NrgEdge interviews Dr Mazlan Madon who is an independent geologist. He is also involve as a member of Commission on the Limits of the Continental Shelf and Academy of Sciences Malaysia. A passionate geologist with vast experience, Dr Mazlan Madon is considered among the top Geology experts.
1) You are someone who has taken up many geologist position with Petronas over the years. Are you able to share with us what kept your passion burning in order for you to be in the industry for more than 30 years?
I consider the many positions that I was appointed to during my service with Petronas were merely following the “natural” course of a career progression, starting as a trainee geologist in 1984 to the penultimate technical position of “Custodian” in 2007. Since then I had held various Custodian positions within different parts of the organisation, doing slightly different things but essentially the same role. Whether one considers a span of 23 years to reach the “top” to be slow, ‘average’, or fast, is a different question altogether. I think, for me to have stayed in the same industry for more than 30 years is not unusual, especially in the oil/gas industry. A more interesting question that people often asked is what kept me going for so long in the same company. The simple answer is my passion for geology. It is fair to say that I care more about geology as a science than its application to oil/gas exploration, because in a way, passion for the science is more everlasting than one’s love for exploration (which tend to emulate the oil price).
2) During your years with Petronas, you wrote a book titled “Petroleum Geology and Resources of Malaysia” which was the main source of reference for the petroleum geologist within the region. What was the factor that inspired or influenced you to write this book?
To be clear, the book was a team effort, and was a deliberate initiative by the management of Petronas at the time, to share the knowledge gained through decades of oil exploration in the country, with not just the oil industry people but the public at large. So a team was assembled and headed by a project manager/chief editor, and I was lucky to be called in by my boss to work full-time on it, along with two other people. It was 1996, and I had just re-joined the company after finishing my PhD studies and I think the momentum helped, because there was an enormous amount of documents I had to go through in order to provide a balanced view of the geology of each basin or province in Malaysia, based on the knowledge at that time. I was also fully aware that as an author I also represent, in some way, a Petronas ‘view’ of the geological understanding at that time.
3) As we know, you are a member of the Commission on the Limits of the Continental Shelf (CLCS), a body of experts established under the UN Convention on the Law of the Sea (UNCLOS). Are you able to tell us more on this position?
The CLCS consists of 21 members elected every 5 years from among the nationals of countries (coastal State) that ratify the UNCLOS. So, I was nominated by the Malaysian government to serve in that commission, but I serve in my personal capacity. Members of CLCS are experts in either hydrography, geology or geophysics. Under article 76 of UNCLOS, a coastal State may submit to the CLCS particulars relating to the limits of the continental shelf beyond 200 nautical miles. The main role of the CLCS then is to consider the data and information submitted by the coastal State in the justification to extend its continental shelf beyond 200 nautical miles.
4) The world is constantly evolving, and new technologies have been given birth in the recent years. What are the most impactful technologies you feel that had greatly aid geologists or explorers like yourself in terms of new field research and development?
There is no doubt that as far as the oil exploration/development is concerned, seismic technologies have contributed immensely to the success of the business. On the flip side, it could be argued that because seismic has been so successful as a body of technology, some managers became over-reliant on it while inadvertently neglecting the fact that a brilliant technology still requires competent humans to use it. Besides seismic, an overarching factor in the industries’ success is the rapid development of computers. I still remember using floppy disks on DOS-based PCs when I started in 1984 and when the internet was still at a very rudimentary stage. Look where we are now due to the power of computers.
5) With fewer oil companies investing in exploring new oil fields in the current oil price climate, do you think this is a short-sighted move? Also how do you see the market picking-up again in terms of new exploration projects in this region?
I think it is just a normal business practice to cut back on exploration when the oil price is low, but how high exploration is going to bounce back depends on our appetite for new ideas and new plays. Bear in mind, activity was already at a low level in the traditionally mature regions, not because of the oil price but due to the higher risks and unfavourable economics.
6) In the current low oil price climate, a lot of exploration projects have been put on-hold. This has inadvertent lowered the demand for new geology talents. What are the options available for those who are specialised in this discipline? Are their skills transferrable?
It is not entirely true, or wise to assume, that due to less exploration projects, there is lower demand for “new geology talents”. I would say, less exploration projects may see less need for that many operations geologists but the company would need to do more “research” to prepare for the next wave. In any case, new talents would not be put straight onto exploration projects because there is a lag time between a new talent coming in and when he/she is ready to be deployed to the projects.
7) In today’s world, everything is going digital, even learning. Digital learning for geologists in Oil & Gas is now possible with e-courses, live webinars and even virtual field trips! Do you think geologist today are adapting to these new platform effectively? What do you think are the possible barriers preventing these new learning technologies from flourishing further, if they are indeed effective learning methods?
I am not worried about young people adapting to new platform. But I am not sure that they are able to absorb all the knowledge that is made available to them, in a way that will make them more productive in their work, bearing in mind their already busy day-to-day work schedule. My guess is that most people will have some spare time for one or two ‘extra-curricular’ endeavours outside of their ‘normal’ work. If those courses are remotely relevant to their work, it would not be an effective learning tool.
8) As we know, you came out with publications throughout your career. For now, you have retired, hence, will you continue publishing geology related publications to aid/educate other geology enthusiast?
Unlike a manager who loses his power and privileges upon retirement, a scientist never truly retires. When I retired, they took away my company laptop, but I could still write. I consider writing technical articles as one of the two most important tasks for a scientist. The other one is reading. Writing is the best way to articulate one’s thoughts and understanding of a particular subject in the vast field of geoscience. It is erroneous to think that a geologist who happens to work in oil and gas must write only on petroleum geology. A musician does not have to just play the blues. So, yes I will do my best to continue to write and publish articles of interest.
9) As an industry expert, you have had considerable experience as a geologist/geoscientist. For someone who’s just beginning their career in the industry, what advice can you give him or her? Do you feel that youths today have more opportunities to nurture their passion and what life lessons are you able to share with them?
I don’t consider myself an industry expert, but a geology or geosciences expert, maybe. So my only advice would be: to be honest in what you do, seek knowledge as truth, not half-truths, and not because your boss wants to hear it, but because you need to understand it yourself. Yes, young people are given ample opportunities, but they take too much time to decide what part of geoscience they like, before they can move forward in their career. Geoscience is a vast subject, with many inter-related sub-disciplines and topics. The problem in the way our industry has developed is to steer young people to want to do a very small part of geoscience, without wanting to or make it necessary to have a broader knowledge of the science. The result is a so-called ‘specialist’ but ironically with very little depth in understanding and lacking a broader appreciation of the scientific implications.
10) May I know what was the book you wrote that gained recognition? Are you able to elaborate more about this recognition and book? Do you think that the new generation can contribute in future?
It was not a book I wrote. In 2017, the AAPG, as part of its 100th year celebration, wanted to publish a book, “The Heritage of the Petroleum Geologist” which is a sequel to its 2002 publication of the same name, which had honoured 43 “pioneering and notable geologists” for their contribution to the profession. So, what AAPG did was to invite another 58 “accomplished and distinguished” geologists to make the total number of honourees 101, symbolic of 100 for the centennial celebrations plus 1 additional individual “to symbolize the passing of our deep heritage to the next generation of energy-finders”. Like all the other honorees, I was asked to contribute two pages of my “achievements, disappointments, anecdotes, advice” for the next generation, and was lucky to be chosen as one of the 101 honorees at the AAPG Convention 2017 in Houston last April.
Of course, the new (meaning younger) generation can contribute, but they must do it with sincerity, honesty and passion. I was once young too, and came into geology by chance, like many geologists I know. In order to make meaningful contribution, people often say, we must be “passionate” about our work. The word “passionate” has been used a lot by managers during my time when they were trying to motivate the youngsters. But passion takes time to develop, and you cannot fake it. You have to first “like” what you’re doing, before you can be “passionate” about it. When you are young, you wouldn’t know where the career would take you, until you are really deep into the subject and develop a kind of “passion”. You cannot be passionate if you don’t know enough about the subject or the work that you’re doing.
By “contribution”, I take that you mean contribution to geology, as a science and as a profession. The new generation can contribute to the science of geology by learning as much as they could, mainly by themselves, through reading and writing. After all, scientific knowledge grows from the ideas generated and written by scientists for people to read. Knowledge not shared is not knowledge. Attending conferences, making presentations, and writing technical papers are all part of the contribution to scientific knowledge but not all of it. For the geological profession, the new generation should join a scientific organization or geological society where they can interact with their peers as well as with other scientists and even students to share experiences and learn from them. These can be done in many ways, from organizing seminars, workshops, field trips to formal training sessions. Nowadays, there seem to be a lack of interest in joining scientific societies, like the Geological Society, for geologists, when especially in the petroleum industry wherein the perception is that all the knowledge and training are available within the industry or company and so joining a scientific society does not bring any benefit. I think this perception and attitude need to change. Contribution to geology and to the geological profession is not, and should not be, limited to making money for the oil companies, but also for the benefit of society at large.
11) With your intention to do a forum discussion, how will you work with us in terms of moderating those discussion at our NrgGuru section?
As I understand it, NrgGuru is a platform for users to ask questions relating to the oil and gas industry. In that regard, I will try to answer mainly questions that relate to my own knowledge and experiences, and leave other questions for other experts.
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Headline crude prices for the week beginning 13 May 2019 – Brent: US$70/b; WTI: US$61/b
Headlines of the week
Midstream & Downstream
The world’s largest oil & gas companies have generally reported a mixed set of results in Q1 2019. Industry turmoil over new US sanctions on Venezuela, production woes in Canada and the ebb-and-flow between OPEC+’s supply deal and rising American production have created a shaky environment at the start of the year, with more ongoing as the oil world grapples with the removal of waivers on Iranian crude and Iran’s retaliation.
The results were particularly disappointing for ExxonMobil and Chevron, the two US supermajors. Both firms cited weak downstream performance as a drag on their financial performance, with ExxonMobil posting its first loss in its refining business since 2009. Chevron, too, reported a 65% drop in the refining and chemicals profit. Weak refining margins, particularly on gasoline, were blamed for the underperformance, exacerbating a set of weaker upstream numbers impaired by lower crude pricing even though production climbed. ExxonMobil was hit particularly hard, as its net profit fell below Chevron’s for the first time in nine years. Both supermajors did highlight growing output in the American Permian Basin as a future highlight, with ExxonMobil saying it was on track to produce 1 million barrels per day in the Permian by 2024. The Permian is also the focus of Chevron, which agreed to a US$33 billion takeover of Anadarko Petroleum (and its Permian Basin assets), only for the deal to be derailed by a rival bid from Occidental Petroleum with the backing of billionaire investor guru Warren Buffet. Chevron has now decided to opt out of the deal – a development that would put paid to Chevron’s ambitions to match or exceed ExxonMobil in shale.
Performance was better across the pond. Much better, in fact, for Royal Dutch Shell, which provided a positive end to a variable earnings season. Net profit for the Anglo-Dutch firm may have been down 2% y-o-y to US$5.3 billion, but that was still well ahead of even the highest analyst estimates of US$4.52 billion. Weaker refining margins and lower crude prices were cited as a slight drag on performance, but Shell’s acquisition of BG Group is paying dividends as strong natural gas performance contributed to the strong profits. Unlike ExxonMobil and Chevron, Shell has only dipped its toes in the Permian, preferring to maintain a strong global portfolio mixed between oil, gas and shale assets.
For the other European supermajors, BP and Total largely matched earning estimates. BP’s net profits of US$2.36 billion hit the target of analyst estimates. The addition of BHP Group’s US shale oil assets contributed to increased performance, while BP’s downstream performance was surprisingly resilient as its in-house supply and trading arm showed a strong performance – a business division that ExxonMobil lacks. France’s Total also hit the mark of expectations, with US$2.8 billion in net profit as lower crude prices offset the group’s record oil and gas output. Total’s upstream performance has been particularly notable – with start-ups in Angola, Brazil, the UK and Norway – with growth expected at 9% for the year.
All in all, the volatile environment over the first quarter of 2019 has seen some shift among the supermajors. Shell has eclipsed ExxonMobil once again – in both revenue and earnings – while Chevron’s failed bid for Anadarko won’t vault it up the rankings. Almost ten years after the Deepwater Horizon oil spill, BP is now reclaiming its place after being overtaken by Total over the past few years. With Q219 looking to be quite volatile as well, brace yourselves for an interesting earnings season.
Supermajor Financials: Q1 2019
Source: U.S. Energy Information Administration, Short-Term Energy Outlook, January, April, and May 2019 editions
In its May 2019 edition of the Short-Term Energy Outlook (STEO), EIA revised its price forecast for Brent crude oil upward, reflecting price increases in recent months, more recent data, and changing expectations of global oil markets. Several supply constraints have caused oil markets to be generally tighter and oil prices to be higher so far in 2019 than previous STEOs expected.
Members of the Organization of the Petroleum Exporting Countries (OPEC) had agreed at a December 2018 meeting to cut crude oil production in the first six months of 2019; compliance with these cuts has been more effective than EIA initially expected. In the January STEO, OPEC’s crude oil and petroleum liquids production was expected to decline by 1.0 million b/d in 2019 compared with the 2018 level, but EIA now forecasts OPEC production to decline by 1.9 million b/d in the May STEO.
Within OPEC, EIA expects Iran’s liquid fuels production and exports to also decline. On April 22, 2019, the United States issued a statement indicating that it would not reissue waivers, which previously allowed eight countries to continue importing crude oil and condensate from Iran after their waivers expired on May 2. Although EIA’s previous forecasts had assumed that the United States would not reissue waivers, the increased certainty regarding waiver policy and enforcement led to lower forecasts of Iran’s crude oil production.
Venezuela—another OPEC member—has experienced declines in production and exports as a result of recurring power outages, political instability, and U.S. sanctions. In addition to supply constraints that have already materialized in 2019, political instability in Libya may further affect global supply. Any further escalation in conflict may damage crude oil infrastructure or result in a security environment where oil fields are shut in. Either situation could reduce global supply by more than EIA currently forecasts.
In the May STEO, total OPEC crude oil and other liquids supply was estimated at 37.3 million b/d in 2018, and EIA forecasts that it will average 35.4 million b/d in 2019. EIA assumes that the December 2018 agreement among OPEC members to limit production will expire following the June 2019 OPEC meeting.
Source: U.S. Energy Information Administration, Short-Term Energy Outlook, January, April, and May 2019 editions
U.S. crude oil and other liquids production is sensitive to changes in crude oil prices, taking into account a lag of several months for drilling operations to adjust. As crude oil prices have increased in recent months, so too have EIA’s domestic liquid fuels production forecasts for the remaining months of 2019.
U.S. crude oil and other liquids production, which grew by 2.2 million b/d in 2018, is forecast in EIA’s May STEO to grow by 2.0 million b/d in 2019, an increase of 310,000 b/d more than anticipated in the January STEO. In 2019, EIA expects overall U.S. crude oil and liquids production to average 19.9 million b/d, with crude oil production alone forecast to average 12.4 million b/d.
Relative to these changes in forecasted supply, EIA’s changes in forecasted demand were relatively minor. EIA expects that global oil markets will be tightest in the second and third quarters of 2019, resulting in draws in global inventories. By the fourth quarter of 2019, EIA expects that inventories will build again, and Brent crude oil prices will fall slightly.
More information about changes in STEO expectations for crude oil prices, supply, demand, and inventories is available in This Week in Petroleum.