In this issue, we hear from two pillars of the industry, one an internationally recognized scholar with 30 years in academia, and the other a senior corporate executive with more than 25 years’ E&P experience. Professor Larry W. Lake describes the full oil-price cycles in our industry that he has witnessed firsthand, discussing how best to deal with them and the possible benefits they may have for our careers. Rubén Caligari, Senior Adviser, Knowledge Management, Petrobras, is optimistic about the future, despite the current downturn. He reminds us of the long-term growth prospects for global energy demand and the wide-ranging challenges we will face to fulfill it. – Luis Ayala, Andrés Zoldi, and James T. Edwards, Editors, Pillars of the Industry
“I’ve been rich and I’ve been poor. Rich is better.”
That line, variously attributed to Mae West, Sophie Tucker, and Mel Brooks, speaks to cycles in life. And in a career. I have worked for 35 years, long enough to have seen a full cycle, peak to peak and then some, in the hydrocarbon producing industry. Allow me to share some observations gleaned from this experience.
Longevity can breed cynicism, and I certainly have my share—associated mostly with the inability of our industry to understand or even acknowledge that there are cycles. Or when rarely it does acknowledge them, it always seems to be someone else’s fault: stock prices; stock analysts; costs; oil prices; that ever-available excuse, OPEC; or, most recently, the economy and the financial crisis. But, depending on the circumstances, these are all good reasons and inevitable. So the challenge is to manage our careers through the cycles: survive during the downs, prosper from the ups, and above all, grow personally and professionally. It could hardly be more timely or instructive to talk about the cycles and how to deal with them.
First, we should acknowledge the obvious. All technically based industries have cycles (see dotcom and investment banking) so they are impossible to avoid. Well, you could hedge. My former colleague Mark Miller said that the safest bet was to be an aerospace/petroleum engineering double major because when one was up, the other was down. However, don’t believe anyone who, living in the valley (at the peak) says that things simply will continue to decrease (increase). It is always a question of timing.
As times change, so do management attitudes. When times are good the industry will say, “People are our most important asset.” When they are bad, it is, “You are responsible for managing your own career.” Even here, rarely is there a desire to take a broad view of the ups and downs.
A second point is that you can benefit from cycles. It is easy to see the potential when times are good, the proverbial rising tide lifting all. But it is also true when times are bad because such times force re-evaluation of opportunities, and more personal growth. Former students occasionally tell me that being laid off was the best thing that happened to them because they made a change that they never would have made had times remained good. All of those production companies newly founded in the past 15 years are firsthand evidence of opportunity taken during down times.
Obviously we are responsible for our own careers. Here are some highly personal pointers for exercising that responsibility.
Thirty-five years ago when I began with Shell (my true graduate experience) as a chemical engineering PhD, I did not know the difference between upstream and downstream. It was all learning for me from day one, and my choice of career proved serendipitous. I would not change a thing. I cannot conceive of a more interesting set of technical problems; nor can I image a group of more highly motivated and intelligent professionals. None of my classmates that have gone into other fields have been exposed to work as interesting as mine. Few have had the opportunity to see the world that I have. Flying into a country outside the US, even if only for a few days, causes dramatic changes of perspective. When asked by incoming students why they should go into petroleum engineering my best answer is, “because we have the most interesting work.”
Part of the reason for the interesting work is diversity. We are at core a single-product industry: hydrocarbons. But confronting nature, geology, economics, and uncertainty daily requires an immense skill set. Problems are being tackled by engineers (petroleum, chemical, civil, and mechanical mainly), geologists, economists, biologists, and managers from all over the world every day. Our work is interesting because solutions are difficult.
Drake’s Folly was drilled in western Pennsylvania in 1859. This was only 2 years before the start of the American Civil War and not too long after the aforementioned Chopin was performing. This means that our industry is 150 years old. Few other industries have been around this long. The longevity is a mark of the importance of hydrocarbons to our way of life, especially to transportation. There is no reason to expect the challenges to be any less significant or the work to be any less interesting in the future, cycles or not.
Larry W. Lake is a Professor in the Department of Petroleum and Geosystems Engineering at the University of Texas, Austin, where he has taught for more than 30 years. Lake has won numerous awards, is a member of the US National Academy of Engineers, and is an internationally recognized scholar, who has taught industrial- and professional-society short courses in enhanced oil recovery and reservoir characterization around the globe. He is the author or coauthor of four textbooks and the editor of three bound volumes, including the latest edition of the SPE Petroleum Engineering Handbook. Lake has supervised more than 30 PhD students, with many of them now in leading positions within academia or industry. He holds BSE and PhD degrees in chemical engineering from Arizona State University and Rice University.