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.

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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.

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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.

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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.

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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.

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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.

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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.

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A Shell of their former selves

Yesterday I received an email from Shell containing more diversity mumbo-jumbo than I thought possible:

We have just celebrated International Women’s Day, when women are recognized for their achievements regardless of age, race or beliefs.

This sentence reads as though it was written by a committee. Why not just stop after “achievements”? What have age, race, and beliefs got to do with women’s day?

The value that women have in the workforce is truly immeasurable.

Is it? Could you not apply the proportion of women in the workforce to the overall value added by the company (“profits”)? Cross-reference this with the total women’s wage bill and you’d have an order of magnitude at least. You could refine things further by assuming whichever women (and men) were involved in writing this press release represented negative value to the tune of their salaries.

At Shell, the unlimited potential in each woman is considered one of our greatest resources.

Considered by whom? I bet investors are a lot more interested in your production rate, reserves, and cash pile. And “unlimited potential in each woman”? Does each man have unlimited potential? Or only those who went to Delft?

They then provide links to various webpages, which contain such gems as:

Shell promotes a culture that is gender balanced. This extends to the way we hire and develop our female talent. We run leadership workshops designed specifically for women.

Nothing says gender equality quite like leadership workshops designed specifically for women.

In the last five years, Shell has increased female representation on our Board of Directors from 8% to 33%. We have also seen the representation of women in senior leadership positions rise from 16% in 2012 to 22% in 2017.

I for one will be extremely interested to see how this pans out. It’s not that I don’t think women can be leaders, it’s that when a company adopts progressive initiatives based on politically-driven social science papers originating in the lunatic fringe of western academia, they’ve lost all perspective. Pepsi’s CEO is Indra Nooyi, an Indian woman, and they pointedly don’t make a big song and dance about it because she is undoubtedly there on merit alone. I worked in and around Shell organisations between 2004 and 2009, and there were plenty of capable women doing very well there, some of whom were in senior positions. There didn’t seem to be any impediment to women back then, they were just fewer in number for the most obvious and natural of reasons. If Shell now believes it’s necessary to artificially inflate the number of women in senior positions in the way they’ve described above, it’s a sign they’re less interested in oil and gas production than social engineering.

For us, this is just the beginning.

The beginning of the end, I suspect. Shell will survive for a long time on its legacy production, reserves, and vast cash pile, but I’d hazard a guess that very little it has done or will do since the oil price crash in 2015 will contribute to its long term future. Applying the “clogs to clogs in three generations” analogy, Shell’s latest generation of whizz-kid managers are eyeing up their next Ferrari while the factory falls into disrepair.

I’ve an inkling I might yet be young enough to write the obituary of Big Oil. As many predicted, their demise won’t be due to a lack of oil in the ground.

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Statoil’s Folly

This is making me all misty-eyed with nostalgia for the late ’90s/early ’00s:

The board of directors of Statoil proposes to change the name of the company to Equinor. The name change supports the company’s strategy and development as a broad energy company.

Back in the days when New Labour were sneering at anything traditional and wrecking institutions that had worked well enough for centuries, the business world was going through it’s own version of similar self-harm. British Airways replaced the Union Flag on its tailplanes with tribal art, reversing the decision a few years later. Having spent £75m on branding experts, PricewaterhouseCoopers changed its name to Monday, which proved to be a mistake. Sun Alliance and Royal Insurance changed their name to More Than, which it keeps to this day. British Petroleum switched it’s name to BP, getting rid of the shield logo and replacing it with some sort of flower. They also adopted the tagline Beyond Petroleum, despite sales of oil, gas, and petroleum products making up pretty much all their revenues.

It’s this last example which I’m reminded of the most by Statoil’s rebranding, for obvious reasons. Have a read of the guff they’ve come out with to justify it:

The world is changing, and so is Statoil. The biggest transition our modern-day energy systems have ever seen is underway, and we aim to be at the forefront of this development. Our strategy remains firm. The name Equinor reflects ongoing changes and supports the always safe, high value and low carbon strategy we outlined last year,” says chair of the board in Statoil, Jon Erik Reinhardsen.

Basically, Statoil doesn’t want the word “oil” in its name any more despite oil (and gas) production being their core business by a mile and a half. Yes they do other things, including renewable energy – as all the major oil firms now claim – but these activities are negligible in terms of revenue when compared to the production of hydrocarbons and their derivatives, and always will be. If you want to invest in a solar energy company, invest in a solar energy company. Don’t invest in an oil company that has bought some solar energy capability for PR purposes. I noticed a few years back that Porsche now makes luggage and sunglasses, or at least licenses their brand to someone that does. What Statoil’s doing is the equivalent of Porsche rebranding in the hope nobody notices their core business is still making cars.

“Equinor is a powerful expression of who we are, where we come from and what we aspire to be. We are a values-based company, and equality describes how we want to approach people and the societies where we operate. The Norwegian continental shelf will remain the backbone of our company, and we will use our Norwegian heritage in our positioning as we continue growing internationally within both oil, gas and renewable energy,” says Sætre.

A values-based company. Uh-huh. Which company isn’t these days? I’m sure the good folk who dropped a bridge on innocent motorists in Florida claimed the same thing, but what does it actually mean? If values are something you need to consciously adopt and then advertise, perhaps you don’t have them. A friend of mine recently switched employers and one of his first assignments was to attend a three-day workshop with the senior management to decide what the company values would be. This is the same category error as when a CEO stands in front of his staff and says “we need to adopt X culture”. Values, like culture, is something you develop organically, intrinsically, personally. They cannot be imposed by decree, and a company’s culture or values is simply the aggregate of the people within it. If you were to send someone into a modern corporation with a copy of its “values” and tell them to report back when they found the first instance of a manager acting in a way which completely contradicts them, you’d barely have time for a cup of tea. As I’m fond of saying loudly in meetings, if you want to change the culture in a company you need to employ people who already subscribe to that culture, put them in charge, and fire those that don’t (this suggestion doesn’t always go down well.)

“Equinor is a name that is forward-looking, and creates a strong platform for engagement and dialogue with a broad set of stakeholders. We believe it will create internal alignment and pride, and help attract capital, partners and talents,” says Reidar Gjærum, Senior Vice President for Corporate Communication in Statoil.

Here’s another anecdote. I once worked for an outfit that wasn’t doing very well, and the reasons were obvious. The best thing the CEO could have done in terms of helping the company was gas himself in his garage, but instead he decided the company name and logo should change. He hired a consultant to tell him the name and logo was holding them back, but the consultant returned with the message that, on the contrary, the name and logo were probably the best things about the whole damned outfit. The consultant got fired on the spot, but the name and logo remained. The episode taught me that if a company is looking to change its name and logo (slightly updating the latter is fine), it’s got other, more serious problems that aren’t being addressed and the name change is merely a distraction. To their immense credit, RoyalDutch/Shell has retained the latter part of its name and the Pecten logo despite both being completely outdated and irrelevant in terms of what the company does. Coca-Cola never changed its name or logo, despite the company branching out far beyond cola production. And Chicago Bridge and Iron (CBI) famously isn’t in Chicago, doesn’t make bridges, and uses no iron.

Many people are as unimpressed as I am at Statoil’s name change:

The firm, the world’s 11th largest oil and gas company, released a video on Thursday announcing that after 45 years of operations, it is changing its name to Equinor.

The video is perhaps not what you’d expect from a company with assets worth more than €100 billion.

Starting off with the scream of a woman echoing through a forest, the video then cuts to her giving birth, before shots of a little girl doing gymnastics, a classroom of children learning that “to learn is to change”, and a spotty teenager looking in the mirror cross the screen.

Does this sound like an oil company with its eye on the ball? This doesn’t help, either:

Oil majors aren’t famed for their pranks, but Statoil ASA had analysts checking it wasn’t April Fool’s Day when it announced a new name that turned out to have been acquired from an Oslo veterinary practice specializing in horses.

When people think your company’s proposed name change is an April Fool’s joke, you might want to reconsider. Note the disparity between the earnestness of the Statoil CEO and the degree of seriousness on display from the journalist in this passage:

“I don’t expect Equinor to be love at first sight for everyone,” the CEO told reporters in Oslo on Thursday. “Give it a little time, let it mature. I feel very confident that this is right and important for the company to do.”
Statoil declined to disclose how much it paid the veterinarian, who will soon be offering services from equine dentistry to castration under the name of Equina.

And this is illuminating:

The name change is bound to “stir up some emotions,” said Frode Alfheim, the head of Industry Energy, Norway’s biggest oil union. But what counts is that the company remains 67 percent state-owned, stays in Stavanger and focuses on the Norwegian continental shelf, he said.

Basically, a state-owned oil company doesn’t want to be branded as a state-owned oil company; they’re embarrassed by who they are and what they do. How very modern.

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We’ve agreed an agreement is necessary

Years ago I was an engineer working with a team that was being sent to site to carry out a load of construction works. Nothing too major, but no matter what the workscope any  company showing up on site has to have in place a Site Safety Plan, which is a document identifying all the risks associated with the works and how they intend to manage them. Any contractor working in the oil and gas business will have a procedure describing how to prepare a Site Safety Plan, and it will typically contain prescriptive instructions such as:

– A hazard identification workshop and risk ranking exercise shall be carried out prior to mobilisation.

– A risk mitigation plan shall be put in place detailing how each identified hazard shall be managed such that the residual risk is as low as reasonably practicable.

– Tool-box talks shall be prepared and tailored to address the residual risks associated with the works.

In short, prior to mobilising to site, the Safety Manager leads an exercise in identifying the risks and mitigating against them, which usually involves compiling (or writing) numerous procedures related to the execution of the works (e.g. excavations, lifting, vehicular transport, etc.) This will all be collated in the Site Safety Plan and communicated to everyone involved, including the owners of the site, and demonstrates that the risks involved with the works have been properly thought about and are being managed. (Bardon will know all this stuff backwards and inside-out, as would anyone who’s spent time on a site.)

Anyway, our Safety Manager was given several weeks to prepare this document, and a few days before mobilisation it was passed to me for review. This is what I read:

– A hazard identification workshop and risk ranking exercise shall be carried out prior to mobilisation.

– A risk mitigation plan shall be put in place detailing how each identified hazard shall be managed such that the residual risk is as low as reasonably practicable.

– Tool-box talks shall be prepared and tailored to address the residual risks associated with the works.

Rather than doing the tasks required, the Safety Manager had simply repeated what we were supposed to do prior to mobilisation. He had completely failed to understand that now was the time to do what was required. Or he had no idea how to, and just winged it. I suspect the latter.

I was reminded of this when I turned on the TV this morning to see Theresa May and Jean-Claude Juncker telling everyone a deal had been struck such that Brexit talks can now move forward. But when journalists asked for details, such as the shape of the final agreement on the Northern Ireland border, the response was that they’d agreed than an agreement must be reached. Via Gareth Soye on Twitter, I found this excerpt from the report which supposedly gives us more detail:

Since the result of the Brexit vote was known, the question was always how to reconcile a differing regulatory regime either side of the border without putting in place a hard border. This was supposedly something that had to be agreed before the talks could proceed, but in the finest style of a modern corporate manager they’ve just said:

“We will not have a separate regulatory regime for Northern Ireland nor a hard border. Now, moving on…”

I suspect the intention of both May and the EU is that this issue will never come up for serious discussion again because, one way or another, the UK will remain in the EU in all but name.

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