Lessons Learned on Risk & Initiative Taking within an Oil & Gas Experience

Most of our life decisions are based on trade offs e.g. leaving the security of a stable income and employment for the promise of better employment, growth and development opportunities post an MBA program.  How do we decide on these trade offs?  How do we know that we will be better off after we trade short term goals for long term one?  For some decisions its obvious; however, for many its not that clear.  They all carry a certain degree of risk, the way we approach risk has a lot to say on whether our decisions will turn out to be good.  One key aspect is in taking calculated risks, albeit, each individual has a different level of risk tolerance.  Another would be managing expectations and if, as in most cases, the outcome of your decisions depends on how well you interact with other people or individuals interrelationship and communication skills become vital.

During my employment period with Consolidated Contractors International Company (CCIC), an Oil & Gas contractor, I held the position of progress engineer.  My task was to develop, maintain and issue weekly construction progress reports for the estimated USD 600 million liquefied natural gas (LNG) plant project.  At the time CCIC was building the largest LNG trains in the world on behalf of the main contractor, Technip/Chiyoda JV, and ultimately the Qatar Gas, Royal Dutch Shell and Conocophillips owner consortium.

At the time, the company was in the early phases of mobilization / early works and well behind schedule.  There was around 500 employees, instead of the forecast 1,500 with an estimated 8,000 employees required at peak. To make things more challenging, due to the rate of growth and developments in the region the company had to rely extensively on new employees the majority of which were either with less than 2 years of work experience or new to the oil & gas industry (I included).

With the assistance of an IT colleague, I have developed the system in three weeks, taking into consideration lessons learned from a similar nearby project, understanding the functionality and responsibilities of the departments who would be providing input to the progress system, automating inputs as much as possible a means to reduce human error and producing the work breakdown structure (WBS) of the whole project.  As I came to realize later, this was the easy part of my task!

Right from the start, feedback was inaccurate and sporadic, especially those generated by the construction department.  This created an administrative and planning nightmare, not to mention confidence issues with our client.  My department’s head intended to request reprehension measures against the individuals responsible for the inaccuracy and delay in reporting.  Sensing that this would complicate matters and make my mission even harder; I was able to convince him to grant me time to try to fix this issue on my own.  I was fully aware, that if I failed to rectify this matter, it would adversely effect my chances of employment progression, increased responsibilities and exposure as well as damage my credibility.

Taking the initiative, I decided to intensify personal relationships with the individuals in charge of providing the required progress inputs.  I frequented their work stations more, personally delivering and running them through the forms I needed to be filled.  At the beginning I have assisted in filling out the forms and joined site progress inspections.  Adopting this approach benefited my progress reporting exercise greatly; I was able to improve the reporting process by listening to their inputs, suggestions and by integrating the theoretical and practical aspects of progress reporting.  More importantly, I understood that the construction teams believed that successful construction projects could be delivered through site work only.  Hence, they underestimated the importance of paper work, reporting and the administrative aspects of the construction industry.

Throughout the coming weeks I was able to highlight the importance of providing accurate inputs in a timely manner through personal discussions and by conducting a group presentation on the subject.  I reasoned to them that through proper progress reporting, their hard work on site could be better presented to our senior management and client, provide input to efficiently plan the rest of the construction activities, and form the basis for payments from our client which will eventually have an effect on their bonus schemes.

My approach had noticeable effects on their input, I was congratulated by my department’s head and it made me feel self fulfilled.  During the rest of my employment period, I was tasked with ever challenging exercises, gained an employment grade increase and a satisfactory bonus.

This experience made me realize that one needs to take control and ownership of his duties, not be afraid to be an initiator and take on calculated risks in order to reach self fulfillment, results and employment progress.  Furthermore, owing to the diversity of people and backgrounds I had to interact with, I gained a deeper appreciation of diversity and improved my conflict resolution ability.  Finally, understanding the root cause of the problem is the basis for formulating efficient and successful solutions to any problem.

Oil & Gas: Growth Opportunities

The oil & gas industry has always fascinated me, due to the sheer size of operations, intensity and multidisciplinary coverage.  Very few industries are as vertically integrated or as geographically diverse, which to me are key attraction points for they offer the opportunity to experience the majority of aspects making up the modern business administration philosophy as nested in divergent cultural contexts.  Coming from a mechanical engineering background and having worked in the oil & gas industry while currently undergoing my MBA training, the oil & gas industry offers a unique opportunity for me to experience the best of the two worlds.

One of the main drivers of this growth in the past five years was the rapid modernization of the BRIC nations (Brazil, Russia, India and China).  Granted that any slowdown in the growth of these nations will have an adverse effect on the growth of this industry, the GPD growth of these nations is expected to continue growing although at a slower rate than in previous years, continuing to represent a potential opportunity for the industry.1 Another drivers for increased price and thus increased production are 2:

  • the fast emerging middle class in India and China and the growth of in motor vehicle use
  • the rising pressure on developing countries to fund measures aimed at combating increased poverty

The industry, although has seen its revenue slashed by 39.7% in 2009, has shown an average rate of growth of about 1.3% since 2008 with a forecast of a 3% growth rate in 2013 alone, revenue has risen from $4.2 trillion in 2008 to an expected revenue of $4.5 trillion in 2013.  This growth is expected to grow at an annualized rate of 2.5% to $5.1 trillion over the next 5 years to 2018. More importantly, profit and employment are expected to grow over the same period with the former growing at an annualized forecast rate of 2.9% while the latter at an average annual rate of 1.5% to 1.4 million people. This growth is driven by the rising production of oil and gas and the increased difficulty of extracting oil.3

In addition to the above forecast of growth, the industry as a whole is characterized as being 4:

  • low concentrated
  • highly competitive and the trend is increasing
  • high barriers to entry and the trend is steady
  • highly globalized and the trend is steady

With the above information in perspective, it is my view that companies within the industry will place additional emphasis and importance on improving their supply chain management and strategic planning to maintain or increase their market share and competitiveness.  This view lines rather smoothly with my previous training/experience and intent to pursue the Product Service Management career track with emphasis on Strategic Management.

 

Notes: 1, 2, 3 & 4 – David Young (2013). IBISWorld Industry Report B0531-GL. Global Oil & Gas Exploration & Production. Retrieved Sep 2013 from IBISWorld Database