OIL AND GAS: TO BE OR NOT TO BE IN THE INDUSTRY?

MARCH 2016

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OIL AND GAS: TO BE OR NOT TO BE IN THE INDUSTRY? 06

US PRESIDENTIAL CANDIDATE BERNIE SANDERS IS TONE DEAF ON FRACKING 08

CONSERVANCY GROUP, INDUSTRY SPANS ENVIRONMENTAL GAP WITH SITING TOOL Empowering People in Oil and Gas

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JULY 2015 CONTENTS

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Oil and Gas: To Be or Not to Be in the Industry?

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US Presidential Candidate Bernie Sanders Is Tone Deaf on Fracking

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Conservancy Group, Industry Spans Environmental Gap with Siting Tool

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Asian NOCs: Not Immune to Pressure of Reducing Staff

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MARCH 2016 EDITION

ASST. EUROPEAN EDITOR

RAndreasEExarheas A

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CAREERS EDITOR

MANAGING EDITOR

Valerie Jones

Saaniya Bangee

APAC EDITOR

DESIGNER

Chee Yew Cheang

Marcus Tenette

SENIOR EMEA EDITOR

CREATIVE DIRECTOR

Jon Mainwaring

Eric Duenas

SENIOR EDITORS

VP CONTENT

Deon Daugherty Karen Boman

Bertie Taylor

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MARCH 2016

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Oil and Gas:

MARCH 2016


To Be or Not to Be in the Industry?

Valerie Jones, Careers Editor

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@rz_careernews

he environment of the oil and gas industry’s up-

among minorities and women. Oil and gas companies have teamed

stream sector has been something of a horror

up with schools and educators to do so.

movie for the past year-and-a-half. Layoff num-

And then there’s the many veteran oil and gas workers who are

bers are in the hundreds of thousands with possibly more to

retiring or choosing to leave the industry, creating the need for more

come. In particular, oilfield services companies have suffered

millennials to step up and fill roles as the backbone of the U.S. work-

tremendously.

force transitions. Once the market recovers, new discoveries are

We hear, see and read the news every day. The industry’s in a downturn … and we don’t know where the bottom is. But no matter how many times I read or write about the current state of the industry, there’s a certain cliché phrase that always seems to come up: “It’s cyclical.”

made and drilling resumes, the industry hiring will pick back up – with a good chance many laid off employees will be given the opportunity to return to their jobs. But are burgeoning oil and gas professionals receiving mixed messages? They’re told in school how much they’re needed in the in-

It seems as though those two words have served as a sense

dustry, and yet many workers living through the downturn are saying

of reasoning – a reminder that, in all honesty, this too shall

run for the hills. Who’s right and who’s wrong? That’s not for me to

pass. But, try and tell that to 20-year petroleum engineer who

determine. However, one consistent message seems like it would be

got laid off six months ago and has yet to find another job in

the most beneficial. In any conversation with a student or worker

the industry. Knowing an industry is cyclical doesn’t mean one

early in their career regarding the oil and gas industry (I’m talking

is immune to sour feelings when the industry is in the unfa-

parents, professors, recruiters and industry vets), two truths should

vorable part of the rotation.

be stressed: 1) the reality of the current market – people are losing

Despite the current oil glut, there are some great reasons why the oil and gas industry is still a good career choice. And

jobs, drilling contracts are getting cancelled, rigs are being stacked, and 2) it’s cyclical … and the market will recover.

these are the reasons academia is trying to reiterate to young

It would be a disservice, misleading and downright unrealistic to

students. A solid background in STEM (science, technology,

describe the oil and gas industry in any other way. As long as there’s

engineering and math) is often a precursor to a career in the

work in the field, there will be a need for workers, whether that’s

oil and gas industry. For years now, the United States has

today, tomorrow or next year.

made great efforts to increase the number of STEM graduates

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MARCH 2016


US PRESIDENTIAL CANDIDATE

BERNIE SANDERS IS TONE DEAF ON FRACKING Deon Daugherty, Senior Editor

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or all of the attention heaped on the shenanigans of the Republican contest to name a presidential nominee, the Democrats have escaped from crit-

icism relatively unscathed. At least on the issues. Certainly on oil and gas concerns. Let’s give them a moment, shall we?

@Deon_Daugherty

Anderson Cooper: A number of Democratic governors say it can be done safely and it’s helping their economy. Are they wrong? Bernie Sanders: Yes. *Wild applause from the crowd. Former Secretary of State Clinton’s response probably

During the Democrats’ debate March 6 in Michigan, an ea-

didn’t surprise anyone. She’s been holding onto the coattails

ger University of Michigan student laid out her view of frack-

of the Obama Administration, which many in oil and gas be-

ing as a perilous practice. Then she asked the candidates

lieve is attempting to regulate the industry to death. But at

if they supported fracking. From there, the dialogue went

the very least, she gave the appearance of thinking about the

something like this:

issue and considering its relevance to locals.

Hillary Clinton: I don’t support it when any locality or any

The senator from Vermont? Not so much.

state is against it. I don’t support it when the release of methane

It’s easy to give a pithy, crowd-pleasing response when you

or contamination of water is present. I don’t support it unless

refuse to delve into the details. But similar to Sen. Sanders’

we can require that anybody who fracks has to tell us exactly

other grandiose plans – each lacking a crucial component of

what chemicals they are using. So by the time we get through

“Where’s the money?” –telling those governors in oil-pro-

all of my conditions, I do not think there will be many places in

ducing states not to depend on fracking comes with a cost.

America where fracking will continue to take place. *Subdued recognition from the crowd. Bernie Sanders: My answer is a lot shorter. No, I do not support fracking.

According to the National Conference of State Legislatures, the cost could be around $846 billion – the total state tax collections during the heyday of the energy renaissance in 2013. Oil-and-gas producing states depend on that cash for things

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MARCH 2016


like public schools, criminal justice and health care.

logic – wherever you find yourself on the political spectrum – is

Sanders’ has wooed mostly young, mostly white Americans

that even the president of the United States cannot unilaterally

with his pie-in-the-sky plans for free healthcare, free college

raise taxes or otherwise alter the tax code. The Constitution’s

and now, a world free of fracking. But his fracking position

checks-and-balances system precludes one politician from

would make that wish list hard to fund because, kind-hearted

running amok. To that end, ask Obama what it’s like to try to

as they probably are, those doctors and nurses, college pro-

order around a Republican Congress.

fessors and the utility companies that turn on the campuses’ lights, expect – probably, even need – to be paid. On the few occasions he’s been pressed to provide details of how his ideas will be funded, Sanders is consistently brief.

In the words of the possibly immortal Rolling Stones, “You can’t always get what you want.” Good luck getting a rich-people tax through Majority Leader Mitch McConnell’s Senate and Speaker Paul Ryan’s House.

He will tax the wealthiest Americans. The problem with that

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MARCH 2016


Conservancy Group, Industry Spans Environmental Gap with Siting Tool Karen Boman, Senior Editor

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@KarenBoman

ust like death and taxes, the only other certainty

While the stringent regulations and protests by environmentalists aren’t

in life for the oil and gas industry appears to be

surprising, one thing that surprised me recently was new software tool be-

increased environmental regulations and pro-

ing developed to aid drillers and midstream companies. It’s not the tool, but

tests from environmental groups about their activities.

rather, the fact that it’s being developed by a global conservation organiza-

From the Obama administration’s bilateral agreement

tion, that caught my eye.

with Canada that will seek to reduce methane emissions

The Nature Conversancy’s (TNC) new tool, EnSitu, an ARcGIS-based an-

from the oil and gas industry, to the Bureau of Offshore

alytical software tool, allows oil and gas companies to identify surface in-

Energy Management’s (BOEM) decision to update off-

frastructure layouts within their acreage that let them balance development

shore air-quality monitoring regulations, oil and gas com-

costs and environmental concerns. The idea for the tool, which has been

panies not only must grapple with low oil prices, but with

in development since 2013, was born out of discussions between TNC and

increased regulations. BOEM’s recent central and eastern

Marcellus shale players, according to the Marcellus Shale Coalition Quarter-

Gulf of Mexico lease sales drew protestors calling for an

ly Magazine’s Winter/Spring 2016 edition.

immediate end to offshore leasing and for a clean-up of Gulf of Mexico offshore infrastructure. Oil and gas operators in Pennsylvania’s Marcellus

Four Marcellus operators participated in development of the software tool, along with TNC, the University of Tennessee at Knoxville and the Cadmus Group Inc. The tool was officially leased for beta testing in January 2015.

shale play are also facing new regulations, which were

According to the Marcellus Quarterly, TNC’s goal with EnSitu is to provide

finalized earlier this year by the state’s Department of

operators with siting options for surface infrastructure that avoids and min-

Environmental Protection. These new regulations include

imizes potential impacts on nature while accounting for financial and other

more stringent rules around permitting, waste handling,

constraints.

water restoration and identifying old wells.

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MARCH 2016

“When made early in the development planning process, improved siting decisions can be a valuable investment in risk reduction and regulatory compliance,” the Marcellus Quarterly reported. EnSitu can generate alternative layout scenarios for surface infrastructure, using a sophisticated optimization algorithm and parameters set by the user, including pad dimensions, number of wells per pad and site-specific factors such as landowner preferences. It also can incorporate regulated setback distances in all states with shale operations currently within the Appalachian Basin, and include existing roads that could be improved and used for site access. This is typically less expensive than building new access roads. It also can conduct risk-ranking and trade-off assessment of various environmental and cost factors, incorporating but also going beyond regulatory requirements to reduce over-

saying that environmental regulations will add costly, unnecessary regulations, the latter saying that regulations don’t go far enough. I don’t think the conversation should be an either-or discussion – we need both. Unfortunately, that’s an idea that has never seemed to catch on. Seeing a conservation group working with the oil and gas industry makes me wonder if there’s hope that the two groups can bridge the conversation gap.

all risk. TNC is seeking patent and trademark protection for EnSitu. According to the Marcellus Quarterly, interest has been seen not only among Appalachian Basin operators, but by operators in other shale plays within the United States and internationally. As a result, TNC is now seeking an appropriate partnership to grow and maintain the tool for widespread use. These steps will be implemented in the coming months. Having covered oil and gas for a number of years, I’m quite familiar with the rhetoric exchanged between the oil and gas industry and environmental groups – the former

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MARCH 2016


Asian NOCs: Not Immune to Pressure of Reducing Staff Chee Yew Cheang, APAC Editor

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f you thought that only employees working for publicly listed oil and gas companies in the developed world were vulnerable to job losses in an industry downturn,

just take a look at the signs that are now emerging in Asia, where national oil companies (NOC) are the dominant employers. Last month, local media reports indicated that an oil and gas joint venture partially owned by a state-owned firm in Vietnam – one of Southeast Asia’s largest oil and gas producers after Indonesia and Malaysia – intends to trim its existing workforce by approximately 29 percent. Vietsovpetro, the 51-49 joint venture between national oil company Vietnam Oil and Gas Group (PetroVietnam) and Russia’s OAO Zarubezhneft respectively, currently employs around 8,000 staff, according to its website. The joint venture, established in 1981 to explore and produce Vietnam’s offshore petroleum resources, had already retrenched 600 employees over the past two years due to the downtrend in global oil prices that commenced in the second half of 2014. Staff strength is expected to fall to less than 5,000 over the next five years if Vietsovpetro follows through on a proposal to reduce its manpower pool as mooted by Zabubezhneft as part

@cheeyew_cheang of the joint venture’s ongoing restructuring efforts, company CEO Tuh Thanh Nghia told Nang Luong Moi, a newspaper of the Vietnam Petroleum Association, as quoted in Thanh Nien News Feb. 22. The restructuring effort is particularly urgent as Vietsovpetro is facing a budget deficit of around $230 million, Nghia said in January, adding that the company’s financial situation has not improved despite numerous efforts to cut costs, including shutting down two of its subsidiaries and reducing 400 jobs. According to Vietsovpetro’s CEO, the joint venture – which will be “running out of money” by the end of April – has suggested to its parent firms to shut down some of its oil fields, particularly those with high operating costs. However, the idea was rejected by PetroVietnam and Zarubezhneft. Still, the state-owned company may have a change of heart about Vietsovpetro’s proposal to shut down production at some existing fields, especially if oil prices fall below $30 a barrel – a level that was breached on a few trading sessions in mid-January, PetroVietnam’s Vice President Do Chi Thanh said, as reported by Thanh Nien News Feb. 1. Previously, Asian NOCs, such as Thailand’s PTT Exploration and Production Co. Pcl (PTTEP) and Malaysia’s Petroliam Nasional Berhad (PETRONAS) revealed a preference to retain permanent staff even as oil prices slipped lower.

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MARCH 2016


However, after reporting a 56 percent annual decline

“Exhaustive efforts are ongoing to redeploy affected

in net profit for 2015, the Malaysian NOC announced the

employees. PETRONAS will further embark on a separation

following day a “new business operating model for better

exercise for these employees as needed, which is expected

business efficiency, resilience and sustainability amidst a

to be completed over the next six months,” the company

challenging time for the oil and gas industry.”

added.

“The new structure – designed for a flatter, leaner and

Meanwhile, what’s happening in Asia on the job cuts is

more efficient business operating model – is a part of delib-

symptomatic of a bigger problem facing the global oil and

erate, sequential measures that PETRONAS is undertaking

gas industry. As low oil prices continue to cause a shrink-

to better navigate the organization through tough external

age in activities, companies are left in a quandary regard-

environments,” the firm said in a March 1 press release.

ing their operational needs, especially manpower.

According to PETRONAS, the move will result in redundancies of under 1,000 positions.

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