Pillars of Industry

Turbulent, Exciting Times . . .

Rubén Caligari, Senior Adviser, Knowledge Management, Petrobras

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

Worldwide, people, large corporations, and family businesses alike are being shaken by one of the most complicated scenarios in a long time. Energy supply is in the limelight and the volatility of prices is triggering all market alarms. For us, responsible citizens and E&P professionals, these are undoubtedly challenging times, and in particular, students of E&P-related disciplines and young professionals (YPs) are getting misleading, contradictory messages. From the perspective of my experience, and being as always optimistic, I would like to stress a few certainties and share them with those younger ones who haven’t gone through so many crises.

Of course, the price of West Texas Intermediate  crude oil is highly influenced by the financial markets, but it is the fundamental economic components—supply and demand—that lie at its basis. Our industry produces energy, an input essential for economic growth and social development, and in spite of periodic pulses in the economy, oil and gas demand can only increase in the long run. Alternative energy sources currently under development and gradually incorporated, according to regional and specific patterns, are only supplementary, at least for now.

Even though the pre-eminence of hydrocarbons that arose during the 20th century—the “century of oil”—will diminish, there’s no doubt that the transition towards an economy based on a more balanced energy matrix will be gradual. Hydrocarbons will continue to be essential for a period longer than the professional career of the readers of this magazine. This conclusion is strongly supported by current  International Energy Agency estimates that forecast a 50% increase in global energy demand by 2030, with hydrocarbons still accounting for more than half of total supply.

From the supply side, we all know that natural resources are becoming more difficult to find and produce and that the declining rate of giant producing fields seems to be higher than predicted. However, there are grounds to be relatively optimistic. Both the drive of a steady medium-term demand and related energy prices and innovative E&P technologies that are constantly being incorporated into the market have been key factors in field discoveries far beyond the geographic, geologic, and technical frontiers of current fields—revealing an industry that understands the magnitude of the challenges and is well prepared to face them. Besides recent discoveries, plus the ones that will take place in future and the increases in recovery factors in currently producing reservoirs, there are two highly promising frontiers in the future of energy supply—energy efficiency and the growing incorporation of hydrocarbons from nonconventional sources.

The first one is, undoubtedly, our best chance to reduce global consumption and emissions, without sacrificing social welfare, and evidence shows that there are clear opportunities for improvements in this area in the short term. As for nonconventional hydrocarbon resources, there are oil and gas shales and oil sands. Furthermore, new technologies for natural gas monetization and extra heavy oil upgrading will add to the unconventional resource base. Large development projects for unconventional hydrocarbons will be undertaken in at least several locations around the world, although current economic conditions may defer some of these projects for a time. Nonetheless, we will witness their gradual incorporation in the global supply.

Now, even though the existence of a sustainable market and the development of new technologies are indispensable conditions, these are neither the only nor the most important ones. A consensus currently exists on the paramount role of knowledge as the only key differential and critical success factor. As knowledge is directly related to people, this is the concept supporting the usual definition of human resources as the most valuable asset of organizations.

This is especially true for E&P. Our industry is based on complex, specialized, permanently renewed knowledge. Its multidisciplinary nature and social exposure contribute to a challenging, complex scenario. In fact, technologies that were unknown, or were in preliminary experimental stages when our generation graduated from university, are nowadays widely applied. In every industry discipline, the increasing pace of technological progress leads to extremely specialized professionals—requiring a gradually larger effort to keep up to date in each specific field of interest. Simultaneously, higher-quality solutions based on sound engineering principles are required to adapt to a more demanding business environment, where an increasing number of new stakeholders appears, including government agencies, communities, and nongovernmental organizations. The types of new positions introduced recently in organizations reflect this complexity—Community Affairs, University Partnerships, Energy Efficiency, Knowledge Management, and others that, like these, might have seemed incomprehensible just a decade ago.

Additionally, the time required for a new technology to complete the cycle from R&D to full field implementation is expected to become gradually shorter. However, it is also true that the competitive advantage that goes to the technology developer is becoming more difficult to sustain, as operators everywhere who are eager to improve and search for best practices will massively adopt a given technology. The only remaining competitive advantage will be the knowledge generated in the technology development process, more permanent in organizations well suited to capture and retain it by providing talent-friendly environments.

Global demand for more, better-prepared petroleum professionals will continue, although probably at a slower pace for a time because of the economic downturn. There still will be a need to fill the generational gap, as older professionals leave the workforce, and new competencies will be needed. YPs will be essential to meet these needs. Besides being active members of teams developing and managing new technologies, they will have to interact with new disciplines that are increasingly more involved in E&P projects, establish strong ties with other active stakeholders and, above all, be flexible towards continuous learning and reorienting their professional profiles as new challenges arise.

Tools and procedures for collaborative work that organizations are increasingly adopting for optimizing resources in a setting of talent scarcity will provide qualified technical help and support for career improvement. At the same time, this will require from the younger an open-minded attitude and extra commitment to results. These procedures place a premium on direct knowledge transfer by means of tutoring and mentoring, currently in practice in many organizations.

During our last SPE ATCE in Denver, the special session on petroleum engineering education confirmed that these issues are on the agendas of universities and training organizations, as well as most E&P companies. The need for closer cooperation between industry and academy has been highlighted, and valuable resources are being directed towards R&D, opening opportunities for those YPs who choose academic careers. 

In looking at the E&P industry today, it is impossible not to notice the high responsiveness of YPs to the debate on the environmental issues surrounding hydrocarbon production. Awareness of the need to control the environmental impact of human activity is becoming globally irreversible. Specifically in E&P, new measures are achieving tangible results in every segment of the industry. Improvements in energy efficiency, as well as the selection of clean, low-footprint technologies—including seismic registration, green drilling fluids, oil chemicals, produced-water disposal, compact and subsea facilities, and many others—are regular oilfield practices nowadays, and we as an industry can pride ourselves on them.

Of course, there are more opportunities to improve. A leading example is the new technologies for carbon capture and sequestration (CCS), now under development and feasibility analysis. CCS most likely will be mandatory in the future. In the environmental area, YPs and those joining the industry in the future will have responsibilities, as well as opportunities for career development, and these individuals certainly will be prepared to take them.

For those carefully evaluating careers and opportunities, the role of SPE couldn’t be more important, including such directly related initiatives as the support of student chapters worldwide and the different programs and events with wide professional participation. In every place where I’ve been over the last 25 years, working in several countries, I’ve seen our JPT magazine on people’s desks. Our technical discussions always have referred to SPE papers; reserves calculations follow SPE standards, and so on.

SPE provides a unique platform of common codes and references, acting as a support for our entire careers—irrespective of changes in country, company, or discipline. Additionally, especially for those of us who have been SPE officers, volunteering is an excellent opportunity to strengthen competencies like teamwork and leadership and, even more than that, to understand and experience the extraordinary multiculturalism of our industry—as one establishes long-lasting, valuable professional relationships and is exposed to new opportunities for professional growth.

A final, personal remark. Many times, working at a remote wellsite in the tough Patagonia or making reserves calculations under the pressure of ever-tighter schedules, I have wondered about my professional career. Every time, in spite of occasional difficulties, I have felt that when I decided on an E&P career, I made the right choice. In these turbulent, challenging times, I have no doubts that, having a long way ahead, YPs will find even more challenges and rewards.

Rubén Caligari is Senior Adviser, Knowledge Management (KM), Petrobras, Rio de Janeiro. He has more than 25 years of experience in exploration and production , including engineering, field development, mature fields revitalization, project evaluations and KM, in Argentina and several other Latin American countries. He is a petroleum engineering graduate with honors from Universidad Nacional de Cuyo, Argentina, and alumnus of the University of Michigan Business School. Caligari served on the boards of SPE Patagonia and the Argentine Petroleum Sections and now serves as SPE Regional Director, Latin America & Caribbean.