By Moji Karimi
Here are some of the repeated discussion topics that seem to be common and specific to O&G.
Before I get to that, and as one of the general discussion points let me clarify the startup concept (my definition of it anyways) in contrast with a small business or consulting.
“Startup is a company based on a somewhat risky (unproven) idea that solves a pain-point in an innovative way. A startup should definitely have intellectual property and could be acquired in a relatively short amount of time”. Therefore, small “me too” businesses or consulting firms don’t fit here. Nothing wrong with those but they follow a different growth path and have unlike business models and priorities. By the short time I mean 7-10 years (for Tech startups that more like 3-5 years, O&G product/market fit takes longer for several reasons). Also have to mention, by O&G startup I’m not referring to a new E&P company (though that is also a very interesting concept. See UpCurve Energy as a good example).
For O&G folks who have lost their job it’s very tempting to immediately think about applying the same skill-set they have learnt to:
- provide somewhat the same service as bigger companies with a twist. Actually down market is the worst time to start a “me too” business. Same services take you to price war with bigger companies and you are certain to lose. Where you could shine is if you compete on “value” and have a clear differentiation.
- become a consultant. Even though this is a nice and quick way to make up for some of the lost income, it’s not a sustainable source and you are going against several other experts who are thinking about doing the same. You are also banking on a shrinking market.
Here are some ideas to consider before starting your business:
Initially the purpose of this post was for those who have lost their job recently; but some aspects also apply to the ones currently employed and want to have a plan B. Working full time and trying to develop an idea at nights and weekends has its own very interesting challenges.
At the end, starting a new venture isn’t easy, if it was everyone would be doing it. However, there is nothing more satisfying that controlling your own destiny.
*This article was first published on 4 February 2016 by Moji Karimi and is reprinted here with full permission.
**About the Writer:
Moji Karimi is an oil and gas entrepreneur who has helped ideate, develop, and commercialize technology for big companies such as Weatherford and has now begun focusing on startups. Currently, Karimi is the business development manager at Biota Technology, a startup that is commercializing DNA Sequencing in the oil and gas industry. He is also a cofounder of SPE Gulf Coast Section Entrepreneurship Cell which is an initiative to educate and connect entrepreneurs, decision makers, and investors. Karimi holds BS and MS degrees in drilling and petroleum engineering, respectively.
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The amount of natural gas held in storage in 2019 went from a relatively low value of 1,155 billion cubic feet (Bcf) at the beginning of April to 3,724 Bcf at the end of October because of near-record injection activity during the natural gas injection, or refill, season (April 1–October 31). Inventories as of October 31 were 37 Bcf higher than the previous five-year end-of-October average, according to interpolated values in the U.S. Energy Information Administration’s (EIA) Weekly Natural Gas Storage Report.
Although the end of the natural gas storage injection season is traditionally defined as October 31, injections often occur in November. Working natural gas stocks ended the previous heating season at 1,155 Bcf on March 31, 2019—the second-lowest level for that time of year since 2004. The 2019 injection season included several weeks with relatively high injections: weekly changes exceeded 100 Bcf nine times in 2019. Certain weeks in April, June, and September were the highest weekly net injections in those months since at least 2010.
Source: U.S. Energy Information Administration, Weekly Natural Gas Storage Report
From April 1 through October 31, 2019, more than 2,569 Bcf of natural gas was placed into storage in the Lower 48 states. This volume was the second-highest net injected volume for the injection season, falling short of the record 2,727 Bcf injected during the 2014 injection season. In 2014, a particularly cold winter left natural gas inventories in the Lower 48 states at 837 Bcf—the lowest level for that time of year since 2003.
Headline crude prices for the week beginning 4 November 2019 – Brent: US$62/b; WTI: US$56/b
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South Sudan was officially recognized as an independent nation state in July 2011 following a referendum held in January 2011. The South Sudanese voted overwhelmingly in favor of secession, which led to Sudan losing 75% of its oil reserves to South Sudan. Although South Sudan now controls a substantial number of the oil–producing fields, it is dependent on Sudan for transporting oil through its pipelines for processing and export. The transit and processing fees South Sudan must pay to Sudan to transport its crude oil are an important revenue stream for Sudan.
After an agreement was reached on the transit dispute that led to a temporary shutdown of crude oil production, the governments of Sudan and South Sudan shifted their focus from border conflicts to the mitigation of their respective domestic opposition factions. The domestic political dynamics and the security situations in both countries will continue to be a potential risk for disrupting the countries’ oil supplies and exports.
In Sudan, the economic shock of the secession has had a significant effect on the economy, which has been hurt by economic mismanagement, corruption, and unsustainably high levels of spending on the military. The partial lifting of U.S. sanctions on Sudan in October 2017 has allowed for increased foreign investment, but Sudan has made little progress toward developing the upstream sector. In August 2019, Sudan’s military and civilian leaders signed a power-sharing deal that paved the way for a transitional government led by Abdalla Hamdok, an economist, to take power in the hope this government would address the country’s problems. However, Sudan remains on the U.S. government’s list of state sponsors of terrorism, which prevents the country from receiving debt relief through the World Bank-International Monetary Fund’s Heavily Indebted Poor Countries Initiative (HIPC).
In South Sudan, President Salva Kiir and the leader of the main opposition faction, Riek Machar, reached a peace agreement in September 2018, which led to reduced violence from the civil war in South Sudan. Although the peace agreement indicates progress, whether the agreement will bring prolonged stability and an inclusive and stable form of governance is unclear. The current agreement is similar to the previous one, which was signed in 2016 and collapsed after two months, and the current iteration does not address crucial elements such as power sharing between the factions and security arrangements that would allow Machar to safely return from exile. Without significant progress in improving the security and political environment, South Sudan’s ability to attract investors and restart production at its fields to increase production will be limited.
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