The Foundation
During the winter of 2016, when the downturn in the oil business had already begun and was felt through the exploration community, Sidsel was invited to give her view on the future of exploration on the NCS in a Dinner Speech on a conference in Oslo in May.
After the company ExploCrowd was established later in 2016, it became very clear that the reflections during these winter months formed a significant part of the foundation of the concept.
This is the Dinner Speech
“Exploration - Could we do more?”
THE FUTURE
Tonight, I wish to share my view of the future within exploration in Norway, what I think that we can expect of the years to come and then I’d like to share some ideas with you on new ways of working. This, in order to give a couple of answers to the question: could we do more? I’ll start by saying that I believe the future is bright, and there will be plenty for us to do when we have come through this downturn. The world is not yet ready to abandon oil completely, and it will take decades to develop technologies that realistically can replace this resource. Norway is in a good position, with strong authorities that are releasing new acreage little by little, thereby keeping jobs for generations. However, it might take a few years before we get back to a normal situation. If such a thing exists. In the meantime, let’s have a look at the current situation and see the opportunities.
UNLOCKING CREATIVITY
How many here are feeling secure in their jobs now? 20%? 10%?
The situation is quite different from two years ago, and there are likely more than 80% of the explorationists here in Norway that are worried about their job, in this time where the number of E&P companies in Norway is decreasing. It is a pretty tough time, and that has significant impact on employee performance and loyalty, and that is something to be concerned about; especially when your passionate people become quiet. It will most likely mean that when times get better, many of us will join new employers – and by then, the competition for the best people will be fierce. So now would be a good time for companies to lay the groundwork to position themselves as attractive employers in the future. It will be much cheaper to invest in recruiting now than later, when all companies are chasing the best people to fill the empty seats.
There are many aspects in this situation that are not good, but can we somehow change our perspective and use it as an advantage? One of the important things that are happening now is that most of us are forced to evaluate our situation and consider opportunities and backup plans. This means that you now have hundreds of creative explorationists brought out of their comfort zone, open to change.
We should use this opportunity: bring people together in different settings and evolve ideas.
THE GLOBAL PERSPECTIVE AND OUR COMPETITIVE ADVANTAGE
Around the globe, businesses are forced to prioritise, 250.000 oil jobs are already lost and many more jobs are highly insecure – including my own – and it is quite a serious situation for many people who are losing their life savings and their house. Most countries don’t have the social security net that Scandinavia has built, and the advantage for us is that we don’t have to worry about loosing everything we have and go live with our parents or other relatives. To be pragmatic, we are fortunate to live in this part of the world, and we should be using this as an advantage to get ahead in the global competition. We have an opportunity, like no one else, to be ready to hit the ground running when times get better – because we will be busy exploring and replacing reserves, to keep the income of Norway sustainable.
IF WE COULD DO MORE - THEN WHAT COULD WE DO?
We are thinking the same thoughts and treading the same paths, as I see it. We are basically going after the same targets, and the stories I get from the different companies is that if you suggest to go for a non-standard play, you are often getting a ”No, that is not for us”. The industry itself is very conservative, which is in high contrast to most of the explorationists souls – so there has to be a balance, of course. But we might be too conservative, and bound by previous experience. And we are losing the young ones, those who are asking all the challenging questions. Training them should be top priority – but it is mainly the young generation that are losing their jobs right now! We need all levels of experience; both those with extensive experience that make sure we don’t repeat mistakes, and those young and daring who asks the difficult questions.
Think about the significant difference between us and the service industry. They are fighting to win projects, where we as oil companies are asking them to deliver at ’almost no cost’. We now know that many of the service companies are offering tenders that they do not earn money on. They are desperate. And the situation forces them to invent new and cheaper solutions. It is now, in a downturn, that new things are invented. But look at our situation: are there any of your managers that tell you to go and explore to find new ways of working and look into new and innovative technology in order to become better and to increase your chances for finding oil at this current price? Yes? No? We have drilled the easy targets, now comes the difficult ones, which requires us to do our best and think of new solutions to de-risk the prospects to meet company strategy. However, as I see it, the main part of us are all running in the same direction. When a new ’disruptive discovery’ is made, we are all running in that direction. When we get tired of that, we are all running in a new direction. All of us. I believe that we have to change our mind-set in this business; we are doing fine, but we can get better: if you are all the same, with the same experience, you think in the same way – and you are never challenged. We should challenge ourselves to see things in a different perspective.
Let me share a story with you: This happened to me last year: we were building a house – we designed it ourselves, and we designed the garage to look the same way as the house. You know: Danish design, symmetries and long views. The garage is quite big, actually 50% of the area of the house (my husband is an engineer, and he loves to build stuff, it is his passion – so it is actually not a garage, but a 50 squaremeter workshop). Anywas, I posted a picture of a 3D model of the house and co-existing garage on Facebook, and I got a very interesting question back: ”Is it an annex?”. And I thought that was a rather stupid question, as I thought that everyone could see it was a garage, completely blinded by the fact that I was so deep into this project that I couldn’t see what other people could see anymore. So I responded: ”No. It is a garage”. But then we started thinking... it was actually a really good question, because it would take an insignificant effort to make the garage liveable with a kitchen, pseudo-bathroom and a toilet – instead of moving to a rented house and live there. There were two upsides with that idea: to save more than 100.000 NOK and live at the build site, which would be extremely effective, since we did a big part of the house building ourselves – in order to save money. Hence, we deported our children to Denmark and my husband and I lived in a garage for three months. We did a lot of BBQ’ing that summer. And I learned an important lesson.
Bring in new views of the world, and demand people to ask questions and challenge your ideas and the way you work. Tell stories. Communicate better. Build bridges.
I believe in the value of diversity. This means both diversity in age, experience and culture. We need to see things from a different perspective and not always go after the same play.
MORE STRATEGIC COLLABORATION ON KNOWLEDGE AND TECHNOLOGY
As I see it, there are especially two areas that can have a significant impact – if we want to do more. We are at the age of sharing economies. Sharing knowledge is in the same league. We are competing against each other in order to find hydrocarbons, make money and save jobs. But this is such a complicated business, that we cannot all be experts in everything. I think strategic cooperation across competitive boundaries is the way forward. And here, I’m not talking about AMIs, I’m taking it further: I’m talking about strategic cooperation between companies, universities and relevant vendors to invent the next game changer, it being a new technology or way of working. An example could be if a company had a skilled team of geophysicists and they joined forces wih a company who had strong sedimentological expertise – and they decided to cooperate on a specific region? They could then bring in experts and vendors as needed. I think the ones who are able to build bridges and strong alliances will win this competition. In fact, we are already working together in many arenas; Norway has a long tradition for this, and we should use this to our advantage: in today’s market situation, we don’t have the luxury to wait till the storm passes. Think about licences you have worked in: there are the formal ones, where most of the communication goes through License2Share, and then there are these licences where the partners bring in their creative people with a genuine wish to make each other better. Those are just … more fun to work in, isn’t it? When you work together to achieve something? We see the same in the Force Structural Geology network group, where we have managed to have an open and informal forum where an engaged group of people are bringing ideas to the table, others are chipping in, letting the ideas evolve until we have something good to go ahead with. And those seminars and workshops have been sold out over the last years, so they are definitely getting something right. We even have more than one representative from several companies, because more people want to join the group and engage in the activities. Just recently, we had our yearly meeting in the Network Group. It was truly inspiring, because at that meeting, the group decided to actively make a difference in the current market situation:
We decided to significantly increase our activity level, lean in and offer even more networking opportunities for those who have a job, those who haven’t, and then newly graduated young people that we in the industry are about to loose. The group is worried about the competence that the business is loosing and want to do their best to secure continuity. There is an incredible willingness to step in and contribute – and we are fortunate to have those people in the industry, because they want to make a difference.
TWO IDEAS
Based on this, I wonder if the time has come to take the cooperation further within our industry?
There has long been talk about de-risking entire areas by drilling stratigraphic wells, deep in basins where you have consistent data. This way, you have the opportunity to prove up areas where you have high risk on the petroleum system. Maybe we should join forces and increase our confidence in an area, either by confirming a working petroleum system or by proving that it does not exist – and then we can leave it behind and move on to more interesting areas.
Another idea could be to establish a low cost drilling campaign to test 10-15 targets and different trap types in one of the underexplored areas on the NCS, where you have little control on the pressure barriers and sealing capacities of faults. There are several areas on the shelf, where wells are not representative for the region, and the seismic is not giving any conclusive answers. Inventing new highly effective and low drilling cost wells, and join forces in a consortia might be beneficial for all of the partners?
However, those areas will be covered by different licenses, which implies some complexity. But think of how efficient this would be, moving us ahead instead of it taking years through the normal licensing process? The ‘Group Shoot Project’ related to the 23rd Round proves that companies can benefit from cooperation, and perhaps time has come for joining forces on de-risking areas with well penetrations? The rig rate is down to 150.000 USD/day and I have just heard of a well that was drilled safely within 10 days, offshore East Africa. It could be interesting to learn how they did this, and see if we could use some of their ideas and learnings?
ORGANISATIONAL CULTURE TARGETING EXPLORATIONISTS
Traditionally, the oil industry is a conservative business with many procedures in place for protecting people and the environment, but the tasks and mind-set of an explorationist is so much different than a production engineer or perhaps a HSE manager. Explorationists are more working against processes and procedures, because it sets limits to our creativity and creates linear thinking. We need free space to think, to connect the dots and develop our conceptual understanding, and that does not work optimally in a rigid organisation. … maybe the time has come to be even better at acknowledging this, than we are currently doing, and treat our explorationists even more as creative scientist and researchers? But why would we do this? Well, I have rarely seen anyone as passionate about their job as geologists. And you can clearly see which of the companies that have been successful to target this over the last few years; it is the new companies that attracts the best people, and especially Lundin, Tullow and Spike Exploration have had a reputation that wants people to work for them. Now times are changing, but we must not forget our people. And I am worried about the consequences of the short-term cost reductions that are going on right now… Looking at the long-term perspective; when the tide turns and the oil price goes up again, you want to be ready with an organisation that is set up for creativity and innovation, but that doesn’t just happen. It is about building trust and nurture a culture where ideas are growing and it is accepted to make mistakes and learn from them, but it takes time to build this trust. I have heard of many stories where the young people in the business tell about how they were told to hold back on their stupid questions. It is this exactly this thinking that brought Kodak, Nokia and Blackberry to the ground. No one should be told to hold back their stupid questions.
Curious questions are what we need, in order to get ready for the future!
An example is the Barents Sea in the 80’ies. The pioneers drilled the courageous wells based on coarse gridded 2D seismic, but they were forced to test minimum economic field size – so they drilled down flank of the structures. Three decades later, with a higher oil price and 3D seismic, we are targeting 60 meters wide channel sands and karstified targets, based on frequency decomposition and all the details we can get from seismic data these days. Back in the 80’ies, they would never have imagined this technological giant step forward. Just like we don’t imagine them now. Our minds can’t just comprehend what will happen. ... but the next great big thing moving us forward will most likely come out of a stupid question that was asked at the right time: a good, or a crazy idea that wasn’t turned down, because it had been “tried before. Didn’t work”.
// FUTURE
It is my hope that I have inspired you tonight, with new ideas and by connecting things in new ways. I also hope that you see the future of the Norwegian Continental Shelf as truly exciting – on the other side of this downturn – and there is a lot for us to do in the years to come.
In the meantime: stay open to be challenged and to explore beyond your own mind-set.