Human resources practices of oil and gas companies need to integrate upskilling of their employees within its policy framework and future vision. As a best practice, it should be a continuous process and not just an instant fix during challenging times.
To further establish the importance of skill set upgradation in the oil and gas industry let us start with the definition:
What is Upskilling?
Upskilling is training an employee on new technology or process to improve his present capabilities. It makes the individual future-ready for upcoming technologies and methodologies, especially the ones related to his skill set and aptitude.
Why is it important to Upskill the workforce?
There are two major reasons:
Manual human labour is always at war with the rapid evolution of technology. New technologies have improved productivity by automating processes and replacing large-scale workforce with advanced machine-learning and AI tools.
This has in-turn led to an abundance of traditional talents and a steep rise in demand for experts who can control this new generation human-machine ecosystem. Upskilling in such a scenario can enable the workforce to use new technology and bridge the skill gap.
Also, it may be more expensive to hire new employees and train them rather than develop ways to nurture talent that’s already there in the company’s workforce; Upskilling is such a scenario will act as a strong retention strategy.
For example, in the last 1800s, rotary drills used to be in operation to drill out oil. Now, the oil and gas industry has technologies like seismic imaging and the latest measurement while drilling technology (MWD) to enhance the productivity of oil drilling. A drilling team that is well versed in the newest technology will always prove to be an asset to the company and vice-versa.
However, upskilling in not restricted to hard skills alone; In the energy industry, soft skills are vitally important, especially because of the rigorous nature of work. Professionals from diverse national backgrounds, cultures, and habits come together to work in the industry. They work in a difficult environment away from family and friends.
Interpersonal skills, ability to communicate clearly, and leadership capabilities are vital to keeping the team working and happy.
Skill set upgradation is a continuous process. Why?
It is quite unfortunate that the implementation of upgrading oneself be it learning new tools & technologies or keeping up with the latest industry trends is not proportional to the advancement of technologies. Hence there is always an imparity in demand and availability of talent.
The only way to bridge the gap between talent demand and supply is timely identification of industry trends and recalibrating oneself by learning the new.
Competition is a big driver of upskilling
Globalisation has opened up new markets. Needless to say, the recruitment department has witnessed a rapid growth of tech-savvy and competitive talent base. For the new-age engineers and entrepreneurs, technology is not something to learn; it is a way of life. When they join the global economy, they will steer everything on the motherboard of technology. The amalgamation of old and new talent would be incongruous if the industry stays away from this mission.
The oil and gas industry has its own downturns and upturns, but such is the importance of energy in the modern world, that it continues to be the force majeure in the economy.
Upskilling through technology courses, in-service training programmes, soft skill modules, and software skilling programmes can keep both employees and employers ready to face the competition and the future.
Nrgedge.net has for long partnered with the industry to equip energy personnel with advanced skill sets in various job profiles and positions. Visionary industry experts have lent their minds to design and develop the upskilling courses to facilitate the process of capability enhancement and professional advancement.
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Less than two weeks ago, the VLCC Navarin arrived at Tanjung Pengerang, at the southern end of Peninsular Malaysia. It was carrying two million barrels of crude oil, split equally between Saudi Arab Medium and Iraqi Basra Light grades.
The RAPID refinery in Johor. An equal joint partnership between Malaysia’s Petronas and Saudi Aramco whose 300 kb/d mega refinery is nearing completion. Once questioned for its economic viability, RAPID is now scheduled to start up in early 2019, entering a market that is still booming and in demand of the higher quality, Euro IV and Euro V level fuels RAPID will produce.
Beyond fuel products, RAPID will also have massive petrochemical capacity. Meant to come on online at a later date, RAPID will have a collective capacity of some 7.7 million tons per annum of differentiated and specialty chemicals, including 3 mtpa of propylene. To be completed in stages, Petronas nonetheless projects that it will add some 3.3 million tons of petrochemicals to the Asia market by the end of next year. That’s blockbuster numbers, and it will elevate Petronas’ stature in downstream, bringing more international appeal to a refining network previously focused mainly on Malaysia. For its partner Saudi Aramco, RAPID is part of a multi-pronged strategy of investing mega refineries in key parts of the world, to diversify its business and ensure demand for its crude flows as it edges towards an IPO.
RAPID won’t be alone. Vietnam’s second refinery – the 200 kb/d Nghi Son – has finally started up this year after multiple delays. And in the same timeframe as RAPID, the Zhejiang refinery by Rongsheng Petro Chemical and the Dalian refinery by Hengli Petrochemical in China are both due to start up. At 400 kb/d each, that could add 1.1 mmb/d of new refining capacity in Asia within 1H19. And there’s more coming. Hengli’s Pulau Muara Besar project in Brunei is also aiming for a 2019 start, potentially adding another 175 kb/d of capacity. And just like RAPID, each of these new or recent projects has substantial petrochemical capacity planned.
That’s okay for now, since demand remains strong. But the danger is that this could all unravel. With American sanctions on Iran due to kick in November, even existing refineries are fleeing from contributing to Tehran in favour of other crude grades. The new refineries will be entering a tight market that could become even tighter. RAPID can rely on Saudi Arabia and Nghi Son can depend on Kuwait, both the Chinese projects are having to scramble to find alternate supplies for their designed diet of heavy sour crude. This race to find supplies has already sent Brent prices to four-year highs, and most in the industry are already predicting that crude oil prices will rise to US$100/b by the year’s end. At prices like this, demand destruction begins and the current massive growth – fuelled by cheap oil prices – could come to an end. The market can rapidly change again, and by the end of this decade, Asia could be swirling with far more oil products that it can handle.
Upcoming and recent Asia refineries:
Headline crude prices for the week beginning 8 October 2018 – Brent: US$84/b; WTI: US$74/b
Headlines of the week
Source: U.S. Energy Information Administration, Monthly Crude Oil and Natural Gas Production
As domestic production continues to increase, the average density of crude oil produced in the United States continues to become lighter. The average API gravity—a measure of a crude oil’s density where higher numbers mean lower density—of U.S. crude oil increased in 2017 and through the first six months of 2018. Crude oil production with an API gravity greater than 40 degrees grew by 310,000 barrels per day (b/d) to more than 4.6 million b/d in 2017. This increase represents 53% of total Lower 48 production in 2017, an increase from 50% in 2015, the earliest year for which EIA has oil production data by API gravity.
API gravity is measured as the inverse of the density of a petroleum liquid relative to water. The higher the API gravity, the lower the density of the petroleum liquid, meaning lighter oils have higher API gravities. The increase in light crude oil production is the result of the growth in crude oil production from tight formations enabled by improvements in horizontal drilling and hydraulic fracturing.
Along with sulfur content, API gravity determines the type of processing needed to refine crude oil into fuel and other petroleum products, all of which factor into refineries’ profits. Overall U.S. refining capacity is geared toward a diverse range of crude oil inputs, so it can be uneconomic to run some refineries solely on light crude oil. Conversely, it is impossible to run some refineries on heavy crude oil without producing significant quantities of low-valued heavy products such as residual fuel.
Source: U.S. Energy Information Administration, Monthly Crude Oil and Natural Gas Production
API gravity can differ greatly by production area. For example, oil produced in Texas—the largest crude oil-producing state—has a relatively broad distribution of API gravities with most production ranging from 30 to 50 degrees API. However, crude oil with API gravity of 40 to 50 degrees accounted for the largest share of Texas production, at 55%, in 2017. This category was also the fastest growing, reaching 1.9 million b/d, driven by increasing production in the tight oil plays of the Permian and Eagle Ford.
Oil produced in North Dakota’s Bakken formation also tends to be less dense and lighter. About 90% of North Dakota’s 2017 crude oil production had an API gravity of 40 to 50 degrees. The oil coming from the Federal Gulf of Mexico (GOM) tends to be more dense and heavier. More than 34% of the crude oil produced in the GOM in 2017 had an API gravity of lower than 30 degrees and 65% had an API gravity of 30 to 40 degrees.
In contrast to the increasing production of light crude oil in the United States, imported crude oil continues to be heavier. In 2017, 7.6 million b/d (96%) of imported crude oil had an API gravity of 40 or below, compared with 4.2 million b/d (48%) of domestic production.
EIA collects API gravity production data by state in the monthly crude oil and natural gas production report as well as crude oil quality by company level imports to better inform analysis of refinery inputs and utilization, crude oil trade, and regional crude oil pricing. API gravity is also projected to continue changing: EIA’s Annual Energy Outlook 2018 Reference case projects that U.S. oil production from tight formations will continue to increase in the coming decades.