Three Fundamental Constants of the Energy Industry

Over the past months I’ve written frequently about strategies each of us can use to not only survive the current downturn in oil and natural gas prices, but discover ways to thrive.

That may seem like a tall order, particularly if you’ve recently experienced a layoff, or even if you’ve kept your job while your colleagues and friends did not. But my fundamental belief is that the ingenuity and drive that led you into this profession are the same characteristics that will propel you into the next phase of your career.

One theme I keep revisiting is that of searching for ways to view your current situation from different vantage points: we need to avoid linear thinking and expand our perspectives to identify opportunities to add value to our employers, industry and profession.

After all, that’s what we get paid to do.

But broadening our thinking doesn’t just happen.

I’m constantly looking for ways to create new perspectives, and it often comes down to asking questions – questions I haven’t previously considered.

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Over the past months I’ve written frequently about strategies each of us can use to not only survive the current downturn in oil and natural gas prices, but discover ways to thrive.

That may seem like a tall order, particularly if you’ve recently experienced a layoff, or even if you’ve kept your job while your colleagues and friends did not. But my fundamental belief is that the ingenuity and drive that led you into this profession are the same characteristics that will propel you into the next phase of your career.

One theme I keep revisiting is that of searching for ways to view your current situation from different vantage points: we need to avoid linear thinking and expand our perspectives to identify opportunities to add value to our employers, industry and profession.

After all, that’s what we get paid to do.

But broadening our thinking doesn’t just happen.

I’m constantly looking for ways to create new perspectives, and it often comes down to asking questions – questions I haven’t previously considered.

Here’s one for you:

“I very frequently get the question: ‘What’s going to change in the next 10 years?’ And that is a very interesting question; it’s a very common one. I almost never get the question: ‘What’s not going to change in the next 10 years?’”

That quote is from Jeff Bezos, founder and CEO of Amazon, from a 2012 video interview.

Bezos and Amazon are disrupters.

They’ve disrupted entire industries, beginning with bookstores and electronic books to large retailers selling everything from furniture to groceries. Leveraging technology, aggressive marketing and razor-thin margins – they have changed the ways consumers purchase and receive goods and services.

“And I submit to you that that second question is actually the more important of the two, Bezos continues, because you can build a business strategy around the things that are stable in time.”

Fundamental Constants of the Industry

Amidst all the changes our industry is experiencing, from unconventional resources to low commodity prices and the great crew change, there may be a useful perspective here that we can adopt for ourselves.

What aspects of petroleum geology and our industry will remain the same in the next 10 years? How might you and I use this knowledge to add value and position ourselves for a successful future?

I’ve been pondering this question, and here are three conclusions I’ve come up with:

  • We will still need energy in 10 years and the majority of it will come from fossil fuels, particularly oil and natural gas.

In fact, the latest reference case by the U.S. Energy Information Administration in the early release of its 2016 Annual Energy Outlook indicates that in 2040, two-thirds of U.S. energy consumption will come from petroleum and hydrocarbon liquids and natural gas – two-thirds!

It’s true that the energy mix is shifting and the reference case supports that. It shows petroleum use for transportation dropping by 10 percent due (mostly) to efficiency gains, and renewables are growing at a rapid clip. Circumstances are changing and that change is accelerating. But humanity will remain reliant on fossil fuels as a significant source of energy because the global energy system is enormous, on a scale that most people have difficulty fathoming. If we want the lights to stay on at an affordable price, we’re going to need these fuels.

  • A second element that will not change is fundamental earth processes.

Ours is an evolving science, and there is still much to learn and discover about how earth systems work, but the fundamentals are rooted in physics and are immutable. It’s our understanding of these processes that changes.

My background is in petroleum systems and basin modeling. As a graduate student, when most geologists would ask about the reservoir, I was asking about the source rock. Ten years later, everyone was asking about the source rock that, in the case of some unconventional petroleum systems, is the reservoir.

  • Which leads me to a third aspect of the industry that won’t change in the next 10 years: the need for ingenuity and innovation to continue finding and developing these resources to fuel the planet.

The oil and natural gas contained within these unconventional petroleum systems was there all along – we even knew it was there. But it was ingenuity and innovation, both technological and business, which enabled producers to develop these resources and unleash the unconventional energy revolution.

The need for oil and natural gas, the opportunity for new understanding and new discoveries about how the earth works, and a continuing need for creativity and ingenuity are three circumstances that won’t change over the next 10 years.

How might you and I position ourselves to use these insights to prepare for the future?

What other aspects won’t be changing?

Reach out to me on Twitter
(@DavidKCurtiss) and share your thoughts.

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