NrgEdge Editor

Sharing content and articles for users
Last Updated: January 31, 2018
1 view
Business Trends
image

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.


uploads1517366164957-Dr+Mazlan+Madon+Nrgtalk+edited.jpg


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.


Sign up on NrgEdge to read more articles like these and get connected with oil, gas and energy industry influencers! 

Visit: https://goo.gl/a36LfT

nrgedge oil and gas interview influencer nrgtalk business
3
7 0

Something interesting to share?
Join NrgEdge and create your own NrgBuzz today

Latest NrgBuzz

OPEC+ Prevails, For Now

The week started off ominously. Qatar, a member of OPEC since 1960, quit the organisation. Its reasoning made logical sense – Qatar produces very little crude, so to have a say in a cartel focused on crude was not in its interests, which lie in LNG – but it hinted at deep-seated tensions in OPEC that could undermine Saudi Arabia’s attempts to corral members. Qatar, under a Saudi-led blockade, was allied with Iran – and Saudi Arabia and Iran were not friends, to say the least. This, and other simmering divisions, coloured the picture as OPEC went into its last meeting for the year in Vienna.

Against all odds, OPEC and its NOPEC allies managed to come to an agreement. After a nervy start to the conference – where it looked like no consensus could be reached – OPEC+ announced that they would cut 1.2 mmb/d of crude oil production beginning January. Split between 800,000 b/d from OPEC members and 400,000 b/d from NOPEC, the supply deal contained a little bit of everything. It was sizable enough to placate the market (market analysts had predicted only a 800,000 b/d cut). It was not country-specific (beyond a casual mention by the Saudi Oil Minister that the Kingdom was aiming for a 500,000 b/d cut), a sly way of building in Iran’s natural decline in crude exports from American sanctions into the deal without having individual member commitments. And since the baseline for the output was October production levels, it represents pre-sanction Iranian volumes, which were 3.3 mmb/d according to OPEC – making the mathematics of the deal simpler.

Crude oil markets rallied in response. Brent climbed by 5%, breaking a long losing streak, as the market reacted to the move. But the deal doesn’t so much as solve the problem as it does kick the can further down the road. A review is scheduled for April; coincidentally (or not), American waivers granted to eight countries on the import of Iranian crude expire in May. By April, it should be clear whether those will continue, allowing OPEC+ to monitor the situation and the direction of Washington’s policy against Iran in a new American political environment post-midterm elections. If the waivers continue, then the deal might stick. If they don’t, then OPEC+ has time to react.

There are caveats as well. OPEC members, who are shouldering the bigger part of the burden, said there would be ‘special considerations’ for its members. Libya and Venezuela -  both facing challenging production environments – received official exemptions from the new group-level quota. Nigeria, exempted in the last round, did not. Iran claims to have been given an exemption but OPEC says that Iran had agreed to a ‘symbolic cut’ – a situation of splitting hairs over language that ultimately have the same result. But more important will be adherence. The supply deals of the last 18 months have been unusual in the high adherence by OPEC members. Can it happen again this time? Russia – which is rumoured to be targeting a 228,000 b/d cut – has already said that it would take the country ‘months’ to get its production level down to the requested level. There might be similar inertia in other members of OPEC+. Meanwhile, American crude output is surging and there is a risk to OPEC+ that they will be displaced out of their established markets. For now, OPEC remains powerful enough to sway the market. How long it will remain that way?

Infographic: OPEC+ December Supply Deal

  • OPEC – 800,000 b/d cut from Oct 2018 levels, Saudi Arabia to cut 500,000 b/d
  • Non-OPEC – 400,000 b/d cut from Oct 2018, Russia to cut 228,000 b/d
  • Total – 1.2 mmb/d cut from Oct 2018, Saudi Arabia and Russia to cut 728,000 b/d
December, 15 2018
Your Weekly Update: 10 - 14 December 2018

Market Watch

Headline crude prices for the week beginning 10 December 2018 – Brent: US$62/b; WTI: US$52/b

  • Crude prices strengthened at the start of this week, with OPEC delivering an agreement that will see production across the OPEC+ alliance decline by 1.2 mmb/d beginning January 2019
  • Two-thirds or 800,000 b/d of the cut will be borne by OPEC – with most of it taken up by Saudi Arabia – while the non-OPEC group will take up a cut of 400,000 b/d, most of which will be taken up by Russia
  • Skepticism has reigned before the supply deal was reached, as the first day of the OPEC meeting in Vienna closed without consensus and the threads holding OPEC together showed some stress when Qatar decided to quit the group
  • Crude prices were also boosted by Libya declaring force majeure at its largest oil field at El Sharara over arm protests, while Canada’s Alberta province announced plans to pare back some 325,000 b/d of output to ease a huge glut
  • The coordinated supply deal by OPEC ‘was not easy’ according to UAE Minister of Energy and Industry, with Iran in particular balking at being asked to sign up to a symbolic cut; this might not augur well for future supply deals that might be necessary given current trends
  • However, the supply cut will only last until April 2019, when the terms are due for a review, which would give OPEC+ enough time to consider and deal with the expiration of American waivers for eight countries over continued import of Iranian crude in May
  • Meanwhile, America became a net oil exporter for the first time in almost 75 years, as the unprecedented boom in US crude oil fuelled by the shale revolution powers on, a development that could dilute OPEC+’s attempt to support global crude prices
  • The recent weakening of WTI prices saw the US lose 10 active oil rigs last week, however, the addition of 9 new gas rigs led to a net loss of only 1 in the Baker Hughes active US rig count
  • Crude price outlook: OPEC+’s decision might have provided some relief, but may not be enough to keep crude oil prices trending upwards. Expect prices to moderate to US$60-61/b for Brent and US$50-51/b for WTI

Headlines of the week

Upstream

  • ExxonMobil’s winning streak in Guyana continues, as it announces its 10th offshore discovery at the Pluma-1 well, boosting estimated recoverable resources in the Stabroek block by almost 1 mmb/d to over 5 mmb/d
  • Apache has initiated production at the Garten field in the UK North Sea, with an output rate of 13,700 b/d and 15.7 bcf/d of natural gas
  • Chevron has raised its capital expenditure for the first time since 2014 into US$20 billion, with a major focus on expanding operations in the Permian Basin as well as on the Tengiz megaproject in Kazakhstan
  • Canada’s Alberta province, weighed down by a supply glut caused by pipeline bottlenecks, has announced moves to reduce the region’s output by 325,000 b/d
  • Equinor and Faroe Petroleum have agreed to trade a number of assets in the Norwegian Sea and the Norwegian Continental Shelf North Sea, encompassing the Njord, Bauge Hyme, Vilje Ringhome, Marulk and Alve fields, with the deal described as a ‘balanced swap’ in terms of value with no cash consideration

Downstream

  • CNPC’s US$9.53 billion joint venture integrated 400 kb/d petrochemicals/refinery project with PDVSA in Jieyang, China has been reactivated, and is now expected to begin operations in late 2021
  • French president Emmanuel Macron has backtracked and suspended a planned fuel-tax hike, after weeks of violent riots by the so-called Yellow Vests grassroot groups of up to 300,000 protestors
  • Limetree Bay Ventures has secured US$1.25 billion in financing that paves the way for the Limetree Bay refinery in the US Virgin Islands to restart after being idled for years, partnering with BP Products North America on the project

Natural Gas/LNG

  • Equinor has received permission from the Norwegian government to proceed with the development of Troll Phase 3, delivering an additional 2.2 billion boe/d of natural gas with a planned start-up timeframe of 1H2021
  • Shell has completed the construction of Gibraltar’s first LNG regasification facility, a small-scale project that will feed a new power plant in the territory
  • Trinidad and Tobago has agreed to allow BP and Shell to extend the operational life of the Atlantic LNG Train 1 in Point Fortin by five years, with the country receiving the ability to sell LNG cargoes through its state gas firm
  • Tokyo Gas and the Philippines’ First Gen Corporation have signed a joint development agreement to build and operate an LNG receiving terminal, as the three-horse race narrows over the country’s first LNG import facility
  • American LNG player Tellurian has agreed to supply trader Vitol with some 1.5 mtpa of LNG over 15 years from its 27.6 mtpa Driftwood LNG export terminal currently being developed in Calcasiue River, Louisiana
  • Tanzania is opening talks with Equinor and ExxonMobil to launch the East African nation’s first LNG project, likely to derive gas from the Equinor-operated offshore Block 2
  • Shell is expecting to produce its first cargo of LNG from its Prelude FLNG facility in Australia before the end of 2018
December, 14 2018
Permian’s Pipeline Lifeline

The Permian is in desperate need of pipelines. That much is true. There is so much shale liquids sloshing underneath the Permian formation in Texas and New Mexico, that even though it has already upended global crude market and turned the USA into the world’s largest crude producer, there is still so much of it trapped inland, unable to make the 800km journey to the Gulf Coast that would take them to the big wider world.

The stakes are high. Even though the US is poised to reach some 12 mmb/d of crude oil production next year – more than half of that coming from shale oil formations – it could be producing a lot more. This has already caused the Brent-WTI spread to widen to a constant US$10/b since mid-2018 – when the Permian’s pipeline bottlenecks first became critical – from an average of US$4/b prior to that. It is even more dramatic in the Permian itself, where crude is selling at a US$10-16/b discount to Houston WTI, with trends pointing to the spread going as wide as US$20/b soon. Estimates suggest that a record 3,722 wells were drilled in the Permian this year but never opened because the oil could not be brought to market. This is part of the reason why the US active rig count hasn’t increased as much as would have been expected when crude prices were trending towards US$80/b – there’s no point in drilling if you can’t sell.

Assistance is on the way. Between now and 2020, estimates suggest that some 2.6 mmb/d of pipeline capacity across several projects will come onstream, with an additional 1 mmb/d in the planning stages. Add this to the existing 3.1 mmb/d of takeaway capacity (and 300,000 b/d of local refining) and Permian shale oil output currently dammed away by a wall of fixed capacity could double in size when freed to make it to market.

And more pipelines keep getting announced. In the last two weeks, Jupiter Energy Group announced a 90-day open season seeking binding commitments for a planned 1 mmb/d, 1050km long Jupiter Pipeline – which could connect the Permian to all three of Texas’ deepwater ports, Houston, Corpus Christi and Brownsville. Plains All American is launching its 500,000 b/d Sunrise Pipeline, connecting the Permian to Cushing, Oklahoma. Wolf Midstream has also launched an open season, seeking interest for its 120,000 b/d Red Wolf Crude Connector branch, connecting to its existing terminal and infrastructure in Colorado City.

Current estimates suggest that Permian output numbered around 3.5 mmb/d in October. At maximum capacity, that’s still about 100,000 b/d of shale oil trapped inland. As planned pipelines come online over the next two years, that trickle could turn into a flood. Consider this. Even at the current maxing out of Permian infrastructure, the US is already on the cusp on 12 mmb/d crude production. By 2021, it could go as high as 15 mmb/d – crude prices, permitting, of course.

As recently reported in the WSJ; “For years, the companies behind the U.S. oil-and-gas boom, including Noble Energy Inc. and Whiting Petroleum Corp. have promised shareholders they have thousands of prospective wells they can drill profitably even at $40 a barrel. Some have even said they can generate returns on investment of 30%. But most shale drillers haven’t made much, if any, money at those prices. From 2012 to 2017, the 30 biggest shale producers lost more than $50 billion. Last year, when oil prices averaged about $50 a barrel, the group as a whole was barely in the black, with profits of about $1.7 billion, or roughly 1.3% of revenue, according to FactSet.”

The immense growth experienced in the Permian has consequences for the entire oil supply chain, from refining balances – shale oil is more suitable for lighter ends like gasoline, but the world is heading for a gasoline glut and is more interested in cracking gasoil for the IMO’s strict marine fuels sulphur levels coming up in 2020 – to geopolitics, by diminishing OPEC’s power and particularly Saudi Arabia’s role as a swing producer. For now, the walls keeping a Permian flood in are still standing. In two years, they won’t, with new pipeline infrastructure in place. And so the oil world has two years to prepare for the coming tsunami, but only if crude prices stay on course.

Recent Announced Permian Pipeline Projects

  • September 2018 – EPIC Midstream Holdings – 675,000 b/d, 1125km, 24-30’ diameter, 4Q19 target opening
  • November 2018, Wolf Midstream Partners – 500,000 b/d, 65km, 16’ diameter, 2H2019 target opening
  • November 2018, Jupiter Energy – 1 mmb/d, 1050km, 36’ diameter, 2020 target opening
  • December 2018, Plains All American Pipeline – 575,000 b/d, 830km, 26’ diameter, 3Q19 target opening
December, 04 2018