Hui Shan

Job Steward at NrgEdge. If you are an Energy Professional (Oil, Gas, Energy) contact me for opportunities
Last Updated: September 13, 2018
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Career Development
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This is an exciting time for energy professionals, especially for all those who are looking for a job change within the oil and gas industry!

The current year is already witnessing a steady rise in the oil prices and the number of LNG projects thus painting a positive picture for the future.

Additionally, industry experts say, that the trend of employing temporary and contractual staff on an ongoing basis will continue to grow by 24%, which up by 1% than the previous year.


The profiles which will be in demand include:

  • Skilled Operator Maintainers to carry out operation, production and maintenance activities on various production plants.
  • Geologists, company representatives, drillers and rig crews in exploration
  • Cost and Planning Engineers in the downstream segment
  • Gas Insertion Workers in an active residential construction market
  • Engineering Service Managers, technicians and mechanical fitters in line maintenance and engineering services
  • Engineers from various disciplines: mechanical, electrical and control systems engineers, pipeline engineers, and project engineers.

Looking at the studies and profiles in demand, it is evident that there is immense scope in the industry and if one is looking for a job change, this could be an ideal time.

Opportunities, however, may come with a caveat and hence it is important to understand the pros and cons associated with switching jobs to make an informed decision.


Getting started: Gain clarity

Before you hand over your resignation letter, it is important to determine if a career change is a good move. Start by answering a few questions:

  • What are your interests and specific career goals?
  • Why do you want to switch to another company?
  • What does your financial statement say? Can you switch without causing undue stress?
  • Is your family happy with your decision? How does it impact them?


Dos for job hopping in the oil and gas sector

Regardless of your current job, your academic proficiency and your work history the oil and gas industry offers numerous opportunities. However, it is important to pick the one that will propel you to success.


DO – Know your options

The lifecycle of an oil and gas project moves from the conceptualization stage to the decommissioning phase. There are different levels in between and each of them requires a different skillset.

This industry is open to talented professionals, which means that if you are willing to learn you can easily climb the career ladder and even explore lateral movements to newer functions.

For instance, if you do not like working on offshore rigs, but are a technology enthusiast, you can switch to digital lead roles by completing a relevant certification.


DO – Intensive research

Since you are planning to move to another company, research becomes crucial for your personal as well as professional growth.

Start with researching the disciplines that are in high demand, the best companies to work for, covering your interest domain, company policies, work visa requirements and other government regulations.

While Houston, Abu Dhabi, and Perth are hotspots for exploration and production activities, new opportunities are emerging in countries like Malaysia, Mexico, and Mozambique.

Furthermore, speak to industry experts, and learn about the benefits and loopholes. The more you know, the better decision you will make.


DO – Compare the benefits

Learn about the benefits that you avail in your current job vis-à-vis the gains you will enjoy in your next job.

Begin by comparing the obvious: your compensation. As per the 2018-19 Hays Salary guide, 57% of oil and gas professionals will get a minimum of 3% rise in their next review while 21% of employers won’t increase your salary at all.

Learn where you belong and what are your chances of growth in your current organization. Once you have the number, compare it with the compensation that you are expecting in your new job.

Make sure you include the cost of living and the work-life balance in your decision-making. Apart from direct monetary benefits also compare additional benefits like working hours, job flexibility, growth prospects, insurance benefits, and other bonuses and allowances.


Don’ts for job hopping in oil and gas sector

It is important to know what might go wrong and how it can be avoided to keep the decision-making simple and easy.


DON’T – Be intimidated

The competition in the oil and gas industry is fierce. The industry requires highly skilled and experienced professionals and it is recommended that one keeps upgrading one’s skills as the demand shifts.

This dynamism in the industry often intimidates the professionals. Therefore, the idea here is to understand your potential, market value, and the expected competency. If you fit the bill, then you must consider switching.

However, if you identify a knowledge or skill gap, then it is advisable to gain the required expertise and then plan the job change. This ensures that you do not settle for less.


DON’T- Risk your safety

Safety parameters and guidelines are crucial in the oil and gas sector. Learn about the safety policies, employee benefits and the insurance policy of the company you are planning to join.

Gather references if possible from existing or former employees on how they treat their workforce to avoid work-related injuries, accidents, and diseases.


DON’T – Compromise on your stability 

One should have the right reason to switch. Often employees quit due to boredom and monotony at work and then later regret their decision.

Therefore, if you are planning to quit for growth opportunities or better exposure, it is crucial to analyze rationally if you will achieve what you are aiming for in your new job.

Additionally, if you are not sure about the new work environment or the growth potential, then it will be wise to drop the plan until you have clarity and extensive knowledge.

But do keep looking for more suitable options. Switch only when you are sure. Compromising stability may cost you your career.

The best part about the energy sector is that if you are willing to do hard work, there isn't any dearth of opportunities. It offers a lucrative salary, travelling, stability and growth opportunity. Just weigh the pros and cons of your career decision and you are good to go!

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EIA forecasts less power generation from natural gas as a result of rising fuel costs

In its latest Short-Term Energy Outlook (STEO), released on January 12, the U.S. Energy Information Administration (EIA) forecasts that generation from natural gas-fired power plants in the U.S. electric power sector will decline by about 8% in 2021. This decline would be the first annual decline in natural gas-fired generation since 2017. Forecast generation from coal-fired power plants will increase by 14% in 2021, after declining by 20% in 2020. EIA forecasts that generation from nonhydropower renewable energy sources, such as solar and wind, will grow by 18% in 2021—the fastest annual growth rate since 2010.

The shift from coal to natural gas marked a significant change in the energy sources used to generate electricity in the United States in the past decade. This shift was driven primarily by the sustained low natural gas price. In 2020, natural gas prices were the lowest in decades: the nominal price of natural gas delivered to electric generators averaged $2.37 per million British thermal units (Btu). For 2021, EIA forecasts the average nominal price of natural gas for power generation will rise by 41% to an average of $3.35 per million Btu, about where it was in 2017. In contrast, EIA expects nominal coal prices will rise just 6% in 2021.

The large expected rise in natural gas prices is the primary driver in EIA’s forecast that less electricity will be generated from natural gas and more electricity will come from coal-fired power plants in 2021 than in recent years. EIA expects about 36% of total U.S. electricity generation in 2021 will be fueled by natural gas, down from 39% in 2020. The forecast coal-fired generation share in 2021 rises to 22% from 20% last year. However, these forecast generation shares are still different from 2017, when natural gas and coal each fueled 31% of total U.S. electricity generation.

Significant growth in electricity-generating capacity from renewable energy sources in 2021 is also likely to affect the mix of fuels used for power generation. Power developers are scheduled to add 15.4 gigawatts (GW) of new utility-scale solar capacity this year, which would be a record high. An additional 12.2 GW of wind capacity is scheduled to come online in 2021, following 21 GW of wind capacity that was added last year. Much of this new renewable generating capacity will be located in areas that have relied on natural gas as a primary fuel for power generation in recent years, such as in Texas.

January, 20 2021
U.S. oil and natural gas production to fall in 2021, then rise in 2022

U.S. monthly crude oil and natural gas production

Source: U.S. Energy Information Administration, Short-Term Energy Outlook (STEO)

In its January 2020 Short-Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) forecasts that annual U.S. crude oil production will average 11.1 million b/d in 2021, down 0.2 million b/d from 2020 as result of a decline in drilling activity related to low oil prices. A production decline in 2021 would mark the second consecutive year of production declines. Responses to the COVID-19 pandemic led to supply and demand disruptions. EIA expects crude oil production to increase in 2022 by 0.4 million b/d because of increased drilling as prices remain at or near $50 per barrel (b).

The United States set annual natural gas production records in 2018 and 2019, largely because of increased drilling in shale and tight oil formations. The increase in production led to higher volumes of natural gas in storage and a decrease in natural gas prices. In 2020, marketed natural gas production fell by 2% from 2019 levels amid responses to COVID-19. EIA estimates that annual U.S. marketed natural gas production will decline another 2% to average 95.9 billion cubic feet per day (Bcf/d) in 2021. The fall in production will reverse in 2022, when EIA estimates that natural gas production will rise by 2% to 97.6 Bcf/d.

U.S. monthly crude oil production

Source: U.S. Energy Information Administration, Short-Term Energy Outlook (STEO)

EIA’s forecast for crude oil production is separated into three regions: the Lower 48 states excluding the Federal Gulf of Mexico (GOM) (81% of 2019 crude oil production), the GOM (15%), and Alaska (4%). EIA expects crude oil production in the U.S. Lower 48 states to decline through the first quarter of 2021 and then increase through the rest of the forecast period. As more new wells come online later in 2021, new well production will exceed the decline in legacy wells, driving the increase in overall crude oil production after the first quarter of 2021.

Associated natural gas production from oil-directed wells in the Permian Basin will fall because of lower West Texas Intermediate crude oil prices and reduced drilling activity in the first quarter of 2021. Natural gas production from dry regions such as Appalachia depends on the Henry Hub price. EIA forecasts the Henry Hub price will increase from $2.00 per million British thermal units (MMBtu) in 2020 to $3.01/MMBtu in 2021 and to $3.27/MMBtu in 2022, which will likely prompt an increase in Appalachia's natural gas production. However, natural gas production in Appalachia may be limited by pipeline constraints in 2021 if the Mountain Valley Pipeline (MVP) is delayed. The MVP is scheduled to enter service in late 2021, delivering natural gas from producing regions in northwestern West Virginia to southern Virginia. Natural gas takeaway capacity in the region is quickly filling up since the Atlantic Coast Pipeline was canceled in mid-2020.

January, 15 2021
So, Why Is Saudi Arabia Doing This?

Just when it seems that the drama of early December, when the nations of the OPEC+ club squabbled over how to implement and ease their collective supply quotas in 2021, would be repeated, a concession came from the most unlikely quarter of all. Saudi Arabia. OPEC’s swing producer and, especially in recent times, vocal judge, announced that it would voluntarily slash 1 million barrels per day of supply. The move took the oil markets by surprise, sending crude prices soaring but was also very unusual in that it was not even necessary at all.

After a day’s extension to the negotiations, the OPEC+ club had actually already agreed on the path forward for their supply deal through the remainder of Q1 2021. The nations of OPEC+ agreed to ease their overall supply quotas by 75,000 b/d in February and 120,000 b/d in March, bringing the total easing over three months to 695,000 b/d after the UAE spearheaded a revised increase of 500,000 b/d for January. The increases are actually very narrow ones; there were no adjustments for quotas for all OPEC+ members with the exception of Russia and Kazakshtan, who will be able to pump 195,000 additional barrels per day between them. That the increases for February and March were not higher or wider is a reflection of reality: despite Covid-19 vaccinations being rolled out globally, a new and more infectious variant of the coronavirus has started spreading across the world. In fact, there may even be at least of these mutations currently spreading, throwing into question the efficacy of vaccines and triggering new lockdowns. The original schedule of the April 2020 supply deal would have seen OPEC+ adding 2 million b/d of production from January 2021 onwards; the new tranches are far more measured and cognisant of the challenging market.

Then Saudi Arabia decides to shock the market by declaring that the Kingdom would slash an additional million barrels of crude supply above its current quota over February and March post-OPEC+ announcement. Which means that while countries such as Russia, the UAE and Nigeria are working to incrementally increase output, Saudi Arabia is actually subsidising those planned increases by making a massive additional voluntary cut. For a member that threw its weight around last year by unleashing taps to trigger a crude price war with Russia and has been emphasising the need for strict compliant by all members before allowing any collective increases to take place, this is uncharacteristic. Saudi Arabia may be OPEC’s swing producer, but it is certainly not that benevolent. Not least because it is expected to record a massive US$79 billion budget deficit for 2020 as low crude prices eat into the Kingdom’s finances.

So, why is Saudi Arabia doing this?

The last time the Saudis did this was in July 2020, when the severity of the Covid-19 pandemic was at devastating levels and crude prices needed some additional propping up. It succeeded. In January 2021, however, global crude prices are already at the US$50/b level and the market had already cheered the resolution of OPEC+’s positions for the next two months. There was no real urgent need to make voluntary cuts, especially since no other OPEC member would suit especially not the UAE with whom there has been a falling out.

The likeliest reason is leadership. Having failed to convince the rest of the OPEC+ gang to avoid any easing of quotas, Saudi Arabia could be wanting to prove its position by providing a measure of supply security at a time of major price sensitivity due to the Covid-19 resurgence. It will also provide some political ammunition for future negotiations when the group meets in March to decide plans for Q2 2021, turning this magnanimous move into an implicit threat. It could also be the case that Saudi Arabia is planning to pair its voluntary cut with field maintenance works, which would be a nice parallel to the usual refinery maintenance season in Asia where crude demand typically falls by 10-20% as units shut for routine inspections.

It could also be a projection of soft power. After isolating Qatar physically and economically since 2017 over accusations of terrorism support and proximity to Iran, four Middle Eastern states – Saudi Arabia, Bahrain, the UAE and Egypt – have agreed to restore and normalise ties with the peninsula. While acknowledging that a ‘trust deficit’ still remained, the accord avoids the awkward workarounds put in place to deal with the boycott and provides for road for cooperation ahead of a change on guard in the White House. Perhaps Qatar is even thinking of re-joining OPEC? As Saudi Arabia flexes its geopolitical muscle, it does need to pick its battles and re-assert its position. Showcasing political leadership as the world’s crude swing producer is as good a way of demonstrating that as any, even if it is planning to claim dues in the future.

It worked. It has successfully changed the market narrative from inter-OPEC+ squabbling to a more stabilised crude market. Saudi Arabia’s patience in prolonging this benevolent role is unknown, but for now, it has achieved what it wanted to achieve: return visibility to the Kingdom as the global oil leader, and having crude oil prices rise by nearly 10%.

Market Outlook:

  • Crude price trading range: Brent – US$55-57/b, WTI – US$51-53/b
  • Global crude oil benchmarks jumped several levels to a new higher range, as Saudi Arabia supplemented OPEC+’s decision to allow a minor increase in supply quotas for February and March with a massive 1 mmb/d voluntary cut over the same period
  • There are signs that the elevated level of crude pricing is tempting American drillers back to work, with Baker Hughes reporting a massive 67-site gain in active rigs over the first week of 2021; this will present another headache for OPEC+ when it comes time to debate the supply deal path forward for April and beyond
January, 14 2021