Masters of Business Awareness

So now I’m two thirds of the way through my MBA, not counting the dissertation. Have I learned anything? Yes, I have. I wrote previously about how useful I found the class on statistical analyses, but I’ve also now got a good appreciation of accounting and finance. By way of a benchmark, I didn’t even know the difference between accounting and finance before, nor sales and marketing for that matter. Now I probably haven’t learned much more than the basics, but it nevertheless allows me to look at companies quite differently. I also understand a lot more of the terminology which gets used in financial reporting.

I’ve also completed a good class on strategy, something I didn’t think I’d find very useful for some daft reason. I found the difference between commodities and other goods interesting, as well as the different strategies companies pursue in attempting to gain competitive advantage. We did a lot about competitive advantage, and how some companies do well and others fail. Underpinning all of this was a Capsim strategy simulation we played over the term which involved selling electronic sensors while balancing R&D, sales and marketing, production, and financing. I was skeptical at first but once I’d figured out how it worked I got stuck right in, and I came out the other end knowing an awful lot more about competitive advantage and how commercial enterprises work at the strategic level. Alas my team didn’t win the competition; we had in our class a young Ukrainian who was extremely gifted at figuring this stuff out and he left us for dust, but we easily came second.

What this has shown me is how unusual the oil industry is. For a start, there’s just so much money kicking around. I’m studying cases regarding the financing of investments of around $5-10m, which in Exploration & Production represents the money wasted because a manager didn’t want to change a wrong decision because he’d look bad in front of his boss. The first big oil project I was involved in, Sakhalin II, started off with an $8bn budget, it rose to $12bn and eventually came in around $20bn. Nobody really knows. I don’t know what the original budget of Kashagan was, but the main dispute now is whether the final price was $50bn or $80bn. Again, nobody really knows. If any other industry outside of government spent money this way, they’d go bankrupt within weeks.

The oil industry is also unusual in that the main players are partners as well as competitors. In any oil and gas development there is one operator and several partner companies. In the North Sea ExxonMobil often had an equal share of a development alongside Shell, who would operate the thing. This is done to reduce risk and make raising capital easier, but it’s equivalent to Boeing and Airbus teaming up to develop a new fighter for the US Air Force. When we studied flat and tall corporate structures and the characteristics of each, it was obvious which category my former employers fell into. I knew this already of course, but I didn’t realise quite how hierarchical oil companies are compared to other major corporations (one or two readers might find it interesting that the companies most often used to compare tall versus flat organisations were IBM and Intel).

The other thing which struck me about the oil industry is how unbelievably slow and bureaucratic the decision-making process is. In my previous place of work, decisions would take months and sometimes years, involving endless meetings up, down, and across the organisation. There may be good reasons for this, but most commercial operations don’t have this sort of time to waste. During one of the seminars I spoke to a chap who worked for a big pharmaceutical company in Switzerland, and he showed me the app he uses for processing and submitting his expense claims. He scans the receipts, clicks send, and it’s automatically approved within hours. Hotel bookings, flights, and ground transport work much the same way. If someone brought that into an oil company they’d summon witchdoctors to cast out the demons within. Booking tickets and processing expenses in my last place of work involved dozens of people, umpteen signatures, and half a forest for each trip.

Sixteen years in the oil industry has sheltered me from a lot of things, and my MBA is making me see the world in a different way. I’m also beginning to sniff out potential opportunities here and there. That was the primary purpose of doing it, of course.

Share

Purgery

When you work in the oil and gas business, particularly if you’re around live plant or involved in construction, safety is dinned into you with all the subtlety of Trump running commentary on the Mueller investigation. It’s so effective that when you wander outside the oil and gas environment you wonder why people are deliberately trying to lose an eye or commit suicide. The industry takes safety seriously because 1) hydrocarbons are phenomenally dangerous and 2) unlike other industries, they have plenty of money.

One of the things people involved in maintenance understand is the importance of purging vessels. If you need to do some work on a tank, separator, or drum that normally holds hydrocarbons you first empty it, then you purge it with nitrogen. Then when you open it you use an ultra-sensitive gas detector to make sure there’s nothing poisonous, flammable, or explosive left inside. I don’t know where the following video is from other than it’s Chinese and I’m not entirely sure what happened, but my guess is whatever he was doing ignited residual gas in the vessel.


Be like Stalin: purge.

(Via Obo)

Share

Unforced Errors

This post sort of follows on from this one, and describes much the same problem.

A year or two into my assignment doing weight estimates, we had a big re-organisation which meant I was dealing mainly with offshore facilities and more closely involved with cost estimations (rather than purely weight estimations). One of the principle ways the cost of a facility was estimated is to take various parameters – total liquid processing capacity, oil production rate, gas processing rate, etc. – and use that to work out the topsides weight. This is what they did, and as far as I know they still do.

One day we invited an American chap to visit us from a company which specialises in the design and operation of certain installations. We wanted his feedback on previous work we’d done with him, and his advice for future projects. He was very open, and I found the meeting fascinating. He highlighted the various technical requirements unique to our company which made our installations more expensive than they ought to be, with other clients happy to accept less stringent requirements or use industry standards. He went into detail on this, and in several instances it was the case that technology had moved on and our standards hadn’t yet caught up. For example, if you want to send an intelligent pig down a line you’d have to put 5D bends in (i.e. the bend radius is 5 times the pipe diameter), but nowadays the pigs can generally handle 3D bends. Our standards still required 5D bends, which take up a lot more space in a crowded facility. That was just one example of several, which as an engineer I found very interesting.

Not so my colleagues. After the meeting I raised these points as possible areas in which we could save costs, and the response was:

“Oh, that was all bullsh*t, he was just telling us that to try to get the next contract.”

Not for the first time has an expert in a particular technical field been invited into an oil company to share knowledge and been treated like he’s the dumbest one in the building.

Anyway, one of the things the American chap said was his company had found no relationship between the liquid production rates and the facility topsides weight. There were just too many other variables which affect it, such as the degree to which you want to remove certain contaminants. He even said his company had teamed up with a university to research this relationship, but after a couple of years they’d given up. What this fellow said effectively consigned our entire estimation methodology to the dustbin, because it relied entirely on a perceived association between production rates and topsides weights. This either went straight over the heads of the assembled staff sat in front of him, or they chose to ignore it. Either way, nobody mentioned it again.

Just for fun, once I’d been taught statistical analysis techniques last semester I ran some figures to see whether the methodology we’d been applying back then was mathematically sound. It turned out there was a correlation between equipment weight and topsides weight, but it was a lot weaker than I’d expected. But more importantly, there was no association between production rates and equipment weight, or indeed between any of the parameters we used and weights. So the American was right, then.

Now had I known these techniques when I still worked there, and demonstrated to those in charge of the methodology that we shouldn’t be assuming an association between X and Y when none exists, they’d have said:

“This is the methodology we are using. Your job is to follow it without asking questions.”

In fact, a short while before the reorganisation someone suggested I get involved in cost estimations and apparently one of the managers said:

“Oh, we don’t want him, he’ll just find things wrong with our methodology.”

Major corporations, people. Next time you hear about something like this or this, you’ll know how they happen.

Share

Don’t mention the flaw!

Once upon a time I was posted to a department in an oil company which dealt with the early-stage designs of new installations, much of which was geared towards providing enough information for a cost estimate to be carried out. To a rough order of magnitude, the cost of a new offshore installation (either floating or fixed to the seabed) can be estimated from its weight. Keeping things simple, the weight of an offshore facility comprises Equipment Weight, Piping Weight, Structural Weight, and Others. If you have enough data, it is theoretically possible to work out the total weight of a new offshore installation by taking just the Equipment Weight and applying various ratios from similar, existing facilities. Most large engineering companies do this in order to obtain order-of-magnitude weights and cost estimates, but it is very much a finger-in-the-air approach which, at the early stages of a project, is fine.

The problem with my new department was they did the equivalent of dividing 11.3 by 3.4 and writing the answer as 3.32352941. Any GCSE science or maths teacher will tell you the answer to any calculation cannot be more accurate than the initial input data. But when we did estimates using data with an accuracy of ± 30%, we’d make comparisons of estimates that were within 10% of each other and propose weight savings of 5%. If you think it’s just journalists who are innumerate, be aware there are engineers with the same affliction working in large oil companies.

Then things got a whole lot worse. Weight ratios apply to offshore facilities because they are designed as a single unit relatively unaffected by their location (I’m talking topsides or floaters here, not the jackets or other support structures). I’m simplifying massively, but the point is that the weights of floating and other offshore facilities are not primarily driven by where they are installed. By contrast, the cost and complexity of onshore installations is enormously impacted by topography and geotechnical conditions under the soil. As you can imagine, building a facility on flat, firm ground is a bit easier than doing so on the side of a granite mountain or in a marsh. Civil engineering accounts for approximately 30-40% of the cost of constructing an onshore oil and gas installation, mainly grading the site, bringing in aggregate and compacting, and building the vast underground networks of pipes and cables needed to run the thing. This is why the first things you do when you’re thinking about building an onshore plant is the topographical and geotechnical survey; it’s sort of hard to do anything without it.

But I worked with very clever people, and they came up with a way of estimating the costs of an onshore facility regardless of where it was located. Insofar as topography went we could just assume it was flat, and soil conditions could be ignored or data from a project on another continent used instead. That soil conditions can vary dramatically across a hundred metres didn’t seem to matter. Furthermore, we could use ratios to work out the weights like we did offshore. Now I spied a problem with this. Offshore, on a global basis, there is probably a relationship between Total Equipment Weight and Total Structural Weight; all equipment on such facilities is supported by structural steel, after all. But onshore equipment is generally placed on a concrete plinth sunk into the ground, the size of which is driven by the soil conditions and equipment weight. The structural steel supports some equipment and a lot of piping and cables, but it does a very different job to that on offshore facilities. In many instances, the structural steel around a piece of onshore equipment is negligible. In short, on an onshore plant there is no ratio from other facilities which can be used to estimate structural weight using equipment weight. But here were were, applying the same methodology as if it could.

Having some experience on onshore sites, I began to use my noggin a little. In one estimate, I ascertained that a vessel had no structural steel at all: it rested on its own legs and there was no maintainable valve on top which would need an access platform. But two managers queried this: they asked how the structural steel weight could be zero. I said it was because there is no structure associated with this vessel. They said this must be wrong, and I should apply a ratio of 30% vessel weight. So I asked them what structure they thought I was missing. They couldn’t say, but they told me to add the weight in, which came to several tonnes.

A little later, they got an intern with no post-graduate engineering experience to create a formal procedure for estimating the weights of onshore facilities, convinced that from such data the costs could be derived. They then passed it around all the engineers for comments. I noticed that it did not consider many components of the underground networks, which as I said comprises a huge portion of the costs. The most glaring omission was the firewater ring main, which is big, expensive, and common to all onshore oil and gas facilities. The reason this wasn’t included was because it would be designed “later”, which I found actually meant “nobody here knows anything about firewater ring mains so it’s best to pretend they don’t exist”.

I’d only been in the department a few weeks and I naively thought I’d be being helpful by pointing out, as I have done above, why this new methodology drawn up by the intern was fatally flawed. I drafted a comprehensive email with examples and explanations and sent it to my boss and the head of department, whose brainchild this new methodology was. A few days later I was called into an office where both of them were waiting and told to close the door. Their talk with me can be summarised as follows:

“We have read your email, but the decision has been made to adopt this methodology going forward. Your job is to follow it without asking questions.”

This was probably the first time it dawned on me that in many corporate departments results are meaningless, and all that matters is people obediently follow the process. I fought it for about a year, then just got with the program and pumped out absolute garbage which got wrapped up in more garbage and presented to senior management right up to the CEO. It didn’t take me long to work out whatever rubbish we were generating was not the basis on which decisions were getting made – the company wouldn’t be in business if that were the case – and the entire process, which cost millions of dollars, was merely to keep people employed. I once remarked in the wake of the oil price crash that if the company wanted to cut costs they could get rid of our entire department and employ a child to roll dice every time senior management wanted figures. That went down about as well as my critique of the estimation methodology.

The experience left me wondering how much of this sort of thing goes on in major corporations with names you’ve heard of. Quite a bit, would be my guess.

Share

Highest standards of quality and professionalism

An unsolicited email I received from a Dubai-based recruiter over the weekend speaks volumes about HR standards in the modern oil industry:

Dear Sir,

Greetings,

We are a human resource staffing agency providing highest standards of quality and professionalism. We pride ourselves on our efficient, professional and yet personal services both to our clients and applicants and our ability to supply the right staff complements the recruitment needs of our esteemed clients.
As per our discussion, please find below details:
Company: Qatar Petroleum
Position: Sr. Project Engineer
Location: Qatar
Status: Family Status

Because nothing says “personal service” like a mass-mailing where they don’t even bother to use your name. And highest standards of professionalism? Let’s see.

Interviews are at London, between 9th to 13th December, 2018.

Which is in 2-3 weeks’ time. Rather short notice for an international interview, no?

Please send us your updated CV in MS Word Format and the details below at the earliest.

PLEASE PROVIDE US WITH FOLLOWING DETAILS
Total experience:
Reporting to:
Current salary in USD per month (After Tax): (Basic)
Other Benefits:
Current salary in USD per month (After Tax): (Basic)
Notice period:
Date of birth:
Contact no:
Current Location:
Alternate Email:
Nationality:
Education: Degree / Completion year:

Because I can’t be bothered to take certain details from your CV, I’ll ask you to list them separately. And I’ll twice ask you your current salary even though, quite frankly, it’s none of my f*cking business.

Here’s a snapshot of the job description:

It’s well formatted, isn’t it? And this made me chuckle:

Good luck with that. For quite some time now, oil and gas recruitment has been farmed out to increasingly shoddier manpower agencies engaged in a race to the bottom. The above is typical, and indicative of the standards one finds across much of the industry. You can imagine the sort of candidate they’ll get.

Share

Pink Petro

Via a follower on Twitter, I came across an outfit called Pink Petro. I first assumed it was something to do with the gay lobby, but it turns out it’s an organisation purportedly aimed at boosting women in the oil industry. The first thing that struck me is this outfit is going to run into trouble if it encounters some proper lefty feminists; they’ve been trying to shed the “pink for girls” maxim for decades.

So what is Pink Petro?

Pink Petro is a global community of energy leaders and disruptors committed to busting the diversity gap and creating a new, inclusive future for energy.

Ah yes, the diversity gap:

The energy industry ranks second to last when it comes to gender diversity, with a workforce that’s just 22% female.

Firstly, so what? Perhaps 22% female participation is the optimum balance? Secondly, how many of those 22% are in admin and overhead positions? Judging by the makeup of the Pink Petro management, it seems to be dominated by over-educated power-skirts from HR and marketing with very few having any engineering or technical experience. Do energy companies really need more of these?

The whole thing looks to me like a racket aimed at enriching the founders by shaking down companies for sponsorship and hoodwinking young women into paying to listen to feminist boilerplate. Naturally, like all good SJWs, they claim to be working for the greater good:

3/4 of industry employees are 50 years of age and older, meaning the need for talent is now.

I’ve been hearing this lament for at least 12 years (see also here and here). The fact is oil companies have no idea how to recruit, largely because they’ve taken the responsibility away from the technical management and handed it to sprawling HR bureaucracies filled with the sort of people who now are running Pink Petro. Amusingly they say they are “disruptors”, as if those who bang the diversity drum while climbing the greasy pole of giant multinationals are non-conformists. You’d see more disruption in an abbey full of Trappist monks.

The need for change is now. That change requires a new way of thinking that focuses on community, connection and purpose.

Do you reckon you’ll hear “new ways of thinking” in a conference organised by this lot? In their next one the headline speaker is Randi Zuckerberg, who is rich and famous due to the efforts of her brother Mark. That’ll inspire young female engineers, I’m sure.

Funnily enough, I actually know one of the keynote speakers and have worked with her. By all accounts she’s a very good senior manager, although the myth built up around her probably wouldn’t stand up to serious scrutiny. I know lots of men who worked with her who said she was a great boss, as well as a good personal friend to some. But I recall a young woman who worked with her who told me that while she was a good boss, she made it very clear that all achievements on the project must be hers and hers alone: nobody else could take any credit. She also said that if challenged she could quickly turn childish, making personal remarks which anyone with experience would recognise as overcompensation for insecurity. This was particularly the case with young, ambitious women who crossed her path. That said, this was some time ago; hopefully she’s changed since then.

So what’s the conference about? Well, you tell me:

The Pink Petro HERWorld Energy Forum is an innovative experience that addresses new frontiers in the energy industry where business, workforce, innovation and policy intersect. Powered by creative disruptor, Pink Petro, our forums are hybrid in-person, digital simulcasted experiences built on a firm belief that energy education is changing and needs to be accessible to everyone, everywhere in classrooms, the field, office, and the C-Suite.

Are you any the wiser? The only effect that word salad had on me was to make my teeth grate at the term “C-Suite“. I first heard it during one of my lectures a few weeks back and it makes a firm’s senior management sound like a bunch of status-seeking egomaniacs whose first order of business is safeguarding their own power and privilege. Does anyone know how long this term has been in use?

HERWorld is proud to boast the contribution of women and minorities in energy. Seeing is believing. For us it’s not about talking about diversity, it’s about socializing energy by tapping the diverse faces and voices in our industry.

Because nothing will boost the prestige of women in the oil industry like paragraphs of woolly guff from a bunch of power-skirts with MBAs from Ivy League business schools.

Since the forum’s inception, our focus has been to put a focus on reverse-representation. Most industry events include 95%+ male speakers. HERWorld reverses that and does better. We include women and minorities in our panels and keynotes (on average 85%) and have over 20% male attendees.

I know lots of very good female engineers working in the oil industry, some of whom do face difficulties because of their sex (see here, for example). Women in the oil industry would be better served by rewarding competence and delivery rather than sheep-like compliance, bootlicking, and an ability to enthusiastically embrace every idiotic management directive. Self-serving, discriminatory outfits like Pink Petro might be able to charm or scare the PR managers of major companies into sponsoring them and have HR managers singing their praises, but they will do nothing to help normal women navigate a career in the oil industry. On the contrary, they are more likely to do them considerable harm.

Share

Fun with procurement

Last week the ZMan changed tack a little and wrote about procurement in large organisations. It’s worth a read, not least because the comments did not immediately fill up with morons explaining every bad thing which occurred since the Thirty Years War is the fault of (((the Rothschilds))).

For those unfamiliar with the RFP, which is sometimes called a request for quote or even a request for information, it is a document companies produce when they wish to buy a capital product or service. In theory, the document describes the item or service, the conditions that have to be met in order to be considered and the process by which the company intends to evaluate potential vendors. These are popular in government and large corporate environments.

This struck a nerve:

If an organization or government is buying a well defined product or a commodity item, it makes sense, but for something like a complex service, then it is a recipe for failure. Even in the case of well-defined item like a machine tool, I’ve seen RFP’s that appear to be written by enemies of the issuing company. The people creating the document use it to impress their boss, rather than make a sound purchase.

The other thing that always turns up in RFP’s is the underlying assumption that the person who wrote the thing is a genius. The specifications will be hilariously narrow, which results in the request being for an exact copy of what they have now, but newer. My suspicion has been that there is a correlation between the level of specificity and the lack of understanding of the problem to be solved by the purchase. Smart companies buy products and services to solve problems. Stupid companies tick boxes on forms.

When I was in Nigeria, the acquisition form an engineer would complete in order to buy something had space for no less than nine approving signatures. Whole weeks would pass as these documents moved at the pace of a snail from one desk to another. Occasionally we’d get a question or two but they were never sensible, more along the lines of “Do we really need this?” or “Can we use two 100lb flanges instead of one 200lb?” The people reviewing the acquisition and (eventually) applying their signature added no value whatsoever; they were certainly not to be held responsible for any errors therein. But their involvement was important nonetheless, just not in the way you’d hope: it justified their existence in the organisation.

A similar thing happens with RFPs (and many other documents produce in large organisations). Thirty-three departments will all insist on being involved, requiring an endless series of meetings where each person sticks his oar in. You’ll notice this when you design by committee: every department needs to be seen to contribute something, even if it’s completely stupid or irrelevant. If they don’t, they worry they’ll not be seen as important. The result is a jumbled mess of narrow interests, pet projects, hypotheticals, and competing priorities written up by a junior employee for whom English is very much a second language. I was once involved with an integrity inspection and risk assessment project in the Middle East and tacked on the end of the RFP was a single paragraph saying the contractor had to create an entire IT system which allowed each document to be uploaded, accessible to everyone, and modifiable with automatic revision upgrades. It was obviously the bright idea someone came up with at the end of a meeting; that risk and safety consultants probably aren’t the best people to be setting up IT systems didn’t occur to any of the geniuses in Contracts & Procurement. Another requirement you see is for the contractor to train client personnel in some area, giving no guidance as to how many people and to what level you must train them.

The RFP that spawned this post was obviously the result of some serious business problem the company needs to solve. The trouble is the RFP so thoroughly obscures it, no vendor will be able to identify the problem, so they will not be able to solve it.

The arrogance of a modern company is such that they believe vendors are both stupid and liars, and they don’t need to know what the actual problem is. All they need to do is read the RFP, submit the lowest price, and be prepared to do exactly as the client tells them.

This is a good anecdote, too:

A story I’m fond of telling is about going to the initial RFP meeting for a government contract. I was a young guy and still a little green. They handed out the RFP’s and discussed the schedule. An old guy sitting next to me thumbed through the document and found the poison pill in about ten minutes. He stood up, told everyone to look at the specific section. In a few minutes everyone left the room other than me and one other guy. He was the predetermined winner. It was a good lesson.

A lot of times when a company issues an RFP it’s simply for compliance reasons. Most companies have to get quotes from a minimum three (and sometimes five) bidders, even if they have an incumbent who’s CEO is good pals with the client’s MD and they have the job in the bag. One of the first things a contractor or vendor needs to do when they receive an RFP is work out whether they’re just making up numbers on a bid-list. If you’ve never done business with this outfit before and you get a call from someone in bad English expressing disappointment you’ve not submitted a tender and offering you more time, you know the job’s gone to someone else but they need to make it look kosher. I even ran an experiment on this once, and used to turn in bids at ever decreasing prices just to see what would happen. Then I stopped responding and I got a call from a chap in contracts who asked why I hadn’t submitted a bit.

“Because it’s obvious we’re just making up numbers on a bid-list while every job goes to that company you always use,” I said.

He was most indignant.

Share

Manage the people you have

Underneath yesterday’s post, Bardon wrote the following:

I don’t like Ilya either and think that he should be shown the door. How long has that loser being getting away with it, is all I can say about the useless idiot.

So let me elaborate on the situation on Sakhalin Island in 2007, which will be fairly typical of most non-western countries. There is a thing called Local Content Legislation which makes it a legal requirement on the part of all foreign entities to hire a certain percentage of locals. If the locals are uneducated, unskilled, and untrained it doesn’t matter: it is the foreign company’s responsibility to provide the necessary training to allow them to do the job. If there are no locals around because the site is in the middle of nowhere, you must hire them elsewhere and bring them to site. In the early days, it was possible to employ a whole bunch of locals as drivers or in other lowly positions, but the authorities soon got wind of this and started looking at job categories and average salaries.

Even before 2007 companies in Sakhalin were under enormous legal pressure to hire more locals in more senior positions. At the height of the Sakhalin I and II construction projects (which were running simultaneously), there were tens of thousands of people working on them, both locals and foreigners. The population of Sakhalin is around 500,000 of which about a third live in Yuzhno-Sakhalinsk, the regional capital. To say there were serious labour shortages is an understatement, and thousands of Kazakhs, Turks, Kyrgyz, Uzbeks, Azeris, Brits, Americans, Australians, Nepalese, Dutch, Indonesians, Filipinos and another forty nationalities were brought in to man the projects. Russians were brought from the mainland by the thousand, particularly those from the Krasnodar region who had experience on the Caspian Pipeline Consortium. Kazakhs were also favoured because they spoke Russian and had experience from the Tenghiz and Karachaganak projects.

In short, any Russian under 50 on Sakhalin who was not mental, in jail, or a raving alcoholic was in high demand (so about half the male population, then). Added to that was the problem that foreign companies needed most of their Russians to speak English, which reduced the labour pool even further. This is why all the foreign companies on Sakhalin at that time were stuffed full of teachers: they were the first ones they identified who could speak English, and any technical skill or other competence came further down the list of requirements. Much further.

So while we had some very good Russians working for us, we also had some pretty average ones who you couldn’t do much about because the law didn’t allow a foreigner to do the job and there were no better Russians available. It is in such situations a manager is really tested. Any idiot can fire someone and hire another, but it takes skill to manage a team with a whole range of individuals and understand that these are the people you have to work with. A common mistake a lot of modern managers make is to believe replacing people is a bigger part of their job than effectively managing those they have. When a new manager of Plymouth Argyle football club takes over, he doesn’t sell the whole team and demand the club buys Ronaldo and Messi. Instead he looks at the team he has and tries to get the very best out of them, and he’ll only sell a player once they’ve been shown they can’t fit the team and a better replacement is available. Now I understand some managers have the luxury of being able to fire people and immediately replace them, but let’s not pretend this requires any great talen t.Another way of putting it is you manage the team you have, not the one you wished you had; I was stuck with Ilya and had to work with him. In the main he did a reasonable job, could be relied upon for the most part, and brought in more money than he cost us. Indeed, by the standards of Sakhalin Island in 2007 he was a pretty good employee.

The other thing every manager had to be wary of on Sakhalin was the labour law. The Russian labour code is notoriously strict, and getting rid of people for performance issues required several steps with the involvement of HR, each properly documented. Even then, local employees used to take foreign companies to the local labour courts, who would delight in ruling in favour of their own (this was in stark contrast to when a Russian would take a Russian company to court, and get laughed at). This meant you would only fire an employee as a last resort, when the damage they have wrought is so great you have no choice. Usually, the way of getting rid of a bad employee was to make their job a bit rubbish and, with the labour market being what it was, wait for them to get a better job with another company on more money. The exception was if they were drunk at work, in which case they would always resign rather than have the reason for dismissal entered in their labour book for future employees to see.

In summary, firing Ilya on Sakhalin Island in 2007 wasn’t really an option, even if it were a good idea. Instead I was required to manage him. Imagine.

Share

Offshore Clerks

Back in the days when I had a career and was running a team of engineers, a job request landed on my desk regarding the replacement of a valve in the depths of an offshore platform. According to the process, this request was born from a problem identified by the offshore operations and maintenance team, who then discussed it with their onshore counterparts to consider what should be done and with what priority. The offshore team consisted of the Offshore Installation Manager (OIM), the field operations supervisor, the maintenance supervisor, the marine operations manager, plus a whole host of operators, technicians, maintenance personnel, and safety officers. Onshore, the team comprised a production manager, a deputy production manager, a maintenance manager, a safety manager, plus a load of engineers and other support staff. All were involved in the discussions surrounding the problem – the valve was seized – and they decided to replace it. Were it a straight-up replacement it would have been handled by the maintenance team, but because they wanted to move it to a different location nearby, it became an asset modification and needed engineering to get involved. As per the process, every manager and supervisor both onshore and offshore had to sign off on the request for engineering support, and each was given space to append their discipline comments to the form. These managers and supervisors were mainly western expats between 35 and 55 years of age, and considered some of the best the company had to offer. For this reason they were well paid.

So the request lands on my desk, I look at it for a while, then turn it the right way up, then call my lead piping engineer, a grizzled Scotsman who I’ll call Fred. Fred had more brownfield engineering experience than I could hope to acquire in three lifetimes, and I decided early on that he was someone worth listening to. I handed the request to Fred and asked him to take a look, and a few days later we sat down and discussed the job. Fred said the valve was enormous, it was very heavy, and the area it was in very tight and congested. It was therefore going to be a rather difficult job, but not impossible. However, he said he’d know a lot more if he could get out to the platform and take a look for himself.

I usually insist on a site visit by discipline engineers on any brownfield job because the drawings, even if properly updated to as-built status, can never give you the complete picture. 3D scans and PDMS models are very useful, but everything must be verified with a site visit. For all you know, someone’s built a temporary structure right in the area you thought was free; temporary modifications in the offshore oil industry have a terrible habit of remaining in place until the facility is decommissioned. Some managers are only too happy to have engineers visit the site to allow them to discuss the precise problem and proposed solutions with the operators, and some OIM’s insist on such a visit. But often visitors are not welcome offshore due to a lack of bedspace or seats on the helicopter. In this particular case, it was easier to get an audience with the Queen than get a guy offshore as the accommodation was permanently full of essential personnel who couldn’t be spared for a single day. However, I’m a stubborn sod and I refused to move forward with the engineering until Fred had gone offshore and looked at the job in person; I was of the opinion that if the OIM cannot accommodate an engineer for a couple of days, the job can’t be that important. I learned that management don’t like it when you put it like that in meetings.

So eventually Fred got his offshore visit, much to the annoyance of the offshore team. When Fred got there and had undergone the usual safety inductions, he stepped out of the living quarters to find the operations area like the Marie Celeste. He walked around  the whole platform and barely saw a soul, but when he went back to the living quarters and stuck his head in the offices, he found it stuffed to the gills full of people. It stayed like this for the whole two days he was out there. In the company of the most junior operator on the platform Fred descended into the bowels of the platform and found the valve that was seized. It really was huge. He spent an hour or so down there, taking measurements and working out what could be done. He then went back to the living quarters where he was summoned to the meeting room by the OIM and asked to present his findings. Around the table were all the senior people on the platform, who lived there 24/7 for 4 weeks at a time.

Fred began. “I think we need to look at a repair, rather than replacement.”

He was immediately interrupted by the OIM. “No, we have decided it is better to replace it.”

“Replacing it is going to be very difficult,” said Fred. “It’s a huge valve and…”

The maintenance manager cut in. “Yes, it is big but it needs to be replaced.”

“Then that will be a lot of work,” said Fred. “And I’m not sure how you’re going to get a cutting torch down there.”

“A cutting torch?” said someone.

“Yes,”  said Fred. “The valve is too big to fit out the entrance door, even if we dismantle it. The valve body won’t fit.”

“Are you sure?” asked the OIM. “I don’t think so.”

“Okay,” said Fred. “A show of hands, please. How many people around this table have actually been downstairs and had a look at the valve?” The room fell silent. Everyone looked at each other. No hands went up. “Okay, well I have and I’ve measured the valve, the valve body, and the size of the hatch and there is no way we’re getting that valve out without cutting it up, and that won’t be easy down there. So I recommend we dismantle it and repair it in situ.”

So what’s my point? The situation described in this anecdote might not be typical, but it is certainly not unusual either. It is almost inconceivable that an oil company would pay hundreds of thousands of dollars per month to have people sitting on an oil platform (with all its inherent risks) who limit their interaction with the facility in order to do bureaucratic tasks which could just as easily be done onshore, yet it happens. It is common, especially in big companies, to have an organisation staffed by ostensibly experienced and qualified people who are well paid, but simply decline to do their jobs. Instead, they busy themselves with other activities, often under the direction of a manager who never properly understood what they should be doing in the first place. It’s what happens when an organisation’s processes become divorced from the goals they are supposed to achieve, and managers are rewarded solely for following the process regardless of outcomes.

Share

Time for a Change

As of today I am effectively no longer working in the oil industry, although in the strictest sense I still am as I’m on gardening leave. That said, in an even stricter sense, I’ve not been working in the oil industry for quite some time. After something like fifteen years it’s time to call it quits, and for two reasons.

The first is that there is simply no work around. Back when I started out in 2003 there was a mountain of work and it picked up exponentially as the oil price rose. My biggest problem back then was a lack of experience, but once I’d got a few years under my belt I landed some half-decent positions with exposure to serious, major projects. But when the oil price crashed in 2015 the entire industry came to a screeching halt with projects being cancelled en masse and thousands of people fired. Since then, from what I can tell, the industry has adopted a holding pattern until the oil price picks up and things return to how they were in the boom years. This is a bit like the dinosaurs waiting for the meteor dust to settle down so the climate goes back to how it was.

From where I’m standing the oil price didn’t so much crash into a trough than return to normal from a ludicrous high; the lowest it got was around $36 per barrel, higher than it was when I joined the industry, and soon stabilised around $50. The problem was the oil industry had forgotten how to function at such prices, and if they’ve since remembered they’re keeping it secret. The other issue is that even when prices eventually rise the oil industry will look very different than in previous eras. National governments will enjoy the majority stake in any sizeable future development, with private oil companies being lucky to retain operatorship and not reduced to a partner in an operating consortium or simply paid a service fee much like any other contractor. in addition, the competency gaps between locals, low-cost engineering centres abroad, and western expats are closing rapidly, and even if they’re not the industry is happy to accept lower standards. Looking down the road, I simply don’t see much opportunity for well-paid western-expat positions on oil and gas projects. There will be some for sure, but nothing like how it was, and with nothing like the pay either.

The second reason is even if major projects were being sanctioned and positions created, I have reached the conclusion there’s no place for someone like me in the modern oil industry. This isn’t just my opinion: I’ve had various managers tell me they’d made a mistake in employing me, and they’d probably be surprised to hear I couldn’t agree more. I’ve worked for several companies right through the oil and gas industry’s contracting chain and on many occasions I’ve wondered why they hired me. If I’d lied on my CV and claimed a competence I didn’t have, the fault would be mine. But it was more a case of the interview process selecting someone who is task-orientated, responsible, reliable, and can work independently then putting him in a role consisting of menial admin work micromanaged to a degree you’d not think possible. Like many industries with too much money, the oil business recruits for brains and character then put them in positions where the former is not required and the latter a severe handicap. I have no objection to the oil industry creating process-driven roles that serve little purpose other than to keep people employed, but they ought not to fill them with people who are manifestly unsuitable. I’ve been around long enough, and seen enough outfits big, small, and in between to know the part of the oil industry which employs western expats places a high value on keeping your mouth shut and showing blind obedience to the immediate hierarchy and not much on anything else. Why the hell anyone would think I’d fit in there I don’t know, myself included, and after 15 years of trying it’s time to chuck in the towel and do something else.

What that will be is a subject for another post; you’ll find out soon enough.

Share