An ‘Atlas’ of e-learning for a contact sport

The Oilholic has had the pleasure of visiting quite a few E&P facilities over the years from offshore rigs to onshore gas fields. Going back roughly a decade, it wasn't uncommon [and still isn't] to see roughnecks in hard hats being given instructions ranging from operational to health and safety by a superior.

The mode of communication usually involved barking verbal instructions in highly colourful language with bulky printed training manuals on-hand containing everything from evacuation routes to rules and regulations. All of this has changed and rather dramatically, if one may add. What started as a slow, but sure, transformation at the turn of the millennium came in the form of former roughnecks and rig engineers imparting their wisdom for the benefit of budding on-site professionals via training courses using the electronic medium.

 

By 2006-07, e-learning provided by specialist providers had gained considerable traction in what is largely a contact sport. Among the stalwarts, in this relatively young but highly competitive market, is a part private equity-owned, part employee-owned educator headquartered in Aberdeen, Scotland called Atlas.

 

The firm came on the Oilholic's radar back in 2011 at the 20th World Petroleum Congress in Doha.  A further look into Atlas, at the suggestion of a banking sector contact, revealed a client portfolio of some of the biggest names in the business for a company which is less than 20 years old. IOCs aside, strikingly enough, this blogger found that a number of NOCs had also availed Atlas' service to give their workforces – as the educator's motto states – the "knowledge to perform."

 

For the sake of a crude analogy, the Oilholic quipped to Kevin Short, Director of Sales at Atlas, if they'd in fact become the Rosetta Stone of the oil & gas business. "I don’t think it is that simple, although our e-learning courses and industry solutions are indeed multi-linguistic," he laughs.

 

For Short, it's more about creating, marketing and selling virtual learning solutions aimed at "improving efficiencies while minimising operational and legislative risk". This could range from e-training courses for employees moving dangerous goods by air to a simple training solution for evacuating an E&P facility.

 

"There are industry standard courses available from our library; but more often than not, you'll find clients ordering bespoke solutions or an altered version of an existing training solution to suit their specific needs," Short explains.

 

There is no mystique about what Atlas provides and the company continues to record double-digit growth on an annualised basis, much to the delight of its PE owners [HG Capital] one assumes. Peer-to-peer contact and reviews have certainly been of immense help in achieving this – both in terms of retaining clients and bagging new ones. Over the years, Atlas has expanded to Dubai, Kuala Lumpur and Houston.

 

Understandably, the firm keeps abreast of new emerging techniques in the E&P sector, unconventional prospection activity and allied health and safety issues to come-up with e-learning options for clients.

 

However, the Oilholic put one caveat to Short – pros from Aberdeen who have gained expertise for better parts of four decades, especially on the health and safety front in wake of the Piper Alpha tragedy (1988), are also on the educating circuit from Dubai to Calgary and in great demand. So is Atlas toughing it out with them too?

 

"In a sense, perhaps yes. But in terms of the broader picture no! That's because we also work with some of these professionals a lot of the time and hire them as what we call 'Subject Matter Experts' to work on fresh concepts for courses and bespoke solutions for clients. What's good for them is good for Atlas and by default good for the commissioning client."

 

When it comes to fishing these guys out – networking, events, headhunting those with industry reputation and project-based demand all play a part. Such expertise has helped the company put together its patented Atlas Knowledge Centre – a 3,000 page grab of all of the company's core content. Akin to a virtual oil & gas knowledge encyclopaedia, it is made available to subscribers serving as a "refresher" or instant help-guide to learners.

 

But what about converting new clients around the e-learning viewpoint? Short says competency is key here. "We can help companies by ensuring that their recruits not only just sit the course but based on the information that's been given to them, they become competent to handle the tasks at hand. It is not just about providing reading and reference material but rather ensuring that the candidate is learning."

 

Atlas also has an advisory board to help it test run pilot courses and provide constant feedback. Last time the Oilholic checked, there were around 53 companies on board for such an exercise. Finally, the company is also rather careful in being shall we say 'electronic platform neutral'.

 

"If a client wants an e-learning solution to work on a BlackBerry we wouldn't urge them to adopt an Android OS system, or Apple OS. Ultimately, that's their call. We have a young team here who will tailor a course to the clients' IT requirements and subsequently licence it to them, rather than it being the other way around." A wise line to take indeed! That’s all for the moment folks! Keep reading, keep it 'crude'!

NOTE: November 1, 2013 - To read this blogger's interview with Atlas CFO Graeme Park for CFO World click here.

 

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To email: gaurav.sharma@oilholicssynonymous.com
 

© Gaurav Sharma 2013. Photo: Atlas HQ, Energy Park, Aberdeen, Scotland © Gaurav Sharma, October 2013.

The tale of Alberta's first commercial oilfield

A quaint town called Turner Valley in Alberta, Canada may not mean much to the current crop of oil and gas industry observers. However, it has a special place in British history as well as that of the industry itself. Back in 1914, the town acquired the status of Western Canada's oil hub and had the country's first commercial oilfield which, for a while, was the largest oil and gas production base in the entire British Empire as it stood then.

 

Hell’s Half Acre by David Finch is a meticulously researched and entertaining tale of the townsfolk of Turner Valley, and those who came from further afield to make it all happen back in the day. The author, who has been researching the social history of Western Canada’s oil and gas industry since the 1980s and has no fewer than 15 books about the region to his name, recounts where it all began in earnest for the province.

 

The drilling rigs, processing plants and pipelines are all there, and so are anecdotes of the wildcatters and workers who put it all in place, who made it happen and who lived to tell their tales. In order to make for a lively narration, Finch has gelled archived material and the dozens of interviews he conducted extremely well. But this pragmatic book of just over 200 pages, not only narrates a tale of commercial success, but also what costs were paid by Turner Valley in its (and by default) Canada's historic quest for black gold; an effort, which as fate would have it, was sandwiched between the two World Wars.

 

Hell's Half Acre is a very real place in a coulee just outside of Turner Valley, writes Finch. For two decades, companies piped excess natural gas to the lip of this gorge and burned it – in order to produce valuable gasoline they had to also produce the natural gas for which there were limited markets at the time. In fact, the glowing sky could be seen as far south west as Calgary, the author tells us.

 

Canada's national treasure also became a military target for while. At its height, and before peaking in 1942, the Turner Valley provided 10 million barrels per day towards the Allied War Effort. As you would expect, what was then (and still is) a cyclical industry saw its own booms and busts. The companies and their cast of characters from Turner Valley have also been delved into, and in some detail, by Finch.

 

The Oilholic first came across this book on a visit to Calgary and a chance visit to DeMille Bookstore at the recommendation of a local legal expert. For that, this blogger is truly grateful to all parties concerned, and above all to the author for enriching one's knowledge about this fascinating place. Hence, this review was long overdue!

 

Today Turner Valley, a harbinger of the success of Canada's oil and gas industry, is known for tourism, leisure and for being the hometown of Laureen Harper, the frank and vivacious wife of Prime Minister Stephen Harper. So Finch's colourful book could serve as a timely reminder of the importance of a bygone era as Turner Valley begins the countdown to its centennial celebrations of the 1914 discovery of oil.

 

The Oilholic is happy to recommend this book to all those interested in the history of the oil and gas business, origins of the Canadian energy industry, Alberta's place in the global geopolitical oil and gas equation and last, but not the least, anyone seeking a riveting book about the Great Alberta Oil Patch.

 

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© Gaurav Sharma 2013. Photo: Front Cover – Hell’s Half Acre © Heritage House Publishing

North Sea & the 'crude' mood in Aberdeen

The Oilholic spent the wee hours of this morning counting the number of North Sea operational support ships docked in Aberdeen Harbour. Interestingly enough, of the nine in the harbour, six were on the Norwegian ships register.

Whether you examine offshore oil & gas activity in the Norwegian sector of the North Sea or the British sector, there is a sense here that the industry is enjoying something of a mini revival if not a full blown renaissance. As production peaked in the late 1990s, empirical evidence that oil majors had begun looking elsewhere for better yields started emerging. Some even openly claimed they’d given up.

Over a decade later, with new extraction techniques and enhanced hydrocarbon recovery mechanisms in vogue – a different set of players have arrived in town from Abu Dhabi National Energy Company (TAQA) to Austria's OMV, from Canada's Talisman Energy to China's Sinopec. Oil recovery from mature fields is now the talk of the town.

Even the old hands at BP, Shell and Statoil – who have divested portions of their North Sea holdings – seem to be optimistic. The reason can be found in the three figure price of Brent! Most commentators the Oilholic has spoken to here, including energy economists, taxation experts, financiers and one roughneck [with 27 years of experience under his belt] are firmly of the view that a US$100 per barrel price or above supports the current level of investment in mature fields.

One contact remarks that the ongoing prospection and work on mature fields can even take an oil price dip to around $90-level. "However, anything below that would make a few project directors nervous. Nonetheless, the connect with between Brent price fluctuation and long term planning is not as linear as is the case between investment in Canadian oil sands projects and the Western Canadian Select (WSC) price."      

To put some context, the WSC was trading at a $30 per barrel discount to the WTI last time yours truly checked. Concurrently, Brent's premium to the WTI, though well below historic highs, is just shy of $10 per barrel. Another contact, who retains faith in the revival of the North Sea hypothesis, says it also bottles down to the UK's growing demand for natural gas.

"It's what'll keep West of Shetland prospection hot. Furthermore, and despite concern about capacity constraints, sound infrastructural support is there in the shape of the West of Shetland Pipeline (WOSP) which transports natural gas from three offshore fields in the area to Sullom Voe Terminal [operated by BP]."

While further hydrocarbon discoveries have been made atop what's already onstream, they are not yet in the process of being developed. That's partially down to prohibitive costs and partially down to concerns about WOSP's capacity. However, that's not dampening the enthusiasm in Aberdeen.

Five years ago, many predicted a rig and infrastructure decommissioning bonanza to be a revenue generator and become a thriving industry itself. "But enhanced oil recovery schemes keep pushing this 'bonanza' back for another day. This in itself bears testimony to what's afoot here," says one contact.

UK Chancellor George Osborne also appears to be listening. In his budget speech on March 20, he said that the government would enter into contracts with companies in the sector to provide "certainty" over tax relief measures. That has certainly cheered industry players in Aberdeen as well the lobby group Oil & Gas UK.

"The move by the Chancellor gives companies the certainty they need over the tax treatment of decommissioning. At no cost to the government, it will speed up asset sales and free up capital for companies to use for investment, extending the productive life of the UK Continental Shelf," a spokesperson says, echoing what many here have opined.

Osborne's budget speech also had one 'non-crude' bit of good news for the region. The Chancellor revealed that one of the two bidders for the UK government's £1 billion support programme for Carbon Capture and Storage (CC&S) is the Peterhead Project here in Aberdeenshire. Overall, the industry sounds optimistic, just don't mention the 'R-word'. Scotland is due to hold a referendum on September 18, 2014 on whether it wants to be independent or remain part of the United Kingdom.

Hardly any contact in a position of authority wants to express his/her opinion on record with the description of political 'hot potato' attributed to the referendum issue by many. The response perhaps is understandable. It's an issue that is dividing colleagues and workforces throughout the length and breadth of Scotland.

General consensus among commentators seems to be that the industry would be better off in a 'United' Kingdom. However, even it were to become a 'Disunited' Kingdom come September 2014, industry veterans believe the global nature of the oil & gas business and the craving for hydrocarbons would imply that the sector itself need not be spooked too much about the result. National opinion polls suggest that most Scots currently prefer a United Kingdom, but also that a huge swathe of the population is as yet undecided and could be swayed either way.

In a bid to conduct an unscientific yet spirited opinion poll of unknown people since known ones were unwilling, the Oilholic quizzed three taxi drivers around town and four bus drivers at Union Square. Result – two were in the 'Yes to independence' camp, four were in the 'No' camp and one said he'd just about had enough of the 'ruddy question' being everywhere from newspapers to radio talk shows, to a stranger like yours truly asking him and that he couldn't give a damn!

Moving away from the politics and the projects to the crude oil price itself, where black gold has had quite a fortnight in the wake of a US political stalemate with regard to the country's debt ceiling. Nervousness about the shenanigans on Capitol Hill and the highest level of US crude oil inventories in a while have pushed WTI’s discount to Brent to its widest in nearly three months by this blogger's estimate.

Should the unthinkable happen and the political stalemate over the US debt ceiling not get resolved, it is the Oilholic's considered viewpoint that Brent is likely to receive much more support at $100-level than the WTI, should bearish trends grip the global commodities market. This blogger has maintained for a while that the WTI price still includes undue froth in any case, thereby making it much more vulnerable to bearish sentiment. 

Just one final footnote, before calling it a day and sampling something brewed in Scotland – according to a recent note put out by the Worldwatch Institute, the global commodity 'supercycle' slowed down in 2012. In its latest Vital Signs Online trends report, the institute noted that global commodity prices dropped by 6% in 2012, a marked change from the dizzying growth during the commodities supercycle of 2002-12, when prices surged an average of 9.5% per annum, or 150% over the stated 10-year period.

Worldwatch Institute says that during the supercycle, the financial sector took advantage of the changing landscape, and the commodities market went from being "little more than a banking service as an input to trading" to a full-fledged asset class; an event that some would choose to describe as "assetization of commodities" and that most certainly includes black gold. Supercycle or not, there is no disguising the fact that large investment banks participate in both financial as well as commercial aspects of commodities trading (and will continue to do so).

Worldwatch Institute notes that at the turn of the century, total commodity assets under management came to just over $10 billion. By 2008 that number had increased to $160 billion, although $57 billion of that left the market that year during the global financial crisis. The decline was short-lived, however, and by the end of the third quarter in 2012, the total commodity assets under management had reached a staggering $439 billion.

Oil averaged $105 per barrel last year and a slowdown in overall commodity price growth was indeed notable, but Worldwatch Institute says it is still not clear if the so-called supercycle is completely over. That’s all for the moment folks! Keep reading, keep it ‘crude’!

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© Gaurav Sharma 2013. Photo 1: North Sea support ships in Aberdeen Harbour. Photo 2: City Plaque near ferry terminal, Aberdeen, Scotland © Gaurav Sharma, October 2013.

A crude walk down 'Exploration Drive'

The Oilholic finds himself in the 'Granite City' or the 'Oil capital of Europe' as Aberdeen, Scotland has recently come to be known as. Given that context, a street named Exploration Drive in the city's Energy Park has a nice ring to it. In what has been an interesting week – news-wise, market reports-wise and otherwise – right up to this morning, it's good to be here, meeting old friends and making yet newer ones during been. While this blogger's flight got in on time, blustery conditions so common in this part of the world saw one plane overshoot the runway and the airport closed for a few hours. 

That wasn't the only news in town. Reports of the Libyan PM first getting kidnapped and then released, flooded the wires and Shell – Nigeria’s oldest IOC operator – has put up four oil blocks there feeding the Bonny Terminal (the country’s oldest export facility) up for sale, according to the FT.

The chatter, if formally confirmed, would be seen as a retreat by the oil major from a part of the world where theft of crude from pipeline infrastructure is rampant. Shell it seems is getting mighty fed up of constant damage to its pipelines. Moving on from news, it is worth summarising a couple of interesting notes put out by Moody's these past few weeks.

 

In the first, the ratings agency opines that BP can tolerate a moderate penalty related to the 2010 Gulf of Mexico oil spill without compromising its credit quality. However, a severe penalty resulting from a finding of gross negligence would change the equation according to Moody's, with Phase 2 of the trial to determine limitation and liability having begun stateside.

"BP can tolerate about US$40 billion in penalties, after taxes, under its A2, Prime-1 ratings. A ruling in line with the company's current $3.5 billion provision would leave some headroom to absorb other charges, including settlement costs from payouts awarded for business economic loss claims, which ultimately depend on the interpretation of the Economic and Property Damages Settlement Agreement," Moody's noted.

Other defendants in the case include Transocean, Halliburton and Anadarko. Of these, Transocean, which owned the Deepwater Horizon rig, is exposed to sizable fines and penalties. "Indemnifications will protect Transocean from some liabilities. But other items could ultimately cost the company billions of dollars to resolve," says Stuart Miller, senior credit officer at Moody's.

In its second note, the ratings agency said it had downgraded Petrobras' long term debt ratings to Baa1 from A3. The downgrade reflects Petrobras' high financial leverage and the expectation that the company will continue to have large negative cash flow over the next few years as it pursues its capital spending programme.

With that programme being the largest among its peers, Petrobras' spending in 2013 could be almost double its internally generated cash flow. The company's total debt liabilities increased in the first half of 2013 by $16.3 billion, or $8.36 billion net of cash and marketable securities, and should increase again in 2014, based on an outlook for negative cash flow through 2014 and into 2015. The outlook remains negative, Moody's adds.

Moving away from companies to countries, global analytics firm IHS has concluded that North America’s "Tight Oil" phenomenon is poised to go global. In its latest geological study – Going Global: Predicting the Next Tight Oil Revolution – it says the world has large 'potential technical' recoverable resources of tight oil, possibly several times those of North America.

 

In particular, the study identified the 23 "highest-potential" plays throughout the world and found that the potential technically recoverable resources of just those plays is likely to be 175 billion barrels – out of almost 300 billion for all 148 play areas analysed for the study.

While it is too early to assess the proportion of what could be commercially recovered, the potential is significant compared to the commercially recoverable resources of tight oil (43 billion barrels) estimated in North America by previous IHS studies. The growth of tight oil production has driven the recent surge in North American production. In fact, the USA is now the world largest 'energy' producer by many metrics.

"Before the tight oil revolution people thought oil supply would start to fall slowly in the longer term, but now it is booming. This is important because Russian production has been hovering at the same level for some time, and now the US will exceed the Russia’s total oil and gas production," says Peter Jackson, vice president of upstream research at IHS CERA.

In IHS' view, Russian oil production is unlikely to rise in the medium term. In fact, the firm anticipates that it will start falling because of the lack of investment in exploration in emerging areas such as the Arctic and new plays such as tight oil. "But of course, there is a long lead time between deciding to invest and exploring and then getting that oil & gas out of the ground," Jackson adds.

North America's growth in supply from the tight oil and shale revolution means that the USA is now less worried about the security of energy supply. It is now even thinking of exporting LNG, which would have been unheard of ten years ago, as the Oilholic noted from Chicago earlier this year.

This is having an impact on the direction of exports around the world changing direction, from West to East, for example to China and post-Fukushima Japan. Furthermore, light sweet West African crudes are now switching globally, less directed to the US and increasingly to Asian jurisdictions.

OPEC, which is likely to increase its focus in favour of Asia as well, published its industry outlook earlier this month. While its Secretary General Abdalla Salem el-Badri refused to be drawn in to what production quota it would set later this year, he did say a forecast drop in demand for OPEC's oil was not large.

The exporters' group expects demand for its crude to fall to 29.61 million bpd in 2014, down 320,000 bpd from 2013, due to rising non-OPEC supply. "Tight oil" output would be in decline by 2018 and the cost of such developments means that a sharp drop in oil prices would restrain supplies, Badri said.

"This tight oil is hanging on the cost. If the price were to drop to $60 to $70, then it would be out of the market completely." He does have a point there and that point –  what oil-price level would keep unconventional, difficult-to-extract and low-yield projects going – is what the Oilholic is here to find out over the next couple of days. That’s all for the moment from Aberdeen folks! Keep reading, keep it 'crude'!

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To email: gaurav.sharma@oilholicssynonymous.com

© Gaurav Sharma 2013. Photo 1: Exploration Drive, Aberdeen, Scotland, UK. Photo 2: Weatherford site, Aberdeen Energy Park, Scotland, UK © Gaurav Sharma, October 2013.

Dissecting & summarising PM methodologies

Projects in all sectors of the economy, large or small, need careful planning and consideration. Over the years, project management has evolved considerably to become a crucial standalone genre of management studies.

Perhaps unsurprisingly, literature on the subject has mushroomed. Industry veteran and UCL academic Peter Morris has lent his thoughts via Reconstructing Project Management, which though intentioned as an academic text - is not bland and dry like some other titles vying with it for attention.

In a book of over 300 pages split into four parts and 22 chapters, Morris has offered his take on project management techniques, modes and methodologies drawing on lessons from the past, current discourse and ongoing trends to chart the road ahead. Part I of the book (Constructing Project Management) discusses the history of modern project management and how it evolved into a standalone discipline.

Invariably among the sub-components, oil & gas projects come into view and the author does justice to the sector by flagging it up early on in one of the chapters. He then moves on to the development of project management methodology and standards such as, but not limited to PERT, CPM, APM, PMBOK, etc. In order to contextualise and substantiate his thoughts, there are case studies aplenty.

Moving on to Part II (Deconstructing Project Management), Morris discusses management principles, governance and most importantly the impact (and facets) of risk, governance, people and procurement.

Part III (Reconstructing Project Management) sees the author come into his element, offering his take on the context and character of project management as we know it (or we think we know it) and join the dots to organisational performance. The final Part IV of the book contains a summary and the author's concluding thoughts.

Overall, it’s a good read and a written work likely to retain its value for another couple of decades if not more. The only caveat the Oilholic would like to flag up as an industry observer (and not a practitioner) is that this book is not the meatiest volume out there on project management.

For an outside-in look, what’s here is more than sufficient but some practitioners may beg to differ and demand more detail. Nonetheless, there is strength and uniqueness in brevity too when it comes to tackling such a detailed subject. Hence, this blogger is happy to recommend it to those interested in or involved with project management.

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© Gaurav Sharma 2013. Photo: Front Cover - Reconstructing Project Management © Wiley 2013