Upping the Ante on Technology and Leadership in Challenging Market Conditions: Part 1
Science and engineering is the lifeblood of my career and a passion since sixth form. It was my teacher who first encouraged me to enroll in engineering, which later led me to qualify with a degree in chemical engineering.
My first job was with John Brown E&C in London where I worked on projects in the oil and gas industry. After a few years, my job with BP took me from the engineering contracting sector to a role focused on project and facilities engineering. My next career step was joining the then newly founded Genesis Oil & Gas, moving to Aberdeen and then to Houston, by which time the company was owned by Technip and later I became Technip’s US chief executive officer.
While it is true that the mistakes you make along the way help you learn and progress in life, I can say that I have truly gained a lot personally and professionally from the journey I have made and the people I have worked with. When you start out in the world of work, knowing how to take your educational knowledge to the market place and learning how to apply it in different ways in different situations is critical to your success in life.
I believe that harnessing and sharing expertise and talent, which exists within any business, is a fundamental way that every person can use to enhance the service and support a company provides its clients.
At Lloyd’s Register Energy, I am proud of our employees because thanks to their team work and efforts, our business won the 2014 British Quality Foundation award for our Global Energy Transformation program, which has driven positive change inside and outside of our business.
Challenges for the Industry
Oil prices are one of the most pressing challenges of our industry today. The industry is precariously balanced between long-term success and failure, and the choices that we make in the next few years will determine whether it has a future or not. Technical innovation can no longer be an afterthought for business or government; it must be central to any organization’s strategy for sustainable growth and market leadership.
My appointment as chairman of the Industry Technology Facilitator (ITF) group could not have come at a more interesting time for technology development and I look forward to ensuring that ITF continues to play a fundamental role in helping to advance the implementation of new technologies in the energy industry.
Even in an industry as regulated as offshore oil and gas exploration, there is always room for improvement. Identifying these opportunities is best accomplished by adopting a holistic, rather than prescriptive, set of safety regulations that focus on technology as well as training, taking into account the roles that equipment, systems, processes, and people play in building and maintaining a safety culture.
Recently, we have seen the debate gather momentum on how the industry needs to improve enhanced oil recovery, with aspirations of moving from 40% to 70% on recoverable reserves. Our global research (the Lloyds Register Energy Technology Radar survey) has helped to draw out these key issues and trends from personnel in the oil and gas industry:
- Innovation is drawing on a range of technologies rather than any single breakthrough.
- A variety of technologies that look set to have a high impact in the coming years are related to extending the life of existing assets—enhanced oil and gas recovery.
- The near-term effect of automation on remote and subsea operations is identified as firms seek to cope with challenging environments.
- High-pressure/high-temperature drilling and multistage fracturing are also expected to have a major impact, but are expected to be fully deployed from 2020.
Going forward, technology will be an enabler. If you look at the business challenges we face today—the issues around safety, environment, and costs—you realize that the industry needs to embrace technology even more. Collectively, we need to look harder at technology to help solve many of those issues.
The Effect of Oil Price Drop
The current price environment is very much like a severe stress test to determine which companies have their finance and operations in order. Those that spent too much to lease equipment and plant to drill or have high operating costs are most likely to suffer. If prices drop lower and stay there into next year, providers of drilling services and oilfield gear will need to cut prices to retain customers—moves that will help preserve oil company margins; operators will demand higher levels of integrity from their contractors on equipment, systems, and personnel.
Crew competence and specific training to reduce downtime and the heavy costs associated with equipment failure will be of critical importance to tomorrow’s winners. Manufacturers will have to review their equipment designs for functionality and failure and make adjustments based on new requirements.
One of the difficult questions to address is how to find the best strategy to remain relevant and hedge any job-loss risk during downturns. One of the key factors is competition. Oil and gas companies affected by the oil price drop have strong incentives not to pullback on drilling activities. These companies will be reluctant to let go of their core talent and especially their highly trained and experienced wellsite employees.
Another issue is how to win the war for talent in the next decade. Increasingly, work is ceasing to be a place and more a state of mind. For large numbers of people it can happen at any time of day and in any place. Executives who understand this and equip their organizations to survive in this new world will be the ones still leading successful oil and gas companies in the next 30 years.
How much inflation do I believe is baked into current oilfield service costs? How much room do producers have to lower their capital and operating costs in the near term? You can answer that question by asking: what will be the global demand for power? If there is a consistent demand for more power, there will be demand in the energy sector to deliver sustainable and robust energy supply through engineering expertise and independent technical assurance. If the present conditions hold, then efficiencies have to be looked at without downgrading on safety issues.
Outlook for Young Professionals
The use of data is going to change how we do things in the future. But it will mean new ways of working, new collaborations, and our thinking about different disciplines. Chemical engineers will work with civil and electronic instrumentation engineers, working with mathematicians looking at algorithms and using statistical analysis. There are different mindsets across the industry and it is going to require very different thinking to create the smart and sustainable oil and gas industry of tomorrow’s world.
Our new generation of engineers, in particular, have had experiences as customers, which influence their expectations in other business dealings, such as their interactions with their employers. This means that digital communication capabilities are becoming a key weapon in recruiting and retaining talent as well. Gone are the days when an employee enthusiastically received their new work laptop and mobile phone. Today’s employees more often than not have more information communications technology at their personal disposal than they are given at work and information technology departments are increasingly seen as a limitation to their needs rather than an enabler.
Organizations must understand the best way to enhance communication capabilities for their employees. For most companies, this will not involve handing out tablets or iPads to each employee, but it should involve, at a minimum, setting up internal social networking and knowledge-sharing sites. This approach will also increase productivity as processes previously requiring several stages are completed in one or two stages.
Likewise, organizations need to look at the “complete” package which they offer workers. Reward is part of this—but what employees are engaged with,the environment in which they work, and the opportunities for growth and development are fundamental. There is a clear trend that the engineers of tomorrow are less purely motivated by the sole financial rewards, and the ethics and the ethos of an organization are equally important.
John Wishart leads the energy business of Lloyd’s Register. Before joining Lloyd’s Register in 2011, Wishart was the president of GL Noble Denton. He began his career in technical, project, and leadership roles in the upstream and downstream sectors, first with John Brown and then with BP. He later joined Genesis Oil & Gas Consultants, which was later bought by Technip, and Wishart became the president and chief executive officer for Technip. In 2014, he was appointed as the chairman of the Industry Technology Facilitator, a not-for-profit organization, driving technology development and collaboration within the oil and gas industry.
12 February 2018