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‘Nine to five plus a single employer’ is no longer an equation that the current workforce operates on. This traditional marketplace has been disrupted with the advent of new technology that has heralded gig or on-demand economy. Players like Uber, Airbnb, & Deliveroo offer a classic example of how these innovators have leveraged on this concept of gig economy and have shaken up the traditional setup. Millions of people today, prefer flexible work timings, multiple employers, interest-based projects and multiple revenue streams, the working style we commonly refer to as gig economy.
CIPD describes the gig economy as a new way of working that is based on the temporary jobs or projects, which is paid on the project or hourly basis. It is also referred to as the ‘sharing economy’ or ‘collaborative economy’
The gig economy: pros and cons in the context of the Oil & Gas Industry
The Oil and Gas industry is considered traditional when it comes to adapting to new technology or concepts. However, the notion is changing now with 30% of its workforce comprising of gig workers and the trend is expected to rise in coming years. Instead of depending on the recruitment agencies, companies are now focussing on targeted industry digital platforms to search, shortlist, verify and hire the gig contractors or freelancers. However, like everything else, there are pros and cons of hiring freelancers or gig employees:
Pros:
Reduced Overhead cost
The cost of hiring an in-house employee is immense because apart from salary it also includes costs of insurance, perks, benefits, training, leaves, and cost associated with providing the facilities like internet, sitting arrangements, refreshments, canteen, electricity, and so on. All the extra cost apart from salary gets waived off when it comes to hiring gig employees or also known as “freelancers” in the market. Thus reducing the huge chunk of overhead cost for the employing company.
Low Financial Risk
In the case of full-time employees, the company needs to pay even during “down-times” when the work is low, or the productivity standards are not met. However, in the case of temporary staff or freelancers, the company only pays for the work accomplished as per the specified standard. Thereby lowering the financial risk.
Bigger and better pool of talent
The energy sector is a highly specialized sector and hence requires employees with a specific skill set. Specially for an on-site project, location is the biggest constraint. What if you do not find the right talent at your location? Then you are left with two options: either to hire a new employee and provide training or offload and distribute the work to the current employees. Both this scenario is risky. That’s when the gig employees are a real life-saver. The boundaries are no barrier, you can gain access to any person sitting in any part of the world. You do not even have to compromise on the skills and invest in training.
Innovation and knowledge-sharing
The company spends a substantial amount on strategizing and talent development. However, when you opt for a freelancer, you gain access to knowledge that the employee brings in by working with other organizations. So, in the oil and gas sector, a new employee can bring an innovation in the process or methodology by his experience and observation with different clients.
Round the clock functioning
Sometimes, the gig employee operates from different time zone which means that you can get your work running even while you have closed down at your part of the world. Additionally, you can reach out to freelancers for revisions, urgent works, even after the fixed working hours and during weekends, which is a great relief during tight-deadline projects.
Cons
Lack of supervision and discipline
Most gig workers operate remotely, and you cannot monitor their work physically which means that you can never be sure whether the hourly rates that the employee billed you for, is actually spent on work or for leisure. However, now there are numerous monitoring sites like Hubstaff that tracks the productivity level of the employee. Also, working in oil and gas sector involves potential hazards that can lead to serious injuries and even death. In case of remote workers, managing and monitoring all safety measures pertaining to explosions and fires, equipment safety, machine hazards and so on is a daunting task.
Unpredictable work
Until you gain mutual trust, there is a lot at the stake. For example: if you hire a temporary staff or freelancer to work on a project, you cannot be certain if the person will be able to deliver his/her duties. The risk of losing time, money, and energy is high. If all turns well, you can enjoy the perks however if it didn’t go your way then you suffer a loss on multiple levels. To avoid this scenario, it is advisable to ask for previous work references and keep reviewing the work periodically so that you are aware of the direction things are shaping in.
Loyalty and company ethics
Because, each company has its own set of principles and working guidelines which forms the culture of the company, it is challenging for the freelancer to operate as per the company’s code of conduct or policies. Furthermore, they work for multiple clients at a time, their loyalty may be questionable.
Training and development issue
Every company works and operates differently though key process remains the same. The complete onboarding of the remote worker is not possible as in the case of a full-time employee where the company’s working style becomes their second nature. Additionally, the effort to organize a training program for the gig worker is tricky because of the location and time bound issues.
Thus, for a dynamic industry like oil and gas, gig employees can be an asset if they can bring in the required expertise, skill set and attitude to outperform your expectation. You can find the right talent by using dedicated oil & gas professional networking platforms that bring talents and employers together. Use it to your advantage and you are good to go.
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It was just over five years ago that ExxonMobil discovered first oil in Guyana, transforming the sleepy South American country into the world’s upstream hotspot in just half a decade. The strike rate there has been amazing – 18 discoveries out of 20 well campaigns, and more seem to coming as new discovery efforts get underway. This made Guyana the envy of its neighbours. And why not? The Guyanese economy is projected to grow at 86% y-o-y in 2020, despite the Covid-19 pandemic, as first commercial oil from the Liza field hit the market.
Just over the Guyana border, Suriname, a former Dutch colony had all the more reason to be envious. Unlike Guyana, Suriname has an established upstream industry. Managed by the state oil firm Staastsolie, the volumes are paltry: the onshore Calcutta and Tamabredjo field collectively produce at a current rate of 17,000 b/d. Guyana’s Liza field alone is 15 times larger than Suriname’s total crude output. But the Guyanese miracle always did herald some hope that some of that golden dust could blow Suriname’s way, not least because the giant offshore discoveries in the Staebroek block were just across the maritime border.
In January 2020, this bet proved right. US independent Apache announced it had made a ‘significant oil discovery’ at the Maka-Central 1 well, the first suggestion that the Cretaceous oil formation in Guyana extended southeast to Suriname. Two more discoveries were announced by Apache in quick succession, Sapakara West and, just this week, Kwaskwasi. All three are located in the 1.4 million acre offshore Block 58, which was originally held entirely by Apache before French supermajor Total bought into a 50% stake just before the Maka Central discovery was announced. Three discoveries in six month is quite a payoff, especially with the Kwaskwasi-1 well delivering the highest net pay and confirming a ‘world-class hydrocarbon resource’. More importantly, initial findings suggest that Kwaskwasi holds oil with API gravities in the 34-43 degree range, the sort of light oil that is perfect for petrochemicals and higher-grade fuels.
With Total scheduled to take over operatorship of the block after a fourth drilling campaign, the partners are eager to extend their streak. The Sam Croft drillship is scheduled to head to Keskesi, the fourth scheduled prospect in Block 58, after operations at Kwaskwasi-1 have concluded, and an additional exploration campaign is already in the plans for 2021.
Total and Apache aren’t the only ones playing in Surinamese waters, though they are the first to hit the payday. Most of the country’s offshore blocks have been apportioned, snapped up by ExxonMobil, Kosmos, Petronas, Tullow and Equinor, and all are hoping to be the next to announce a find. ExxonMobil, with Equinor and Hess Energy, have a good position in Block 59, just next to the Caieteur block in Guyana, while Kosmos is hunting in Block 42, right next to the Canje block in Guyana. However, it is Malaysia’s Petronas that is the next likely candidate. Present in Suriname since 2016, when it drilled the exploratory Roselle-1 well in Block 52, Petronas also has interests in Block 48 and Block 53, and recently completed a farm-out sale with ExxonMobil for 50% of Block 52. Its drilling campaign for the Sloanea-1 well is scheduled to begin in Q4 2020, and will be keenly watched by all in Suriname.
Unlike Guyana that had no state oil company, Suriname has existing national oil infrastructure. Staatsolie currently controls onshore and shallow water areas in the country. However, all wells drill in offshore Block A, B, C and D have turned out dry so far. That leaves Staatsolie in a situation: its own areas are not prolific as discoveries by Total, Apache, Petronas et al. For now, Staatsolie is looking to gain rights to 10-20% of any oil discovery within Suriname, but the framework for this is weak and it must navigate carefully to not antagonise the oil majors that are powering the discoveries in its waters. It will do well to avoid the confrontational attitude that is jeopardising LNG development in Papua New Guinea with ExxonMobil and Total, but Staatsolie does have a claim to Suriname’s oil riches for itself.
For now, it is exhilarating to observe the progress in this previously quiet corner of South America. It is the closest thing to frontier oil exploration in the 21st century, with each new discovery generating more and more excitement. Who would have thought there was so much oil left undiscovered? Guyana has shot into the spotlight, Suriname is starting its own ascent and… who knows… could French Guiana be next?
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Source: U.S. Energy Information Administration, Annual Coal Report
In 2019, U.S. coal production totaled 706 million short tons (MMst), a 7% decrease from the 756 MMst mined in 2018. Last year’s production was the lowest amount of coal produced in the United States since 1978, when a coal miners’ strike halted most of the country’s coal production from December 1977 to March 1978. Weekly coal production estimates from the U.S. Energy Information Administration (EIA) show the United States is on pace for an even larger decline in 2020, falling to production levels comparable with those in the 1960s.
Source: U.S. Energy Information Administration, Annual Coal Report
Wyoming produces more coal than any other state, representing 39% of U.S. coal production in 2019, at 277 MMst, which is 9% lower than its coal production in 2018. Coal production in West Virginia, the state with the second-highest coal output, fell by a relatively smaller 2% in 2019. West Virginia is a primary producer of metallurgical coal, which saw sustained demand for exports in 2019. Coal production recently stopped in two states, Kansas in 2017 and Arkansas in 2018. Arizona stopped producing coal in the fall of 2019 when the coal-fired Navajo Generating Station and adjacent Kayenta coal mine that supplied it both closed.
EIA estimates weekly coal production using coal railcar loadings. In 2020, weekly coal railcar loadings have been trending much lower than 2019 levels, and most recent year-to-date coal railcar loadings were down 27% compared with 2019.
Source: U.S. Energy Information Administration, Weekly Coal Production
The decline of U.S. coal production so far in 2020 reflects less demand for coal internationally and less generation from U.S. coal-fired power plants. U.S. coal exports through May 2020 are 29% lower than during the first five months of 2019. U.S. coal-fired generation fell to a 42-year low in 2019, decreasing nearly 16% from the previous year, and has fallen another 34% through May 2020.
Estimated U.S. coal production through mid-July 2020 is 27% lower than the average annual 2019 output, and EIA expects these reductions in production to persist during the remainder of the year. In the latest Short-Term Energy Outlook (STEO), EIA forecasts a 29% decline in U.S. coal production in 2020.
EIA forecasts that U.S. coal production will increase by 7% in 2021, when rising natural gas prices may cause some coal-fired electric power plants to become more economical to dispatch. Much of EIA’s projected recovery in coal production is in the western United States.
Principal contributor: Rosalyn Berry
Amid the unprecedented upheaval that has taken its toll on the world and, in particular the energy industry in the first half of this year, life goes on. Despite shut-ins, weak prices, huge impairments, gloomy forecasts and business challenges, life still goes on. Rigs are still running, exploration is still being conducted and projects are still being approved. The oil and gas world has weathered a huge storm, but that has not stopped it from focusing on necessary work that is vital for the future of the industry itself and the global economy. We have summarised a list of key upstream announcements and developments since April.
One of the major headlines that came out over the past three months was news that Total’s giant LNG in Mozambique has secured as much as US$16 billion in funds from various financial institutions. This is the single largest foreign direct investment project in Africa ever, matching the total current GDP of Mozambique. The speed at which Total completed financing for the US$23 billion project (which taps in the gigantic Golfinho and Atum natural gas fields) is quite remarkable, when the ExxonMobil-led Rovuma LNG next door is facing delays. In fact, the funding raised US$600 million than expected, representing the faith that the 13.1 million ton per annum project, potentially expandable to 43 mtpa, will pay off in the long run. For Total, this will be a hedge, given that its LNG efforts in Papua New Guinea are currently still stymied by a showdown against the country’s new government.
Chevron also had some major news to publish. After failing to acquire Anadarko in 2019 in a dramatic storyline against Occidental Petroleum, the US supermajor has swooped in to acquire US independent Noble Energy for some US$5 billion. The acquisition neatly replaces what the original Anadarko purchase was supposed to achieve – expand Chevron’s presence in the prolific US onshore shale basins, with Noble’s 92,000 acres in the Permian noted as being ‘largely contiguous and adjacent’ to Chevron’s current assets. Noble will also bring with it established positions in the Eagle Ford basin, significant US midstream assets and upstream assets in Israel and Equatorial Guinea, swelling Chevron’s proven oil and gas reserves by 18%. For that amount of potential, the price is a steal. With smaller shale players under pressure, expect more acquisitions of this sort to be announced by deep-pocketed bargain hunters.
Chevron wasn’t the only one to make acquisitions. ConocoPhillips splashed out US$375 million to take up land in Western Canada’s liquids-rich Montney formation, taking the Inga-Fireweed asset from Kelt Exploration. Trident Energy completed its purchase of 10 concessions in the offshore Pampo and Enchova clusters in Brazil from Petrobras. And trader Vitol announced a rara avis, a new US upstream venture called Vencer Energy, focusing on acquiring and operating mature assets in the US Lower 48 region from its base in Houston.
New discoveries have also been coming at a regular speed. Despite divesting assets, Petrobras announced two new discoveries in the offshore Buzios and Albacora pre-salt fields, with reserves of ‘excellent quality’. Eni continues its winning run in Egypt with the new Bashrush natural gas discovery in the Mediterranean Sea, while MOL made its lucky 13th discovery in Pakistan with the Mamikhel South-1 well (the tenth in the TAL Block alone) that revealed ‘significant gas and condensate reserves’. ExxonMobil has restarted two of its four drillships in Guyana and Petronas has handed out contracts in Suriname, so more discoveries are due from that part of the Caribbean. Neptune Energy hit oil at the Dugong well in the Norwegian North Sea, and China’s CNOOC announced a ‘significant discovery’ at the Huizhou 26-6 well in the Pearl River Mouth Basin – the first mid-to-large sized oil and gas field in the area.
CNOOC will be hoping the Huizhou discovery will continue its streak of recent discoveries, boosting domestic Chinese upstream output. Its Luda 21-2/16-3 asset, in the Bohai Sea’s Liaodong Bay, has just started up production, reaching a peak of 25,600 b/d in 2022. Sinopec is also marshalling resources, announcing a US$770 million plan to develop the Dingbei gas prospect in Ningxia and its 230 bcm of natural gas.
Medco reported first gas from the Meliwis field off East Java in Indonesia from an unmanned platform, while the National Iranian Oil Co shrugged off a domestic economic crisis to partner with Persia Oil and Gas Industry Development Co for US$463 million to re-develop the Yaran field in the Khuzestan Province, raising output by 40 million barrels over 10 years. And then in frozen Siberia, where Novatek is speeding ahead with LNG, Gazprom Neft and Shell have agreed to collaborate on developing the Leskinsky and Pukhutsyayakhshy blocks in the Gydan Peninsula: an unusual display of cooperation between a Russian state firm and a Western supermajor.
This is not an exhaustive list of recent developments in the upstream oil and gas corner of the universe. They are the most notable, but there are other signs that the thaw is coming and the industry can recover and begin to grow again. Covid-19 may be something that we must all learn to live with going forward, but life will always go on, and this too shall pass.
Market Outlook:
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End of Article
In this time of COVID-19, we have had to relook at the way we approach workplace learning. We understand that businesses can’t afford to push the pause button on capability building, as employee safety comes in first and mistakes can be very costly. That’s why we have put together a series of Virtual Instructor Led Training or VILT to ensure that there is no disruption to your workplace learning and progression.
Find courses available for Virtual Instructor Led Training through latest video conferencing technology.