Making Megaprojects Successful in the 21st Century
The oil and gas industry is a truly global enterprise that provides opportunities to work in a high-tech industry, and to travel the world working on projects that have the ability to change lives, communities, economies, and countries.
I grew up in Aberdeen, Scotland. As a youngster, I experienced the period of North Sea discoveries and initial development, the profound change this brought to the city, and also the opportunities that have been created for individuals and the region. At the time of the first discoveries, Aberdeen was a primarily rural, agriculture, and fishing town. The initial development of North Sea oil brought an influx of American workers to support development and fill skill gaps that were not available locally. The expat workers initially built their own housing, set up their own schools, and effectively lived separately. However, over time this changed, with more local staff becoming involved and expat workers integrating with the local community. Some decided to make Aberdeen their home. The local skill base gradually developed to the point that Aberdeen is now a global center of excellence in oil and gas, providing ongoing opportunities for thousands.
The initial North Sea development projects were recognized at the time as phenomenal technological achievements. The development of the technology required to work in North Sea conditions was compared to the innovation required to put a man on the moon.
Similarly, shortly after I arrived in Australia I struck up a conversation with a Shell expat about the initial development of the North West Shelf (NWS). He was a very experienced engineer who had worked in numerous international locations, saying to me that “you are very lucky if you get to work on the NWS in your career.” He also went on to share the pride he felt being involved in the scale and difficulty of the initial NWS project.
This combination of the opportunities available and a desire to work on the technical challenges involved in making oil and gas developments real—from discovery to production—led me into the oil industry, and continues to provide enjoyment and satisfaction almost 30 years later.
Challenges for the Industry
There is no doubt that the current oil price cycle is a significant short-term challenge which will require discipline and careful management to navigate. It may be very painful for some people as companies pursue layoffs and cost-cutting initiatives. However, I am a strong believer in learning from history, and throughout my career the boom-and-bust cycles have occurred almost regularly. The exception being the last 10 years of virtual stability.
It is clear from past bust cycles that the oil and gas industry has needed to innovate and develop technology to continue to develop resources and meet the world’s growing energy demand. This becomes more critical in a low price environment. The SPE website, under the history of petroleum technology, documents the innovations over time. In the course of my career, extended-reach drilling, 3D seismic, deepwater development, and shale oil, to name just a few, are game-changing technologies that have significantly changed the industry, bringing down the costs of finding and developing oil and gas resources, and accessing new opportunities to replace reserves. The future challenge is to continue to adapt to circumstances and for the current generation of young engineers to be as innovative and creative as their predecessors.
Equally important is that the current leaders of our industry provide the environment where innovation will continue to flourish. Continuing to attract the best and brightest young talent into science and engineering disciplines is a necessary first step. Further to that, recruiting these bright young minds into the oil and gas industry is essential to the long-term health of the industry.
I have been lucky enough to work on a number of development projects including quite a few that make the megaproject category. These projects are fascinating to work on. The scale is so large that they can have influence over national political and economic agendas, significantly increasing the challenges associated with getting alignment on development plans and project approvals. The magnitude of the costs can be immense, with the project decisions impacting a wide variety of areas.
These megaprojects therefore create an environment in which they gain a momentum of their own, and are often driven by external factors. Whereas subsurface maturity and resource base is often (per best practice) able to dictate the timeline in smaller projects, it tends to be only one of many competing drivers in a megaproject. This requires a very clear understanding as early as possible of reservoir complexity and degree of uncertainty and risk in the subsurface, which can fit within the broader decision-making context.
For staff, this also requires the confidence and communication skills to say no at the right time when being pushed to meet a schedule-driven opportunity. It also requires the judgement to know when it is acceptable to move forward without everything being mature, as being overly conservative can hold back progression of opportunities that other stakeholders have been striving to develop. Megaprojects require close integration with a variety of functions, both technical and nontechnical, to work together to successfully align the maturity and milestones to allow progress to be made.
While it is very important to have a clear and defined work scope and schedule to communicate the challenges, it is often the case that timelines change. Project recycle can be required for many reasons outside of the technical landscape, such as external parties, funding, environmental challenges, and changing oil prices. The ability to work in a constantly changing world with frequent setbacks is therefore important. The reward is the satisfaction that comes when you see these huge projects moving from concept to reality, reaching final investment decision, or perhaps drilling the first development wells.
In megaprojects there is always the opportunity to perform strong technical work and narrow uncertainties. The value associated with key decisions and the cost of future development frequently justifies the additional data and technical work required. In many cases, innovation becomes a technical requirement to help unlock resources and justify the project.
For young professionals, megaprojects provide excellent opportunities to advance career development due to the volume of technical work, exposure to senior staff members, and focus on innovation. Further to that, young professionals may gain exposure to nontechnical areas of the business, such as finance, regulatory, and marketing, which may help broaden their understanding of the business and open up opportunities to new career paths.
Darwin once quoted that “it is not the strongest of the species that survives, nor the most intelligent that survives—it is the one that is the most adaptable to change.” History has taken us from peak oil predictions to the era of shale oil exploitation and has shown that predicting oil prices in the future is out of our control.
The oil industry will continue to adapt and change to circumstances driven by the quality of its science and engineering staff. This will lead to new innovations that will unlock new resources, providing an exceptional industry in which to work along the way. In order to meet world energy demands, megaprojects will continue to be a part of the industry and provide opportunities for the next generation of creative and technologically advanced engineers to innovate.
Ian Milne is the subsurface new developments manager at Woodside Energy. He has been part of the petroleum industry for almost 30 years, initially at Atlas Wireline and Atlantic Richfield Company, and then for the last 19 years at Woodside in a variety of subsurface and managerial roles. During his career, he has worked in the North Sea, North America, and the Middle East regions. Milne holds a BE in electronics and information technology from Robert Gordon University and an MS from Imperial College London.
24 October 2016