## “It’s the Economy, Stupid.” Or Is It?

Unlike the theme this issue suggests, there are strong indications that our sector is less of a “risky business” and more of a pot of gold, with minimal downside and a lot of rewards. Look at some recent financials:

• In 2005, the top five international integrated oil and gas companies (by market capitalization) created wealth of approximately U.S. $100 billion (for perspective, this equates to the gross domestic product of countries such as the UAE, New Zealand, and Iraq). • Their profits rose in excess of 30% compared to 2004. • ExxonMobil set a new profit record for the New York stock market. • Shell did the same in the London stock market. • And the$60/bbl oil price is projected to keep floating above the U.S. \$60 mark for 2007.

The list of dazzling economic results could go on.

The job market is also incredibly active. It is sufficient to shuffle through JPT to witness a job-offer bombardment, equally intensive from oil and gas as well as service companies. After all, young and well-prepared resources are vital not only to keep fueling the industry’s outstanding results and growth, but also to guarantee a smooth “big crew change” when the baby boomers eventually retire—in other words, the outlook for YEPPs seems as bright as it can get.

So, is this all there is to it? Has the oil industry, with its pioneering and polluting stereotype suddenly turned into a piece-of-cake enterprise?

Not quite. What about the distinctive elements of our industry traditionally associated with the idea of risk? Exploring for hydrocarbons (in ultradeep waters), operating in environmentally and sometimes politically adverse environments, relocating with our loved ones abroad (or being forced  to leave them behind), having to deal with and manage the large variance and uncertainty associated with reservoir parameters—none of these appear to be low-hanging, easy-to-grab apples.

There appears to be a dissonance between (industry) facts and (economic) figures.

This issue of The Way Ahead examines perceptions of risk by the diverse actors in our industry, from the reservoir engineer to the chief executive officer, and how they choose to deal with risk.

Of course, strategies and tactics vary greatly. More-senior authors in the Pillars of the Industry section seem to prefer a more rational and systematic approach as opposed to gut feel (presumably, seniority does not come without some upside). James A. Murtha preaches the use of Monte Carlo simulation to cope with the uncertainties of reservoir modeling, “to help managers make better informed decisions.” Cheryl Collarini and Claude Thorp look at the risks lurking throughout our careers, and they invoke a rigorous analysis of all cause/effect relationships before making any decision, be it about work/home environments, career paths, or the different forms of compensation.

At the other end of the rainbow, the approach of younger authors in the YEPP PerSPEctives section is more blunt. While Tricia Stephens sees risk takers as “vital” for the industry and calls for them to emerge from the comfort zone of their “cu-bubbles” (that Stephens sees as an undesirable potential evolution of “cu-bicles”), Andrea Rimoldi did just that when he chose to accept a job transfer to west Africa, in spite of “an outbreak of the Marburg virus, which resembles the Ebola virus” (if you look at the photos that Rimoldi has taken, you cannot blame him for choosing to take the transfer).

These contributions seem to indicate that our industry, its capacity to succeed, and our international careers are all permeated with risk. And the generous profits our organizations have reaped in recent years can indeed be branded as more insecure and prone to uncertainties than those of any other industry.

The question remains: How are risk and challenges turned into golden opportunities?

Paolo Scaroni, CEO of Eni, may have the answer: a “solid decision-making process underpinned by a holistic approach.” His explanation, for those of you that play any ball game, is irrefutable: If we failed to factor in all of the information that is accessible, it “would be equivalent to assessing a football team solely on the basis of the goals scored—what about those conceived?”

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