Adrin Shafil is a Drilling and Completions Manager for Petrofac, and is also a contributing writer for NrgEdge. He has a passion for ERD and is always thinking of the next breakthrough idea for the oil and gas industry.
1. Before joining the oil & gas industry, you wanted to work in Silicon Valley, also known as the world-leading tech hub. What was the reason for the career move to oil & gas in Malaysia?
Actually, let’s talk about my previous aspirations, even before my ambitions for Silicon Valley. Since as long as I can remember, I wanted to be a doctor in my teenage years. The practice of medicine excited me, and I was an avid viewer of medical TV dramas such as E.R. Even at the end of high school, when ExxonMobil came knocking on my door during my senior year, I declined a scholarship with them in hopes of pursuing a career in medicine. However, ExxonMobil did not give up. After my exams, they invited me over to East Coast Malaysia, to visit their offices, a trip offshore and their processing plant. This was when I realized that I could achieve so much as an engineer, when I observed the complexity of the machinery and people on site hard at work. So, I took the engineering scholarship, and went to New York.
Fortunately for me though, ExxonMobil did not dictate which field I could sign up for. So, after taking a few introductory engineering classes, I finally chose Electrical Engineering, majoring in Computer Hardware design. So, my years at school were basically filled with tinkering with microprocessor design and assembly language (even more basic than computer science programming).
And yes, my ambition back then was slightly swayed by the allure of Silicon Valley, where I went to a few interviews with Intel, EMC2 and Microsoft, but after some soul searching, I decided to go back to my love for oil and gas, so I decided to join ExxonMobil in Kerteh, and was assigned to be part of the drilling team, and have remained a driller ever since.
2. Other than being a member of SPE, what are your other involvements outside of work and how do you find time to be involved?
I am fairly active with IADC (International Association of Drilling Contractors) as a speaker and committee member, as well as participating in industry technical committees led by PETRONAS. Recently I’ve been appointed as the Vice Chairman for WeDSTeC Committee by MPM Drilling in Petronas, which was a great honour. The WeDSTeC Committee is a drilling technical arm under the main umbrella of PETRONAS CORAL 2.0 industry-wide transformation programme, which stands for Cost Reduction Alliance 2.0.
And of course, my current online activities as a leadership influencer on LinkedIn and NrdEdge have proven to be quite rewarding, where I assist multiple layers of people in the oil and gas and other industries reach their true potential.
All of this are quite time-consuming, but I feel it is my responsibility to give back to the industry and community I live in, so I don’t let the time crunch bother me too much.
3. You graduated in computer and electrical engineering from Cornell University. How important is education in shaping one’s career path?
I believe that in high school or in higher level institutions, we are not actually merely learning equations, systems, rules or previous discoveries. What we learn is to develop our own abilities based on the fundamentals and tools given to us, where we are able to take our own path and succeed.
Another way to think about it is, every 3-5 years, a new job type is created, especially in the world of engineering and technology and it’s almost impossible for anybody to be educated specifically for that future job, that does not exist yet. Even in oil and gas, I believe with automation in the 4th industrial revolution with robotics and internet of things, the traditional draw and calculate engineering type will be displaced by program designers and data scientists. So, the journey of self-improvement and change will never end in the world we live in, so why should we limit our options based on our education when we were 18 years old?
4. Do you think that fresh graduates today are well-equipped to navigate their way in their careers? What are the skills and traits that are important to sustain a long-term career in the oil & gas industry?
I believe fresh graduates need to look beyond what they have already done, and have a vision of the future, while figuring out their place in that future. With the ability to reinvent themselves and have the right tools always for that vision, they can enter any industry with confidence, and specifically for oil and gas, they will be the catalysts for the new direction that O&G needs to move towards to, to catch up with the level of sophistication that can be found elsewhere. For example, the world is moving towards big data analytics, automation and A.I., so it’s almost impossible to think that O&G will not transform in the same way. And how will O&G be after the 4th industrial revolution? I will not be around then to witness those changes but the current new graduates will, so they need to be prepared for that future.
5. What are your thoughts on the concept of work-life balance? Do you think that reaching the top of the tier in your career, means losing that balance?
My personal opinion is a balance is entirely up to the individual’s goals in life. You can be great at something, but it’s impossible to be great at everything. And this applies to work-life. If you achieve an equal split between the two, then if you are happy with that, go for it. However, if you want to achieve greatness in perhaps a top tier position like a CEO of a company, then you have to make a choice. For some people, they are comfortable with their choice and make work-life possible. And for some, they do not differentiate between work or life, as life is both work and family. To each their own.
6. You’ve given talks about extended-reach drilling (ERD) and have mentioned it a number of times in your articles – why are you so passionate about ERD and what are your hopes for ERD technology in the future?
ERD has just a special place in my heart. Just like how architects and construction engineers race to build the next record breaking skyscraper, the same affection is felt for ERD by drilling and completion engineers. ERD represents the epitome of what drilling and completions engineers can achieve with the tools that they have. Right now, the world record is up to 13km in length, and Malaysian record is about 6.5km. Of course, well lengths are all dependent on the basin you are drilling, and there is no point drilling further and further if the well is unable to achieve the business value, but it remains my dream to be able to push Malaysian ERD industry to deeper frontiers. My hope is that technology for ERD escapes the confines of drilling rig limitations by transforming the way the tool’s energy source is received and converted to mechanical energy. Currently, hydraulics, torque, and pull are all supplied from surface by the rig, which then limits the ability to drill further. In other words, the rig has to be more powerful but there is a limit and cost on upgrading rigs. But if we can imagine self-powered bottom hole assemblies (tools downhole used for drilling), with powerful hydraulic pumps, and automated navigation abilities and closed loop corrections, we can definitely see the 20km barrier no longer be a hurdle.
7. You have managed to gain quite a large network on your LinkedIn profile and you’re very active on it. How important has your professional network been in your career journey?
I feel blessed and grateful with the following that I currently have, and I personally would like to help and guide as much as I can, with nothing expected in return. However, the interactions that I have and visibility allowed by LinkedIn, helps to create a personal digital brand for myself. I am a firm believer that branding is as important to a company and as important to an individual’s success.
In the real business world, the way I dress, the way I communicate is my visual professional brand. Online, what I share, what I write and comment, will become permanent virtual content, which will become my digital image, my personal brand and my legacy. The benefits of an excellent digital brand include a wider audience recognition of my abilities, spanning within and beyond my own field of expertise. With proper exposure, possibilities may arise to allow me to discover new things or pursue whatever it is that I’m passionate about.
8. Do you have a role model that you look up to?
I’m sure I’d embarrass my boss if I mentioned him by name, so I won’t. But to me, he is my role model as he embodies the company’s values, inspires me to take action and he never tires from coaching me with the right guidance and nudges for me to succeed. He is truly a leader, not a boss, and I’m glad to be working with him.
9. I’m sure you have accomplished many things in your life. Can you share your most memorable achievement?
My latest challenge was being able to deliver two wells with a lean budget and on a fast track basis, in what we recognize as a difficult time for the industry. Even the best laid out strategies could not be executed without a great team. My team this year was able to work within the business constraints, and with best in class performance, delivered the two wells safely. It was no easy feat as this was considered one of the most complex wells in Petrofac to date! I’m proud of my team and what they have achieved.
10. Was there ever a moment in your career when you were frustrated to the point of giving up? How did you recover from it?
Okay now it is time to be frank. I am a rather ambitious person and have been since I was in grade school. When my teacher asked me what I was going to be in the future, at the young age of 11, I answered confidently, “A Menteri Besar” (State Governor). While I did not choose the life of a politician, I’ve continued to be goal-oriented all my life, so I aim higher and higher at every stage of my career. So, when I don’t achieve what I want, or being told its not currently in the pipeline, of course I get crushed. An example was back in 2007, in my sixth year as an engineer, I was promised the job of a US Engineering Supervisor after completing my stint in the worldwide planning group. When I was told I had to wait for another year, I threw a fit and quit my job with immediate effect. That was not my proudest moment, but it all worked out well in the end, as I had plenty of opportunities with other companies and I would not be where I am now, if I did not make that change. But as I mature in the industry, I realize that opportunities have to be earned and may not be at the time what we want. So, perseverance and the ability to reinvent myself is key, because sometimes the opportunities given may be something entirely new, but I have to be ready for it.
11. What is next in the pipeline for you? Do you have a project you’re working on or would like to embark on?
Currently we have plenty of wells at Petrofac to be drilled, and future developments, that will keep me busy.
12. Finally, what is the one piece of valuable advice you can give to oil & gas professionals who are about to step into the industry?
Be mindful that the current difficulty in the industry may be longer than expected, so what the industry really needs are people with creative and innovative minds, to be able to maintain safety, operational excellence and achieve business objectives even with a tight budget. So, use the tools that you have, the skills that you’ve learnt and be ready to suggest the next change for oil and gas, and prepare to work and make it a reality. There will always be somebody to listen and guide you, but you need to be able to drive yourself to achieve your goals.
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Headline crude prices for the week beginning 17 February 2020 – Brent: US$53/b; WTI: US$49/b
Headlines of the week
Forecast growth in demand for U.S. petroleum and other liquids is not driven by transportation and not supplied by refineries
The U.S. Energy Information Administration’s (EIA) February Short-Term Energy Outlook (STEO) forecasts that in 2021, U.S. consumption (as measured by product supplied) of total petroleum and other liquid fuels will average 20.71 million barrels per day (b/d), surpassing the 2007 pre-recession level of 20.68 million b/d. However, the drivers of this consumption growth have changed. Since the 2007–09 recession, U.S. consumption growth has shifted toward liquid fuels that are used primarily outside the transportation sector and are supplied mostly from non-refinery sources. Despite this shift away from domestic demand for refinery-produced fuels, U.S. refinery runs have increased, and the excess products have been exported, greatly contributing to the United States becoming a net exporter of petroleum in September 2019. EIA expects these trends to continue for at least the next 10 years.
Hydrocarbon gas liquids (HGL) have been the main driver of U.S. petroleum and other liquids demand growth since 2007 (Figure 1). U.S. production and consumption of HGLs—a group of products that include ethane, propane, normal butane and isobutane, natural gasoline, and refinery olefins—have risen with increased natural gas production and demand from an expanding petrochemical sector. As a result, EIA forecasts U.S. HGL consumption will be 1.27 million b/d more in 2021 than in 2007, and will average 3.45 million b/d.
With the exception of jet fuel, EIA expects less U.S. consumption of refinery-produced products in 2021 than in 2007. Since 2007, increases in U.S. vehicle miles traveled, which normally increases total motor gasoline consumption, have been countered to some extent by increases in vehicle fuel efficiency. In addition, although U.S. total motor gasoline consumption exceeded 2007 levels for the first time in 2016, increased blending of ethanol into finished motor gasoline has displaced some of the petroleum-based, or refinery-produced, portion of gasoline consumption. Therefore, EIA forecasts 570,000 b/d less consumption of refinery-produced gasoline in the United States in 2021 than in 2007, while ethanol will be 0.5 million b/d higher. Ethanol is almost exclusively produced at non-petroleum refinery sites.
Some HGLs can be produced by both refineries and natural gas processing plants. Natural gas plant liquids (NGPLs)—a subset of HGLs that includes ethane, propane, normal butanes and isobutanes, and natural gasoline—can be extracted from natural gas production streams or produced at refineries that process crude oil. However, as U.S. natural gas production increased from 55.3 billion cubic feet per day (Bcf/d) in 2007 to 98.9 Bcf/d in 2019, the amount of HGLs extracted from natural gas production increased from 1.78 million b/d in 2007 to 4.83 million b/d in 2019. EIA expects HGL production from natural gas processing plants to continue to increase to 5.47 million b/d in 2021. Meanwhile, refinery HGL production has been flat at about 600,000 b/d (Figure 2).
Although HGLs have several different end uses, such as propane for space heating and normal butane for blending with motor gasoline, most of the growth in consumption stems from the use of HGLs as feedstock for petrochemical processes. The large increase in U.S. production of HGLs, and the resulting low prices, led to large investments in U.S. infrastructure to extract and transport HGLs to market, as well as investments in petrochemical facilities to consume it. Many of these facilities consume ethane, and to a lesser degree propane and normal butane, as feedstocks to produce intermediate building blocks for plastics, resins, and other materials with nonenergy uses. EIA forecasts that U.S. ethane consumption will reach 1.96 million b/d in 2021, up from 743,000 b/d in 2007, which represents 96% of the increase in U.S. HGL consumption between 2007 and 2021.
Removing HGL and ethanol consumption from the total demand for U.S. petroleum and other liquids indicates that EIA’s 2021 forecast U.S. demand for principally refinery-produced products is about 16.31 million b/d, on par with the 1997 level (Figure 3).
Despite domestic demand shifting away from traditionally refinery-produced products, U.S. refinery capacity has increased 1.7 million b/d between 2007 and 2019. U.S. refineries have adapted to falling domestic demand for certain products, such as residual fuel, by investing in downstream coking capacity to upgrade it into more valuable products. More importantly, international demand for refinery-produced products has increased since 2007, allowing U.S. refineries to increase runs and utilization beyond what the domestic market demanded to supply products to export markets. As a result, the United States became a net exporter on an annual basis of distillate and residual fuel in 2008, of jet fuel in 2011, and of motor gasoline in 2016.
Similarly, demand for HGLs outside of the United States has increased and caused U.S exports of HGLs to increase from 70,000 b/d in 2007 to 2.07 million b/d in November 2019. Between 2013 and 2016, exports of HGLs were the largest contributor to the increase in U.S. exports of petroleum products. U.S. exports of HGLs are mostly of propane and ethane to markets in Asia and Europe, where they are also displacing refinery-produced naphtha as a petrochemical feedstock.
EIA projects that these trends of increasing U.S. production of HGLs, increasing domestic consumption of HGLs, and increasing exports of HGLs will continue beyond 2021. EIA’s Annual Energy Outlook 2020 (AEO2020), released in January, shows projections for further growth in HGL production at natural gas processing plants from 4.91 million b/d in 2019 to a peak of 6.58 million b/d in 2029 and then slowly decline to 6.17 million b/d by 2050. Domestic consumption of HGLs will also increase, driven by continued petrochemical demand for feedstock, which rises from about 3.14 million b/d in 2019 to more than 4.0 million b/d in 2029. Meanwhile, in the AEO2020 Reference case, U.S. consumption of motor gasoline declines until 2042, distillate consumption declines until 2040, and residual fuel consumption continues declining out to 2050.
U.S. average regular gasoline prices rise, diesel prices decline
The U.S. average regular gasoline retail price increased nearly 1 cent from the previous week to $2.43 per gallon on February 17, 11 cents higher than the same time last year. The Midwest price rose nearly 5 cents to $2.31 per gallon. The Rocky Mountain price fell more than 3 cents to $2.47 per gallon, the West Coast price fell 1 cent to $3.14 per gallon, the East Coast price fell nearly 1 cent to $2.36 per gallon, and the Gulf Coast price declined by less than 1 cent to $2.08 per gallon.
The U.S. average diesel fuel price fell 2 cents from the previous week to $2.89 per gallon on February 17, 12 cents lower than a year ago. The Rocky Mountain price fell nearly 4 cents to $2.86 per gallon, the East Coast price fell more than 2 cents to $2.94 per gallon, the Midwest and Gulf Coast prices each fell nearly 2 cents to $2.76 per gallon and $2.66 per gallon, respectively, and the West Coast price fell more than 1 cent to $3.47 per gallon.
Residential heating oil prices increase, propane prices decrease
As of February 17, 2020, residential heating oil prices averaged more than $2.91 per gallon, almost 1 cent per gallon above last week’s price but more than 31 cents per gallon lower than last year’s price at this time. Wholesale heating oil prices averaged $1.80 per gallon, more than 5 cents per gallon above last week’s price but 34 cents per gallon lower than a year ago.
Residential propane prices averaged more than $1.98 per gallon, less than 1 cent per gallon below last week’s price and nearly 45 cents per gallon less than a year ago. Wholesale propane prices averaged more than $0.56 per gallon, more than 1 cent per gallon higher than last week’s price but almost 27 cents per gallon below last year’s price.
Propane/propylene inventories decline
U.S. propane/propylene stocks decreased by 3.0 million barrels last week to 74.3 million barrels as of February 14, 2020, 18.4 million barrels (32.9%) greater than the five-year (2015-19) average inventory levels for this same time of year. Midwest, Gulf Coast, East Coast, and Rocky Mountain/West Coast inventories decreased by 1.1 million barrels, 1.0 million barrels, 0.6 million barrels, and 0.4 million barrels, respectively. Propylene non-fuel-use inventories represented 7.5% of total propane/propylene inventories.
According to projections published in the U.S. Energy Information Administration’s (EIA) Annual Energy Outlook 2020 (AEO2020), total dry natural gas production in the United States will continue to increase until 2050 in most of the AEO2020 cases, primarily to support growing U.S. exports of natural gas to global markets. The United States began exporting more natural gas than it imports on an annual basis in 2017, driven by increased liquefied natural gas (LNG) exports, increased pipeline exports to Mexico, and reduced imports from Canada. In most of the AEO2020 cases, net natural gas exports continue to increase through 2050, and most of the increase is in the near term.
The AEO2020 Reference case represents EIA’s best assessment of how U.S. and world energy markets will operate through 2050, assuming no significant changes in energy policy occur. Side cases show the effects of changing model assumptions: the High and Low Oil Price cases simulate international conditions that could drive crude oil prices higher or lower, and the High and Low Oil and Gas Supply cases vary production costs and resource recoverability within the United States.
Source: U.S. Energy Information Administration, Annual Energy Outlook 2020
EIA expects dry natural gas production to total 34 trillion cubic feet (Tcf) in 2019 once the final data is in. In the AEO2020 Reference case, EIA projects that U.S. dry natural gas production will reach 45 Tcf by 2050. Production growth results largely from continued development of tight and shale resources in the East, Gulf Coast, and Southwest regions, which more than offsets production declines in other regions. Dry natural gas production from these three regions accounted for 68% of total U.S. dry natural gas production in 2019 and, in the Reference case, 78% of dry natural gas production in 2050.
Most of the increase in dry natural gas production is coming from natural gas formations such as the Marcellus and Utica in the East region and the Haynesville in the Gulf Coast region. A smaller but still significant portion of the growth is from natural gas production in oil formations (also known as associated gas), especially in the Permian Basin in the Southwest region.
Source: U.S. Energy Information Administration, Annual Energy Outlook 2020
In the Reference case, both U.S. natural gas exports by pipeline and U.S. LNG exports continue to grow through 2030. LNG exports account for most of the export growth because more LNG export facilities are becoming operational and more projects are under construction. In the Reference case, EIA projects that LNG exports will almost triple, from 1.7 Tcf in 2019 to 5.8 Tcf in 2030, the equivalent of nearly 16 billion cubic feet per day (Bcf/d). LNG exports remain at this level through 2050 as U.S.-sourced LNG becomes less competitive in world markets and as more countries become global LNG suppliers.
U.S. LNG exports are more competitive when oil prices are high (as in the High Oil Price case) and U.S. natural gas prices are low (as in the High Oil and Gas Supply case) because of pricing structures that link Brent crude oil prices to LNG prices in many world markets. In the High Oil Price case, U.S. natural gas net exports reach nearly 13 Tcf by the late 2030s, most of which is LNG. Conversely, in the Low Oil Price case and Low Oil and Gas Supply case, U.S. LNG is less competitive globally and remains lower than 5 Tcf per year through 2050.
By comparison, pipeline trade of U.S. natural gas is less sensitive to changes in assumptions about domestic natural gas supply and world oil prices. Pipeline trade of natural gas is highest in the High Oil and Gas Supply case because low domestic natural gas prices reduce U.S. natural gas imports from Canada.
Source: U.S. Energy Information Administration, Annual Energy Outlook 2020