Commentary, 7/8 2015

Published Aug 24, 2015
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Cover 7/8 2015

A New Generation

“The world needs more energy” is a statement we’ve heard more than once from Tord Lien, Norway’s Petroleum and Energy Minister. The Minister is not alone in this opinion. It’s echoed around the world, especially when you consider that nearly a quarter of the world’s population lives in both economic and energy poverty.

Norway is very luck when it comes to energy. Long before the first barrels were extracted from the Norwegian Continental Shelf, melting mountain snows fed rivers that generate the nation’s electricity. Minister Lien also points out that not only do these rivers provide the nearly continuous work that is converted into electricity, but also water can be stored in batteries high in the mountains to be released when needed.

Other currently available renewable energy sources suffer from the intermittent nature of the forces that provide the work to generate electricity. The wind may not blow continuously, and the sun certainly doesn’t shine 24/7. The energy industry is working hard to create battery systems to mitigate the irregular nature of these energy sources.

Oil and gas have been and are an incredibly efficient storage medium for energy. And we have become better and better at the efficient usage of this energy. Yet, oil and gas are traded as commodities, the price does not reflect the cost of production – it’s a matter of demand versus supply.

The IEA – International Energy Agency – pegs the daily worldwide consumption of oil and liquid fuels in early 2015 at more than 93 million barrels. Worldwide production in January of this year totalled just over 94 million barrels per day, which means that the surplus available for bunkering is less than 1% of the oil produced each day.

Despite a recent dip that has been attributed to the potential for Iranian oil to once again be traded freely, everyone we hear from agrees that the price to oil will again rise. The only real debate is when demand will once again outstrip supply.

So the question is not a matter of “if”, but of “when”.

The current oil prices have meant that the industry is taking a hard look at the cost of doing business. Sustainable, cost-efficient methods working are being examined and implemented. Application of technologies that streamline the workflow has become one positive option.

The industry’s success in developing and applying new technologies is a mixed blessing. Although drilling technologies have made it possible to tap tight gas and oil, the result is one major reason that current production levels exceed demand.

Another cost-cutting measure has been to downsize the workforce. Considering the current economic situation, belt tightening is a given, but simply laying off employees has its dangers. Not so long ago, a common lament within the industry was the fierce competition for expertise. As we have seen time and time again, the mainstream media is quick to report layoffs, but seldom do we hear much about hiring and growth when the industry is thriving.

Downsizing too dramatically can make the workforce recovery more difficult when the cycle again turns upward. Moreover, downsizing has the added danger of discouraging young people from perusing petroleum-related careers.

Expertise is a little like electricity. If the potential is not put to use, no work gets done. The industry must continue to work to find new ways to inspire young people to pursue studies to develop the skills and expertise needed to fill future needs.

The next generation needs to be made aware that studying to develop marketable expertise will not be a waste of time. They must understand that the oil and gas industry is cyclical, and that despite the ups and downs, there is certain to be more than one generation’s work available in the foreseeable future.

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