Category Archives: Oil & Gas

Totally Lost

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Via reader Gavin Longmuir, this:

Total SA has joined Royal Dutch Shell PLC in withdrawing from American Fuel and Petrochemical Manufacturers because of disagreement about polices on climate change.

In a report on integrating climate with strategy, the company said it reviewed 30 industry associations to which it belongs “to verify that their stances on climate issues are aligned with the group’s.”

…

Total Chairman and Chief Executive Officer Patrick Pouyanne also cited the Paris agreement, stating, “Our policy regarding industry associations demonstrates our consistency and credibility. Transparency will strengthen the action of businesses, which are key participants in discussions on how to achieve the objectives of the Paris Agreement.”

Now it might be the case that Patrick Pouyanne believes capitulating to climate activists is the best way to safeguard the interests of Total’s shareholders. It might also be that he’s chiefly concerned about how he is perceived by France’s political elite, having realised his nest is well-feathered regardless of what happens to Total in the long term. I don’t know. But I found this interesting:

Total has suspended all activities on a planned $3.5bn crude export pipeline from Uganda to Tanzania due to uncertainty over its Uganda operation.

The 1,445km pipeline was planned to pass through neighbouring Tanzania to the Indian Ocean port of Tanga.

The decision follows last week’s termination of the farm-down transaction between Tullow Oil, Total E&P and CNOOC.

All parties have been actively progressing the sale and purchase agreement (SPA) since 2017. However, the companies did not reach an agreement on the fiscal treatment of the transaction despite negotiations with the authorities.

Total’s Ugandan development has been going nowhere pretty much from the beginning, and word on the street that the Frenchmen they sent to negotiate with the government – including the CEO – might as well have been random farmers plucked from the fields of Normandy. So if I may make a helpful suggestion to Total’s senior management, perhaps it’s better to reacquire the necessary skills and expertise to develop oil and gas reserves rather than waste company resources in meeting the objectives of the laughably self-serving, corrupt, and ultimately pointless Paris Climate Agreement?

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Gas Trap

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I’ll use this tweet to kick off a post about associated gas:


When you produce crude oil through a well, it’s not just oil that comes up. You also get mud, water, gas, and certain nasty substances. The water is called “produced water” for obvious reasons, and the gas “associated gas”. This means it is associated with oil production, which distinguishes if from a field which is developed purely for its gas reserves (in which case it’s called unassociated gas).

The problem of what to do with associated gas is one that has plagued the oil industry since its founding. Produced water can be treated and put back into the sea or a water course, but you can’t do that with gas. Until a decade or two ago, oil companies would simply burn it off, which is why old pictures of oilfields showed enormous flares lighting up the entire region twenty four hours a day. This pumped some pretty nasty substances into the local environment, but important people only really got concerned when global warming came along and they started looking at how much CO2 was produced by this practice. So what is known as “operational flaring” got severely restricted or banned in most places. The tweet above is referring to the ongoing practice of operational flaring in the Permian basin, the home of the US shale revolution.

One small point before we continue: you still see flares on modern oil and gas facilities because they are part of the process safety system. If you have a problem on your plant, the option of last resort is to dump all your inventory to the flare and let it burn. It’s not good, but better than blowing up the whole plant, taking the neighbouring town with it. So this is why you still see a small, lazy flare burning at the top of a stack in a refinery: it’s burning fuel gas, just to keep it lit for when it’s needed. This is completely different from operational flaring.

So if you can’t flare the associated gas, you have two options. You can reinject it into the reservoir, either to increase reservoir pressure to aid production or just to stop it being emitted to the atmosphere. If that’s not possible either because the reservoir engineers will get upset or, in the case of shale, there is no reservoir, the other option is to monetise it somehow (which might be attractive even if you can reinject it). In many developments, this means running a pipeline to an existing gas plant. If your oilfield is close to other developments, this is often possible. LNG isn’t really an option with associated gas, but you might be able to build a gas plant providing power to local homes and businesses if there is a population centre nearby. Another option is an LPG plant where the gas gets treated and bottled and then trucked to a nearby population centre. I’ve heard of oil companies talking about giving away gas stoves to locals in order to create a market for LPG, but I’m not sure if it was ever done.

The problem comes when none of these options are feasible. I’ve been involved in lots of new development studies at the preliminary stages and the question always arises: what do we do with the gas? One project was in Kurdistan, miles from anywhere. The intention was to produce crude, store it in those huge tanks you see beside refineries, and then pipe it to a refinery or terminal somewhere or offload it into trucks. But we didn’t know what to do with the gas, and there was a lot of it. We couldn’t reinject it, and there was no population centre nearby. We then discovered the gas was full of nasty substances so when we crunched the numbers we’d find we’d be spending X of CAPEX to produce oil and 2X processing the associated gas, and then not knowing what to do with it. So the project got binned: too expensive.

This is why they still allow operational flaring in the Permian basin. It’s not good for the environment, but if it were banned there would be no shale revolution, the oil price would still be above a $100 per barrel, and I might still have a career. One option, and I don’t know how feasible this is without looking at the area in question, would be for the government to provide incentives to all players to build a central gas processing facility which could take all the associated gas and do something with it. But that might face all sorts of regulatory hurdles, let alone the pipelines associated with such a scheme. So they’re stuck between a rock and hard place: force them to dispose of the gas or charge them for emissions, and you’d kill the industry and America’s new-found energy independence. I expect we’ll see several battles played out over this issue in the years to come.

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Never burst, buckled, or bent

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The other day I received a PR email from a company based in Aberdeen which:

is aiming to significantly reduce the environmental impact caused by the oil and gas industry, by offering a new sustainable solution with the refurbishment and reuse of decommissioned subsea equipment and component parts.

This immediately struck me as a venture started by people who think sustainability is a product in itself.

Presently, the industry recycles as much of its subsea equipment as possible once it has no further need for them.

Meaning, they take it off the sea floor and sell it for scrap.

Instead of the traditional recycling process, Legasea takes the subsea production equipment from decommissioned fields and reuses as many parts as possible following a rigorous refurbishment process at its base

Here’s where I think the problem is. Despite the enormous cost of subsea equipment creating a massive industry, there’s not actually a lot of it made. Industry efforts to standardise subsea Xmas trees for example ran into the problem that at the height of the boom only about 150 were installed in a year. A couple of years ago it was in single figures. This is not the sort of mass-volume industry which lends itself to standardisation, and the potential savings not enough to persuade oil companies to abandon their own standards in favour of a common industry-wide design. In other words, these pieces of equipment are bespoke and have to be ultra-reliable, hence they’re very expensive. This isn’t the sort of kit which lends itself to using secondhand parts to reduce costs, and even if it were, how many units do these guys think they’ll be selling each year?

This leads to huge cost and lead time savings for clients and results in saving obsolete components, such as many types of subsea electrical connectors and hydraulic couplings making them available for reuse on producing fields.

The long lead times are due to oil companies demanding bespoke units. If they were willing to be flexible on that score they’d have agreed to a standard design and be buying brand new, off-the-shelf kit. But they haven’t, so they will still want bespoke designs and I suspect the long lead times are down to design and approvals rather than an availability of the parts this company is refurbishing. And what percentage savings will they make using refurbished parts instead of new? I can’t see many engineers in an oil company signing off on using refurbished parts for a piece of kit which will sit at the bottom of the sea for twenty years unless the cost savings really are substantial.

A common occurrence in many other industries, this repurposing of subsea parts helps to preserve vital resources for continued use and reduces the environmental impact of the oil and gas companies themselves.

Preserve vital resources? Such as? And it is debatable whether refurbishing these parts with all the material and manpower involved will use fewer resources than just producing them from new.

Co-founded by Lewis Sim (Managing Director) and Ray Milne (Operations Director), the Legasea team has been joined by team members Chris Howley (Service Technician), Graham Petrie (Projects Manager) and Chris Moffat (QHSE Manager).

So you’ve got your overheads sorted, then. How many units will they be refurbishing each month, do you think?

“We offer an alternative route for unwanted and recovered subsea production systems and will take liability and ownership for the equipment; making it safe, clean and disassembling it to its component parts. Reusable parts will then be used to fulfil the demand for urgent remanufacturing and spares when crucial production is at risk during routine preventative maintenance or when an unforeseen failure is encountered subsea.”

Okay, the business model might work if they’re providing urgently-required spare parts, but how many emergencies are they expecting each year? And I’d be interested to know just how much liability they’re willing to take on. One component failure and they could be on the hook for millions within an hour.

Hey, I wish them well and I’m just some bloke on a computer, but if I’m gonna get unsolicited PR emails I feel I’m entitled to look at them critically.

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Head 1, Hunter 0

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This is an old post which I’d made private when it was sensible to do so. Now I’m studying HR it serves as a handy reminder as to how bad things are out there, so I’m reposting it.

A few months ago I received an email from a manpower agency representing an independent oil company that was looking to recruit an Engineering Manager to be located in a West African country. The reason why I didn’t just hit *Delete* as I do with most of these emails is because, for once, the agent had named the company and provided a job description. This is unusual in the extreme, most of these clowns email you with an exciting opportunity with a company they cannot name in a vague location with a job description “to follow”. Uh-huh. I’ve written about this before.

So I replied that I was interested, just for the hell of it, and the agent responded with an outline salary and benefits package, which looked pretty good. So I became more interested. I wasn’t exactly looking to move company, but I think it’s always wise to keep an eye on what’s out there, know what the market thinks of you, and get in some interview practice (you never know when you might need it!) And if my current employer was only going to offer me a role in a filling station as my next assignment…well, you get the picture.

Firstly the agent interviewed me, just to make sure that I wasn’t a complete Herbert. Then within a couple of weeks I had a phone interview with the HR bloke, who was about 25 years old and recently recruited from…a manpower agency. This was a pretty standard HR interview, but near the end I queried the part of the salary package which made reference to a “hypothetical tax deduction”. All oil companies do this for various reasons: deduct taxes from staff salaries in one place and actually pay taxes wherever they’re working. This is fairly standard practice, but the tax rate is usually pretty low. In this case, the HR chap told me I’d be taxed at the full UK rate.

Whilst working in West Africa on a residential basis.

I didn’t say anything at the time, but when a 50% or whatever tax is applied to the salary package it didn’t look anywhere near as attractive. I called up the agent, told them I was no longer interested, and they said they’d “look into it”.

I was therefore quite surprised to be invited to another phone interview, this time with the Head of Engineering & Projects (who would be my functional line manager). Having nothing to lose, I went ahead and did it anyway, and thoroughly enjoyed myself. With no pressure to actually get the job I was myself (blunt and opinionated), and had a good discussion with the chap on the other end who clearly knew his stuff. It was far more of a technical discussion than the previous one, outlining the role, who I am, my experience, my management style, etc.  And I came away thinking that the role was a lot larger and more interesting than anything I’ve yet had, and with a lot more responsibility. Now I had no interest in doing another stint in Africa, but if the right position came up and they were throwing money at me…well, I can be persuaded.

It turned out I impressed them enough for me to be considered their front runner for the position (so the agent told me), and they arranged another phone interview (which would be the fourth, if you include the one with the agent). This one was with the Regional Manager, and during the conversation much was made of the benefits of working for a smaller, more flexible company which exercised common sense, made quick decisions, delegated responsibility, and kept procedures to a minimum. This was in contrast to a supermajor, which makes even the army look slick and efficient. I have to say, this prospect alone did appeal. Needing line manager’s authorisation to hang a white board in your office, and waiting 9 months for expenses to clear a 6-stage approval process, does tend annoy after a while. Like the previous interviewer, this chap was also pretty switched on and we had a good chat. I didn’t change my approach – blunt and opinionated – mainly because I don’t know how to be any other way, but I came out of that round still as the favoured candidate.

It had occurred to me that we would need a face-to-face interview before they’d make me an offer, but I assumed this would take place in London or some other half-normal place. So my expectation was that they’d send me an offer subject to a final interview, and if I liked it I’d jump on a plane to see them, spend a few hours sizing each other up, and then make a decision one way or the other.

This turned out to be far too sensible. Instead HR took the lead and said, through the agent, that I should go to this West African country to see the place and “meet the team”. Now if this can be done easily, then fair enough. If I was working in London, there’s no reason why I couldn’t jump on the plane to Aberdeen to meet a few folk and scope out the office. But almost nobody goes to these sort of locations on a scoping visit, they just jump aboard and hope it’s okay when they get there. I signed up for Sakhalin knowing nothing about it, and turned up in Nigeria for a 3-year assignment having never set foot in the place. It’s just the way it is, standard practice in the oil business. So I explained that I didn’t need to see the place, anything will be an improvement on Nigeria, and can we just get on with it please? Time was running out, as I would need to start talking about my next assignment with my current employer, and I don’t like to fanny people about too much.

Then word came back that I needed to go to this country because the Country Manager, Production Manager, and Maintenance Manager (or something) all wanted to interview me. So I looked at how I could get myself over to this country without my current employer knowing (they’d twig pretty quickly I wasn’t there on holiday). After a bit of research, it turned out that I couldn’t. It is not possible to lie about which flights you’re taking in and out of Nigeria, because we get taken to and met from every flight directly for (very sensible) security reasons. And I didn’t even know how I’d get a visa for this place, and if the agent or the company HR people knew they were keeping it to themselves. Checking the internet, I needed to apply for a visa in advance, but I had to find even that out for myself. HR were about as proactive as Israel’s Iron Dome.

So I went back to them with a proposal: the three people who want to see me can select one person to come and meet me in London on a certain Saturday, which I can plausibly claim is a brief trip home. They have their headquarters in London, so it shouldn’t be that difficult. Or all three could come, I really didn’t care. The agent took this proposal to the young HR chap, who seemed reluctant to pass it to his bosses. Instead he came back with a rather pompous repetition of his previous demand that I show up in this bloody country. So I told them, once and for all, I’m not sodding going. I’ve made a proposal, either answer it or leave me alone. And still nobody was any the wiser as to how I could get a visa.

The agent then kind of got shoved to the side and I spoke directly with the oil company, an HR girl who was actually quite nice but clueless. I told her that before I get on a plane anywhere I need a firm offer to discuss when I get there. Meanwhile, she was trying to persuade me that I really did need to go for an interview in-country. So I decided to give her a bit of training in How Oil Companies Normally Interview Candidates In A Sensible Manner (later, my colleagues thought I should have invoiced them a consultancy fee). I said it’s fine to want a face-to-face interview, that part I get, but it’s mind-bogglingly stupid to expect candidates to present themselves in the developing world for the purpose. Every other organisation arranges for candidates to come to a logical transport hub – Dubai, London, Singapore (where I had the main interview for my Nigeria job) – and a panel of managers spend 2-3 days conducting interviews and having a bit of a jolly. Nobody – not even blitheringly idiotic major oil companies – bring candidates to the arse-end of nowhere. In my case the Nigerian interview was conducted over the phone once the chaps I met in Singapore had given me the thumbs up. All of this seemed to be new to her.

What also seemed new to their entire organisation was the impracticality of flying between West African countries. They approached the whole thing as if it was a simple hop from Paris to London. For a company which prided itself on its African operations, they seemed to know little about how the place works.

Anyway, they came back with an offer. By this stage I had given them precise details of my current package, to ensure we’d not be wasting our time if they were only paying peanuts. Their offer matched my current package almost to the dollar, only more of theirs was wrapped up in discretionary bonuses. I was still being taxed at full UK rates, even though this money wouldn’t be handed over to HMRC and I’d have to remain a tax exile. Bearing in mind this company is very much smaller and far less well known than my current employer, the question of why the hell I would leave for the same money did spring to mind.

When they rang me back, for what was to be the last time, I asked them this. They said they considered their offer to be competitive, which I suppose it was if they were hiring somebody unemployed and not trying to poach somebody from a much larger and grander organisation. But these small independent companies have to poach people, and that means giving them an incentive to jump ship. Paying the same money isn’t going to interest anybody.

But that wasn’t the worst of it. She repeated the request, now backed by some manager or other, that it was “their policy” to conduct the Stage 2 interviews in-country. Stage 2?!! I’d had four interviews over the course of 2-3 months, and we were still not out of Stage 1! They couldn’t do the interview in London because “all the managers cannot come”, and they could not select one to make the trip because “that’s not how we work”. This was an outfit whose main selling points were quick decisions, flexible operations, efficiency, common sense, and a disregard for procedures.

Also, it wasn’t just the in-country managers who would interview me, I needed to present myself to my future colleagues as well and secure their approval. Which I admit was a first for me. Normally your management hires you and you meet your new colleagues on your first day in the office. This lot seemed to hire via some kind of star chamber.

In withdrawing my candidacy, I pointed out that if I wanted to experience indecision, nonsensical policies, managerial dithering, and general incompetence I could simply attend any random meeting in my own organisation. I didn’t need to change company to get this sort of thing. That pretty much burned the bridges, with them and the agent.

(Incidentally, they told me their other candidates had no problem going to interviews in-country. Which if true, and they find someone suitable, shows them to be doing things right after all. But I am curious to know who these other candidates were: lordy, if I’m the front-runner they can’t be that great! And I can’t imagine too many decent candidates leaving a major oil company to take up this role. So it wouldn’t surprise me if I get a call in 6 months time saying the position has magically reopened and would I be interested in reapplying?)

As things turned out, I did get other agencies calling me asking if I wanted to apply for this same position over the course of the next two years. And by pure coincidence I found myself a few years later in the same meeting as one of the managers who’d interviewed me. I decided to give him a little feedback on his company’s recruitment methods and he (unsurprisingly) got very defensive and said “well, that’s the way we work”. So I asked him if they ever managed to recruit anyone and he said they did, but within two months it was obvious he wasn’t suitable so they got rid of him. Then they hired another guy who walked about before six months was up, but which time the oil price had crashed and they didn’t need anyone there anyway.

“That’s the way we work.”

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One Man, One Vote

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The financial press have a certain fetish about Total’s CEO Patrick Pouyanne. Here’s another gushing article:

Patrick Pouyanne pounced after Occidental Corp trumped Chevron’s $33 billion bid for Anadarko in April with an offer that includes raising financing by selling some of Anadarko’s operations worth up to $15 billion.

By keeping those in the know to a minimum, the French CEO was able to stay flexible in negotiations, take a swift decision and ensure there were no leaks until the binding deal worth $8.8 billion was announced on Sunday, a Total source said.

“Pouyanne proceeded in the same way he did with previous deals: a restricted task force, no bankers and no external counsel,” another source, close to the deal, told Reuters.

Throwing out the rulebook that expects CEOs to be surrounded by investment bankers and other advisers when dealmaking has become a trademark for the 55-year-old CEO and chairman of Total, who took the helm of the French energy major in 2014.

He has surprised investors with his acquisitions, such as buying Maersk’s oil and gas business in 2017 and Engie’s upstream LNG operations in 2018, setting one deal in motion after an unsolicited phone call with the controlling shareholder.

Shouldn’t we perhaps wait a little to see how rushing headlong into major deals while consulting almost nobody plays out over the long term? Look at this bit again:

a restricted task force, no bankers and no external counsel

You’d not hear this from fawning financial journalists, but Pouyanne has a reputation for yelling at anyone who doesn’t tell him what he wants to hear and demanding absolute obedience from all those around him (he’s a product of a grande ecole, after all). And here he is doing multi-billion dollar acquisitions in record time without involving bankers or outsiders. What could possibly go wrong?

For all the praise heaped on him, thus far Pouyanne is reaping the rewards of projects sanctioned by his predecessor. He has put considerable personal investment into Total’s Uganda project but that’s not exactly going according to plan:

French oil and gas major Total’s chief executive said on Thursday that the firm’s Ugandan Lake Albert oil project will be a personal priority this year after setbacks led to a delay on a final investment decision (FID) in 2018.

…

The project, which was expected to have been cleared last year, has been delayed due to disagreements over field development strategy, tax disputes and a lack of infrastructure such as a refinery or export pipeline.

Indeed, it has all the hallmarks of a development someone jumped into feet-first without carrying out proper due diligence and ensuring the right legal structures were in place. I don’t know if Total’s acquisition of Anadarko’s African assets is a genius move or not, but financial journalists should be asking questions over how decisions get made in that company, not blowing smoke up the CEO’s arse.

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Dinosaur Petrola

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A few weeks ago news broke that Chevron had bought US independent Anadarko for $33bn, the largest oil and gas acquisition since Shell bought BG in 2016, bigger than Total’s acquisition of Maersk Oil in April 2017. The acquisition is obviously done to boost Chevron’s US shale and LNG production, so it’s very much a US-centered affair. It is this passage I want to focus on:

Chevron, Exxon, Royal Dutch Shell Plc and BP Plc largely missed out on the first phase of the shale bonanza, when more nimble independent producers such as Anadarko pioneered shale drilling technology and leased Permian acreage on the cheap.

One of the things which surprises me is how slowly the oil majors are reacting to cataclysmic changes in the oil and gas industry. But their lumbering clumsily about in the US shale plays while nimbler outfits cleaned up is really just a sideshow. The real change is in how the oil majors will do business in future. Gone are the days when a supermajor would turn up in a stone-age society, bung the local chiefs some shiny trinkets, and bring in a battalion of palefaces to exploit the reservoir for the next 25 years. Nowadays national governments control pretty much every sizeable oil and gas prospect regardless of which foreign company holds the licence, and nothing is going to get developed in future without the full cooperation of the government or their proxy in the form of a national oil company. This has been the case for some time now, and the past decade or so has seen a rapid increase in local capabilities, whittling away the added value foreigners bring.

In short, oil companies are becoming less owners of an oilfield than service contractors to the real owners, the government. This is an entirely different business model requiring a flatter organisation with strong local subsidiaries who are able to make decisions and do business according to the peculiarities of the region. Thus far, none of the majors have shown much interest in restructuring along these lines, instead growing ever larger and centralising power with a handful of decision-makers cooped up in a gargantuan HQ back in the home country. I expect it is the mind-boggling revenues still being generated from legacy fields which gives them the luxury of ignoring how the industry is changing.

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Global Witness Tampering

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This morning I received an email from an outfit called Global Witness. Let’s take a look:

All of the $4.9 trillion the oil and gas industry is forecast to spend on exploration and extraction from new fields over the next decade is incompatible with the Paris Agreement’s 1.5°C goal, according to new analysis by Global Witness.

All of it? I confess, when the signing of the Paris Agreement was being celebrated by world leaders, I didn’t realise it meant an immediate and total halt on global oil and gas exploration and production. You’d have thought someone might have mentioned it.

The report, Overexposed, published today, is the first to compare the latest 1.5°C climate scenarios used by the Intergovernmental Panel on Climate Change with industry forecasts for production and investment. It finds that any oil and gas production from fields not yet in production or development would exceed what climate scenarios indicate could be extracted and burned while still limiting warming to 1.5°C.

I’d love to see the equation they’ve used to derive global temperature changes from oil and gas production figures. Sadly, the link to their methodology (.pdf) doesn’t include it, or any explanation of how they’ve arrived at this conclusion.

ExxonMobil is forecast to spend the most in new fields over the next decade, followed by Shell. Together with Chevron, Total and BP these five oil and gas majors are set to spend over $550 billion on exploring and extracting oil and gas that is not aligned with the world’s climate goals.

Next up: Toyota stubbornly making cars while world demands jet packs.

“There is an alarming gap between the plans of oil and gas majors and what the latest science shows is needed to avoid the most catastrophic and unpredictable climate breakdown” said Murray Worthy, Senior Campaigner at Global Witness and author of the report.

Meaning, there is an alarming gap between oil and gas demand as expressed by its users and the quantity Murray Worthy thinks they should be using.

“Investors will rightly be concerned that despite industry rhetoric to the contrary, the oil and gas sector’s spending plans are so drastically incompatible with limiting climate change. This analysis should encourage the escalation of investor engagement efforts to challenge oil and gas majors to credibly align their business plans with the Paris goal. Blindly pushing ahead comes with huge financial risks for investors, either as a result of the transition to a low carbon economy, or as the devastating consequences of a changing climate stack up.”

That’s a matter for investors, is it not? I hardly think investors in the oil and gas industry are so dumb as to not be aware of two or three decades of climate hysteria. I expect a good few are piling in on the basis that if the likes of Global Witness get their way, there will be a severe shortage of oil and gas supplies in future allowing them to make hay. No, what Murray Worthy is saying is he disapproves politically of how investors are spending their money, but dresses his words up as concern for their welfare.

Global Witness’ report finds it is only possible to claim this investment is compatible with the Paris climate goals by using scenarios that assume massive carbon capture and removal will take place in the future. This is despite the fact that these technologies remain unproven at scale.

Which is pretty apt, given the technologies which will render oil and gas production unnecessary are also unproven at scale.

The industry is at a crucial turning point; capital investment has fallen by over a third since 2014, largely due to a slump in oil prices. Yet, investment is forecast to rise by over 85% over the next decade, reaching over $1 trillion a year. Two thirds of this is set to take place in new fields.

It’s almost as if investors don’t take you seriously, isn’t it? Now why could that be?

Major capex projects in new fields that are due to be approved over the next decade include US domestic shale expansion, the Vaca Muerta shale in Argentina, the Kashagan oil field in Kazakhstan and the Yamal megaproject in Russia.

The Kashagan field went into production in 2013; I expect he’s talking about the expansion project, which doesn’t make it a new field. Vaca Muerta has been in production since 2011, and I expect he’s also talking about expansion projects. He’s on slightly firmer ground regarding Yamal; production on the Yamal peninsula started in 2017, but the project I think he’s talking about – the development of the Kharasaveyskoye field – is yet to go ahead. However, that’s a Gazprom project, so nothing to do with the majors listed in the article. It’s therefore not surprising Global Witness and those with real money at stake are not on the same page here, is it?

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Worse than a crime

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Yesterday I discovered via Twitter that Notre Dame cathedral in Paris had caught fire, and not long after this photo was circulating:

The reason 9/11 had such an effect, at least on me, was the visual impact of the towers falling in real time. It was surreal, and the next morning I woke up wondering if it really happened. The death toll was appalling, but it was watching the towers collapse on live TV which made it an event equivalent to previous generations’ shooting of JFK whereby we’ll always remember where we were when the news broke.

I felt a similar sensation yesterday watching the spire of Notre Dame fall, knowing things will never quite be the same again. It sometimes takes a lot to move me – I can walk around concentration camps and WWI trenches and not feel anything other than the wind – but the sight of a monument to western civilisation, over 800 years old and the survivor of wars, invasions, revolutions, plagues, and occupations, going up in flames left me incredibly sad.

It also left me angry. This should never have happened. Fires during construction and renovations are common, and renovation work recently started on Notre Dame. There are hundreds if not thousands of rules, regulations, standards, and best practices which exist precisely to prevent fires breaking out on building sites. I know this because when you do work on an oil and gas installation with hundreds of tonnes of pressurised hydrocarbons all around you, you pay attention to them. It seems someone working on Notre Dame didn’t. I doubt this was arson, despite the increasing number of arson attacks on churches in France, not to mention a priest getting his throat cut by Islamists.

I expect the investigation will find the cause was either someone not making his equipment safe before leaving for the day, e.g. he didn’t switch it off or put something hot on something flammable (in the offshore oil industry, someone must stand watch for an hour after work stops to make sure nothing spontaneously combusts), or it was an electrical fire. When renovation work is going on there are a lot of cables lying around, temporary junction boxes, and other equipment which gets bashed around and overloaded. That a fire risk is well known on such sites ought to have led those in charge to apply prevention and mitigation measures to 150% considering the importance of the building. I expect cost was one reason they didn’t, and I’d be willing to bet the modern managerial technique of loafing around in offices at the expense of employing good quality tradesmen and supervising them properly also played its part as well. I expect the investigation will state the technical facts of how the fire started and say little about organisational failings, especially if there’s someone important or a union involved. This is the modern way, an inevitable result of the utterly shameless being put in charge of a no-blame policy.

I also noticed what is probably a minority of morons on social media celebrating the destruction as just desserts for a hodge-podge of alleged sins on the part of the French including colonialism, antisemitism, slavery, and every other grievance they think they can make a buck out of mongering. A lot of them seem to be from the former French colonies, particularly Algeria. I’m not surprised by their remarks, but the question I have for those people wringing their hands is where did these attitudes come from? Who has been banging on about the evils of colonialism, Christianity, western civilisation, and European history for decades? Who have made whole careers out of telling non-Europeans they have been and continue to be oppressed, enslaved, and exploited by the evil white man? The answer is western institutions which have been captured by Marxists and other lefties who hate our civilisation, culture, and history and want the whole lot destroyed. I wonder, how many professors at the Sorbonne who this morning look across the Seine at the blackened, roofless masonry of Notre Dame perpetuated the mindset which is now upsetting them so?

I have no doubt Notre Dame will be restored, but there will be small but noisy campaigns for the money to be used elsewhere or the building replaced with something “more inclusive”. If you think I’m exaggerating, consider that a sizeable chunk of Britain’s ruling classes think ISIS butchers should be welcomed into Britain and given free housing and the western response to terrorist attacks is to arrest those who talk about them in an unapproved manner. The fire at Notre Dame is a tragedy because a wonderful monument to an incredible civilisation almost got destroyed. The greater tragedy is that the civilisation itself is almost destroyed, and few have the courage or desire to put the fire out.

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LGBThee

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From Shell’s corporate website:

At Shell, we support and enable remarkable people from every background, and strive to be a pioneer of LGBT inclusion in the workplace.

At Shell, we care about the diversity of our people because we believe that a fully inclusive workplace allows our employees to flourish and so allows our business to flourish.

When our employees excel, we excel. It’s for this reason that we are proud to support our lesbian, gay, bisexual and transgender (LGBT) staff, promoting equality for employees regardless of sexual orientation or gender identity.

Also from Shell’s corporate website:

Shell has been active in Brunei since 1929, when the first commercial oil find was made by the British Malayan Petroleum Company, owned by Royal Dutch Shell.

The Company was the forerunner to the present joint-venture company of Brunei Government and Royal Dutch Shell, Brunei Shell Petroleum Company Sdn Bhd.

Through the solid partnership between the Government and Royal Dutch Shell, BSP, Brunei LNG (BLNG), Brunei Shell Marketing (BSM), Brunei Shell Tankers (BST)/Brunei Gas Carriers (BGC) form the Brunei Shell Joint Venture (BSJV) companies which constitute the largest employer in Brunei after the government.

Shell Deepwater Borneo (SDB) is a 100% Shell Company that was established in Brunei as a result of Royal Dutch Shell’s acquisition of New Zealand based Fletcher Challenge Energy in 2001.

From The Guardian:

Brunei is to begin imposing death by stoning as a punishment for gay sex and adultery from next week, as part of the country’s highly criticised implementation of sharia law.

From 3 April, people in the tiny south-east Asian kingdom will be subjected to a draconian new penal code, which also includes the amputation of a hand and a foot for the crime of theft. To be convicted, the crimes must be “witnessed by a group of Muslims”.

…

It was a directive of the Sultan of Brunei, Hassanal Bolkiah, who is one of the world’s richest leaders with a personal wealth of about $20bn (£15bn) and has held the throne since 1967. He described the implementation of the new penal code as “a great achievement”.

So Shell demonstrates a firm commitment to LGBT rights via ultra-woke initiatives in places where minorities have been treated without prejudice for at least a decade while they bankroll a monarch who decrees homosexuals must be stoned to death.

Similarly, Total caved in to a shakedown by Accenture and signed (pdf) an LGBT charter along with a whole load of other French companies. Meanwhile, here’s their CEO and other senior executives signing a deal with the Iranian government:

Here’s some news from Iran:

The Islamic Republic of Iran publicly hanged a 31-year-old Iranian man after he was found guilty of charges related to violations of Iran’s anti-gay laws, according to the state-controlled Iranian Students’ News Agency.

The unidentified man was hanged on January 10 in the southwestern city of Kazeroon based on criminal violations of “lavat-e be onf” – sexual intercourse between two men, as well as kidnapping charges, according to ISNA. Iran’s radical sharia law system prescribes the death penalty for gay sex.

While oil company HR departments demand acceptance and celebration of LGBT lifestyles from their staff, their bosses are complicit in propping up the most murderously homophobic regimes on earth. But then moral codes have always been for the plebs while the priestly caste gets a pass, haven’t they?

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Masters of Business Awareness

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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.

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