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FIND A CAREER IN OILFIELD SERVICES | INSIGHT FROM ENTREPRENEURS OF ALL AGES | CONTINENTAL SAVVY

The Magazine by and for Young Professionals in Oil and Gas VOL. 10 // ISSUE 1 // 2014

Entrepreneurship

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ContentsVOL. 10 // ISSUE 1 // 2014

3 What’s Ahead Column from David Vaucher, 2014 TWA editor-in-chief.

4 TWA InterActCheck out TWA community social media conversation.

5 TWA InterviewAmjad Bseisu, CEO at Enquest and chairman of the board at Enviromena Power Systems, talks about his entrepreneurial oil and gas career.

8 HR DiscussionLearn about making the transition from engineering to leading.

10 ForumWhat does it take to be an entrepreneur? Two YPs tell how they do it.

12 Economist’s CornerKey lessons about entrepreneurs’ economics from YP entrepreneurs.

14 Pillars of the IndustryInsight into India’s oil and gas history, entrepreneurship, and his own success from Raj Kanwar, founder of SK Oil�eld Company.

16 SPE 101How an SPE section works and what it does for you.

17 Discover a CareerCEO Brandon Hayes talks about what he’s learned as a young leader helping revitalize Drillchem Drilling Solutions, an oil�eld services company.

19 Technical LeadersEstablished entrepreneurs Ricardo B. Levy and Howard Rosen of Stanford University share advice on becoming a young entrepreneur.

22 Soft SkillsTwo YPs speak about their journeys as successful entrepreneurs.

25 Tech 101Trendsetter Engineering’s Mauricio Madrid and Antony Matson explain how offshore capping stacks work.

28 AcademiaPractical ways to navigate the sea of petroleum �scal systems worldwide.

31 A YP’s Guide to...Continental savvy: Energy entrepreneurship across three continents.

35 YP NewsflashInterviews with four 2013 SPE Young Member Outstanding Service Award winners.

36 Your Best ShotSuperb on-the-job photos submitted by TWA readers.

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2014 Is The Way Ahead’s 10th Anniversary Year! “The seeds of innovation and change have been sown,” said TWA’s first editor-in-chief, Thomas Bruni, in his editorial in the first issue of TWA, Vol. 1, No. 1, 2005. “It is now up to us young E&P professionals to nurture this investment and reap the dividends. The mission of The Way Ahead is to feed this process with fresh energy and creative ideas, with the ultimate goal of bringing SPE closer to our needs, giving us real opportunity to become pillars of the professional society

of which we are proud members.”

Celebrate fresh energy and creative ideas: Your peers on TWA’s volunteer Editorial Committee create each issue of TWA especially for you.

Here you’ll find insight, encouragement, inspiration, understanding, questioning, ideas, and many chances to learn something you didn’t know before.

TWA could spark career advancement. TWA could change your life.

TWA EDITORIAL COMMITTEE

EDITOR-IN-CHIEFDavid Vaucher, IHS

DEPUTY EDITOR-IN-CHIEFTony Fernandez, Noble Energy

TWA A DVISORTodd Benton Willis, Chevron

LEAD EDITORS

Alicia L. Koval, ConocoPhillips

Amir Soltani, Statoil

Dilyara Iskakova, Hess

Henny Gunawan, Schlumberger

Jarrett Dragani, Cenovus

Karrie Santos, Chevron

Lisa Song, Chevron

Madhavi Jadhav, Schlumberger

Maxim Kotenev, CGG Veritas

Paulo Pires, Petrobras

Prakash Deore, Fujitsu Consulting

Shruti Ravindra Jahagirdar,

Shell Technology India

Siluni Wickramathilaka, ConocoPhillips

Subhash Ayirala, Saudi Aramco

Thresia Nurhayati, Halliburton

ASSOCIATE EDITORS

Amber Sturrock, Chevron

Angela Dang, Colorado School of Mines

Ankit Agarwal, Schlumberger

Asif Zafar, Halliburton

Hao Sun, Chevron

Harshad Dixit, Halliburton

Islam Ibrahim,

Gulf of Suez Petroleum Company

Islin Munisteri, BP

Jenny Cronlund, BP

Jim Stiernberg,

Louisiana State University

Marjan Jamshidi, ConocoPhillips

Muhammad Taha, NED University

Oyebisi Oladeji, Schlumberger

Rita Okoroafor, Schlumberger

Rob Jackson, Mountaineer Keystone

3Vol. 10 // No. 1 // 2014

What’s Ahead–From TWA’s Editor-in-Chief

Entrepreneurship and Oil and GasDavid Vaucher

Editor-in-Chief The Way Ahead

T he “corporate ladder” still exists, but does anyone want to climb it anymore? It seems every day there is news about the latest startup to go public, and these

tales of huge success have led to a new aspiration: No longer is it enough to climb the corporate ladder, you have to build your own!

That’s quite a dream: building something tangible, working on your own terms, and maybe even reaping much greater �nancial rewards than if you were to work for someone else. It certainly sounds appealing, doesn’t it?

Many of the most famous startup success stories come from Silicon Valley in the United States, in the technology sector, which makes sense: There is an established culture of collaboration, plenty of people looking to invest their capital, and the cost of developing an “app” can be relatively low.

Contrast that with oil and gas, and differences emerge: Projects take years to complete, tend to be capital-intensive, and have costs that can run into the billions of dollars, so companies are wary of committing to a new project unless they are as close to 100% certain as they can possibly be that their investment will create a return. In fact, the uncertain returns and enormous costs do seem to imply that the culture in oil and gas is inherently skewed away from risk.

When you think about it, any entrepreneurial endeavor inherently involves risk, so does this mean that “entrepreneurship” and “oil and gas” are mutually exclusive?

Absolutely not!There’s a reason Edwin Drake’s �rst attempt at drilling for

oil, in the late 1850s, was nicknamed “Drake’s Folly”: He took a risk looking for a substance that no one had much use for at the time, and suffered many setbacks due to a lack of existing tools and “best practices.” Yet, he persevered! In fact, you could even trace the existence of The Way Ahead all the way back to that folly of his…

What about the Schlumberger brothers, Marcel and Conrad? During the 1920s, they saw an opportunity to apply science to the oil and gas industry, and ended up basically creating the practice of logging, which led to what is today an enormous and well-respected company, both within and outside the industry.

More recently, starting in the early 1980s, George Mitchell decided to move far away from conventional wisdom and look for gas in shale formations (speci�cally, the Barnett), which beforehand had been seen as problem areas to be avoided while “making hole” toward conventional

hydrocarbon accumulations. With some intuition and a lot of trial and error, we’re now at a point where it’s hard to imagine people were ever worried about “peak oil.”

The point is that while people may perceive oil and gas as a very risk-averse industry, it was in fact built upon risk and the “wildcatters” who embraced it. Of course, taking a risk for the sake of it is not the point of entrepreneurship. Rather, risk is just a means to an end: Becoming an entrepreneur is about seeing an opportunity, either to improve on an existing product or service or introduce a new one, and then taking a risk in order to �ll that need.

In our industry, there is always room for improvement, either to make operations run more smoothly or—most important of all—to make things safer.

All these problems to tackle mean plenty of new opportunities for budding entrepreneurs, and I truly believe the oil and gas industry’s best days are still ahead. Why? It’s because of you, the readers of The Way Ahead.

Our generation is hungry and willing to take those risks, we have hindsight and perspective on mistakes the industry has made in the past, and we have access to tools that would have seemed like science �ction even 10 years ago.

Still, if you work for one of the many multinational oil and gas companies, don’t despair! They are a very important part of this industry, and you can still forge your own path forward: You don’t necessarily have to be an entrepreneur to be entrepreneurial. Though I can’t take credit for inventing that concept, I can certainly shed light on the question: What does that mean, really?

Without the usual worries of starting your own company (setting up payroll, or �nding of�ce space), you are free to apply yourself fully to the work of “creating.” Of course, your company may have its own uses in mind for your skills, and this is where you have to hustle, just like an entrepreneur: Be proactive in pitching your ideas, show you are willing to go the extra mile to work on side projects while still getting your main deliverables done, and build a network of contacts within your organization to champion your ideas.

These are all things I’m passionate about, and I’m always looking for ways to be entrepreneurial as I work toward my goal of one day being an entrepreneur myself. This is why I’m delighted this is my �rst issue of The Way Ahead as its editor-in-chief, and even more so that it is jam-packed with interviews, articles, and insights to help you on the path toward making your own “way ahead” in this industry. TWA

4

TWA InterAct

From TWA’s Twitter Feed...

In keeping with this issue’s theme, there were a lot of terri�c career-related articles posted to our Twitter feed during the last quarter, so make sure you are following us @SPETheWayAhead to stay up to date!

Here’s a small sampling of articles from the past quarter:

“A Life That Can Fracture a Relationship,” a New York Times article on oil�eld relationships (http://nyti.ms/1anSGm7).

“O&G Salaries Looking Up in the 2nd Half of 2013,” from the Houston Chronicle (http://t.co/qCemnWjGoH).

“Experience Is Not the Same Thing as Achievement,” commentary written for the Houston Chronicle by TWA editor-in-chief David Vaucher. @KelseyCCampbell called it the “best Millennial article I have read.” (http://t.co/zAohjfxXFQ).

Fellow TWA editor @Munisteri suggested Houstonians #huganengineer, pointing to a Houston Chronicle article asserting the city’s economy is robust mainly because of engineers.

Many thanks to @KenahNyanat for photos of last year’s @OKYPEnergyForum. It looked like it was very well attended!

Finally, the 2013 SPE Annual Technical Conference and Exhibition (ATCE), 30 September to 2 October in New Orleans, Louisiana, USA, attracted a lot of buzz on Twitter! Did you know it was the largest exhibition in the show’s history, with over 12,000 attendees?

The 2013 SPE ATCE also featured the largest PetroBowl in that event’s history—congratulations to the Colorado School of Mines (CSM) on their back-to-back championships.

The CSM team is shown in the photo (right) accepting the newly designed PetroBowl Championship Trophy from co-chairs Tony Fernandez (TWA’s deputy editor-in-chief), Chris Giuffreda, and Sathish Kulathu. Way to go, CSM!

From TWA’s LinkedIn Page...

Entrepreneurial and career-related themes also dominated our LinkedIn feed. Here’s a sample:

“Yes Men? No Thanks!” an article by Virgin Group founder Richard Branson in which he expresses appreciation for various points of view at his company (http://t.co/XclcKy4m6T).

“Why You Should Dump Your 5-Year Career Plan,” an article by Expedia CEO Dara Khosrowshahi where he provides two unusual tips for a YP’s career (http://t.co/DlAu79HJsL).

“Scott Adams’ Secret of Success: Failure,” a Wall Street Journal essay, by the Dilbert comic strip creator, encouraging people to face potential failures as learning opportunities (http://t.co/K55MQct5kn).

“Huge Decisions Demand the Rocking Chair Test,” an article explaining a simple, highly effective way to gain some perspective during decision-making (http://t.co/1ecbUBu7NE).

Find us on LinkedIn and join the discussion!

� Email your thoughts to editorTWA@spe.org.� Converse with us on Twitter: @SPETheWayAhead.� Find us on LinkedIn at SPE The Way Ahead.� Like us on Facebook—at The Way Ahead Magazine.� Get the TWA app at the App Store and Google Play.� Join the TWA Editorial Team—editorTWA@spe.org.

There are many ways to participate in

E X P E R I E N C E

TWA Interview

5Vol. 10 // No. 1 // 2014

Who or what inspired you to work in the oil and gas industry? What entrepreneurial qualities played an important role in your success?

Actually, I did not pick the oil and gas industry as an industry of choice. It is more that the industry picked me. I completed a mechanical engineering degree and then I did a doctorate in aeronautical engineering, as I love planes. As General Motors sponsored my research, I joined them working on control systems optimization for the dynamics of spark ignition engines.

Later I wanted to link back to my roots in the Middle East where the oil and gas business is the biggest industry in terms of value.

Growing up in Bahrain, I had seen the wells, rigs, and infrastructure on a day-to-day basis, although the only connection I had then to the oil and gas industry was my cousin who worked for Qatar Petroleum. When older, I had a summer training internship in construction engineering with Caltex in Bahrain, at the BAPCO [Bahrain Petroleum Company, a national oil company] re�nery, which was my �rst serious full-time job.

When linking back to my roots, I was interviewed speci�cally for oil and gas companies and picked Atlantic Rich�eld Company (ARCO) where I worked for 14 years.

I was always commercially minded. Even when I was young, I created a special currency just for my family and friends. I had a small business when I was 10 years old, buying and selling books. My Palestinian father was a banker. He was conservative and always looking to minimize and mitigate risk. My entrepreneurial spirit probably comes from my mother, who is Lebanese. She is

extremely entrepreneurial in approach and she felt frustrated because she could not pursue her own career as we lived in a society where she was not really free to work.

What are the models of entrepreneurship in oil and gas? Who is a business leader?

First of all, you have to have an unequivocal passion for what you do to be successful. If you absolutely love your work, you will do very well. I loved what I did and I continued to work around the business from the commercial, operations, and drilling sides.

Having a wider skillset is also extremely important in the business. I am a scientist by background, so I started in research and then went to technical services, operations, production, and �nally to commercial.

I think the key is ensuring that you have a huge competitive advantage, whether it is a type of role that brings depth or one that integrates several disciplines.

In addition, the ability to manage people well, to understand people and to motivate them—these social skills matter greatly for a business leader. This is something you do not acquire easily or quickly; this is something developed over time. I think leadership is more about EQ (emotional quotient) than IQ (intelligence quotient).

Can you identify a tipping point in your career when you made a decision and suddenly realized you were an entrepreneur?

A tipping point is probably when I got married. The realization that I could

Amjad Bseisu holds an honors BSc degree in mechanical engineering from Duke University, and MSc and

DEng degrees in aeronautical engineering from Stanford University. From 1984 to 1998, he worked for the Atlantic Richfield Company (ARCO), starting his career as senior engineer in the drilling and production division and moving to the position of vice president, ARCO Petroleum Ventures, with responsibility for operations and commercial activities in the Middle East and North Africa. In 1996, he became general manager of international marketing, negotiations, and business development, and president of ARCO Petroleum Ventures and ARCO Crude Trading Inc. In 1998, he founded the operations and investment business for Petrofac Limited and was the chief executive officer (CEO) of Petrofac Energy Developments International Limited. In 2010 Bseisu co-formed EnQuest PLC and was appointed CEO. Previously Bseisu was a co-founding nonexecutive director of Serica Energy PLC (2004–2005) and Stratic Energy Corporation (2003–2006). In 2010 Bseisu was also appointed nonexecutive chairman of Enviromena Power Systems, a private company and prominent developer of solar services in the Middle East and North Africa.

Amjad Bseisu Chief Executive Officer, Enquest, and Chairman of the Board, Enviromena Power Systems

TWA Interview

6

not live on my salary and keep my wife happy in the long term accelerated my career!

Joking aside, even when I was young I said I wanted my own business. That is why when I was at ARCO, I realized I needed to have a broad range of experience. I was not going to really advance in the oil business or oil investment business without understanding a diverse range of competencies. I made a conscious decision at the age of 20 to understand reservoir engineering, geology, geophysics, and drilling operations.

It is very bene�cial for those who would like to move from technical to managerial careers to get a wide breadth of experience. I also think it is much more dif�cult to be entrepreneurial in the upstream oil and gas environment. It is much easier in the oil services environment.

At the same time, if you have a signi�cant depth of knowledge in particular services or in scienti�c niche areas, then it is much easier to become a successful entrepreneur.

One of your favorite books is The Prize, by Daniel Yergin. What is the most valuable information or idea you can pass on to our readers from this book and from your quest for oil?

A great thing about this book is its succinct link between oil and politics—something close to my heart. The importance of the energy industry in the geopolitical environment is strikingly clear from this book.

Now more than ever, it is clear that writing about the oil industry also means writing about history. When we look at the oil deals in the Middle East, northwest Europe, and North America, these are trailblazing and historically signi�cant.

History can be written through the analysis of the oil and gas industry. It may be unfortunate, but a lot of politics in many parts of the world are related to oil, gas, and minerals. In 20 to 30 years’

time, we will read how current decisions relating to oil and gas will come to have shaped the history of countries.

EnQuest is the largest independent oil producer in the UK. What makes it different from other companies operating in the UK Continental Shelf (UKCS)?

You always have to have a strategic competitive advantage. In the UKCS, there is an open space where the major companies �nd that assets are sub-material for them, in terms of reserves and production. The assets they leave behind or do not want to pursue become attractive to companies of our size. We look at taking the assets that are left behind, aiming to develop them and move them into production. We are extending the lives of assets by trying to introduce secondary and tertiary oil recovery, in�ll drilling, water�ooding, gas lift, electrical submersible pumps, and new technological developments that can be used in these �elds. The UK �ts very well for development companies such as EnQuest.

We are also looking outside the UK, speci�cally in North Africa (Tunisia) and in Malaysia. Both regions also have late-life assets and near-�eld opportunities which are sub-material for major companies or other independents. Our ability to develop these assets—to take them from the discovery phase to the development phase—adds the most value.

For us, production on the order of 5,000 to 10,000 BOPD is material and signi�cant. We started with production of 0 and now we are in the mid-20,000-BOPD range, hoping to get to 50,000 BOPD by around 2017.

North Sea oil production is declining at a time when EnQuest’s is increasing. Are reports on the North Sea’s imminent death premature?

Although the wells are producing a lot more water than oil, they are still

economic. When we took over Thistle, for example, it was producing 2,000 B/D; last year, it produced over 8,000 B/D. The types of �elds we take on are those where there is potential for us to increase the recovery factor. At Thistle, the recovery factor is now around 47% and we are planning to take it well over 50%.

Another example would be Heather, which has one of the lowest recovery factors in the North Sea at around 27% in this 500-million-bbl STOIIP [stock tank oil initially in place] �eld. The reservoir in Heather is dif�cult, compartmentalized, heterogeneous, and quite fractured, but that gives us opportunities. With new drilling and new technology, we are taking it to a higher recovery rate. We can operate with water cuts of more than 90%; Thistle is at 95% plus and still economic.

We are looking for more development opportunities in the North Sea and beyond. These �elds are by de�nition challenging and they do not have large booked reserves, so the geology needs to be well understood.

We have also taken over Ardmore, the �rst producing oil discovery in the North Sea. It was abandoned at 70% water cut, but we are planning to take the water cut up to 90%. We also have a heavy-oil development with Kraken, which has 137 million bbl of recoverable reserves from 450 million bbl STOIIP.

What major changes have taken place in the UK oil and gas industry since you moved there in 1997? How have the changes to the small �eld allowance encouraged �eld development?

The biggest change was in 2011, when the UK government increased tax rates from 50% to 62%. The industry was not consulted prior to that increase, but since then, both as an industry and as a company, we have worked closely with the government.

I think they have largely reversed any negative effects for new developments and for brown�eld investments by giving allowances

TWA Interview

7Vol. 10 // No. 1 // 2014

that have enabled companies to continue investing.

As a matter of fact, the industry invested in approximately USD 25 billion of projects in 2013, the largest investment ever in North Sea oil and gas. This is partially because costs have gone up, but also because the government reacted and was able to give incentives for investment.

Incentives came in 2012 for small �elds and heavy oil, and they have since added brown�eld allowances in 2013, so it has all happened over the last 2 years. These allowances helped us to make these investment decisions. The biggest investment decision we are making is related to the Kraken �eld (heavy oil) and we are looking to sanction that project soon.

Prior to 2013, EnQuest had invested USD 1.3 billion in the North Sea. In 2013, depending on sanctioning of this project, we will have spent more than USD 1 billion, with more substantial investment in 2014 and beyond.

As we understand, you personally believe in “peak oil.” Why?

Globally, it is getting more and more dif�cult to �nd reserves that are economic. The complexity of the reservoirs, the availability of new technologies, and the cost associated with development now have increased markedly. It is generally more dif�cult to �nd new oil, which is more expensive to produce. I think the shale revolution in the US and Canada is real, but with an overall industry decline rate of 3 to 5% a year, that will not be enough because we are losing 3 to 4 million B/D due to natural decline.

I also see the Middle East as becoming more unstable and it will become much more dif�cult to invest in those countries in the next decade

or so—this will also constrain the supply side.

In the US, there are a large number of wells; 45,000 wells are drilled every year, but the decline rate is quite signi�cant. The other problem is the clays in the shale oil plays. I de�nitely think it is a revolution that is contributing several million B/D, but I see it in the single-digit range, not in the double-digit range. For me, that is great in the long term because it helps to alleviate some of the supply shortages in the Middle East.

So I am a peak theorist, but not necessarily a huge oil price bull theorist because I do not think oil prices can go up signi�cantly in real terms. There is always a supply/demand connection. There is always elasticity which destroys demand.

You have assumed various roles throughout your career in the energy industry. What roles have you enjoyed the most and why?

I love what I do and I love the business. As I mentioned, you really need to be passionate about what you do to succeed. I am very happy with what I am doing and I think it’s a great business and industry to be in.

You need to plan your career in a structured manner. You actually have to consider what your strengths are and what your weaknesses are, and to take on roles where you can increase your capabilities. I have had roles that I did not completely enjoy in the past, but if I look at them overall, I am still grateful for them because they gave me the tools I needed to achieve my goals. Not every job is going to be the best job in the world, but if you look at it as the next step in a long journey, I think it becomes much more enjoyable. You can’t just have a dream without a path towards that dream

think crystallizing the path, however long it is, gives you an ability to move forward.

What percentage of EnQuest’s workforce consists of young professionals (YPs)? What kind of YP is EnQuest looking for and why? How would you describe the working culture at EnQuest?

We are a very young company; half of our people are under the age of 40. We do try to hire younger professionals and ensure we get a lot of young talent involved in the industry. For example, we hired �ve graduates in 2013. We look for hunger in YPs. Do you want to be successful? Do you want to make a mark? I think it is important to be passionate. In fact, passion is one of our core values. You have to have a dream and you have to chart out your dream to realize it. You have to think about how the dream will be achievable.

At EnQuest, you will always feel like you are part of a family; we know everybody and everybody knows what they are doing. We are extremely focused and collaborative; everybody understands our goals very quickly. We give responsibility to people from the start.

Have you been an active SPE member? What are the advantages you see of active participation in SPE?

Yes, I was an SPE member most of my career. In 1984, I became one of the youngest Journal of Petroleum Technology editors, reviewing research papers.

SPE papers are hugely useful. The ability to access others’ experience in speci�c situations has been very useful for me and is also very useful for the industry in general. The ability to pass that knowledge on is what moves us forward as an industry. TWA

8

HR Discussion

“People do not care how much you know until they know how much you care.”

—John C. Maxwell, Leadership Expert

Most organizations in the oil and gas industry rely on the talents of bright and dedicated engineers. Although several of these engineers are exceptional in their technical �eld, many have not developed enough of the key skills required to be a great leader.

How is this possible, considering all the schooling and training most engineers undergo? The explanation seems to be that the skills needed to be a valued leader are often different from the talents engineers naturally possess and the skills they learn in school.

Leadership skills—included among “soft skills”—involve communication and relationship management rather than science and facts. Many engineers do not focus on developing communication and relationship management skills. Many technical professionals are not knowledgeable on a personal basis about the people who report to them. Without knowing a person’s hopes, dreams, and goals, there exists little chance of developing them. As Jack Welch,

executive director, Jack Welch Management Institute at Strayer University, said, “When you become a leader, success is all about growing others. It’s about making the people who work for you smarter, bigger, and bolder. It’s not about you anymore. It’s about them.”

Leadership is fundamentally about people and building trust. As such, the biggest leadership challenges are often people issues. These challenges cannot be engineered away, and, if ignored, will just get larger and more complex. By developing communication and relationship management skills, engineers can effectively lead and advance their career without encountering setbacks.

This topic may appear low-priority because the United States and many other countries in the world have placed a fair amount of focus on STEM (Science, Technology, Engineering, Mathematics) programs, rather than on people skills. However, in today’s global market, companies demand that their leaders, even those who are technically oriented, have �nely honed soft skills.

To �ll this need, many of the top universities have identi�ed soft skill development as central to their

curriculum. For example, in a 2004 Wall Street Journal article titled “Top Schools Struggle to Teach Soft Skills,” its author, freelance journalist and book author Ronald Alsop, identi�es United States’ universities such as Yale, Vanderbilt, the University of Chicago, Stanford, the Massachusetts Institute of Technology, Carnegie Mellon, and others that have incorporated innovative elements into their respective curricula to build and strengthen students’ soft skills. This trend among prestigious schools illustrates the importance of soft skill development.

The following are some speci�c strategies engineers can incorporate into their everyday actions to become better leaders in today’s global marketplace.

Acknowledge OthersA frequent complaint voiced by team members about leaders whose primary background is engineering revolves around acknowledgment. For example:

“He never says ‘Good morning.’” “He never uses my name when he talks to me. In fact, I wonder if he even knows my name.” “She always rushes past everyone without making eye contact.”

These are a few actual comments people have made. To make sure others don’t say these things about you, smile at people, make eye contact with them, and say “hello” to everyone you see in passing. Address people by name, if you know it. If you do not, ask what it is.

Realize that everyone wants to feel recognized at some level, whether it’s a friendly greeting in the hall or a one-minute “How are you” chat. While you may not need this sort of recognition to feel validated, others do. It only takes a few seconds to acknowledge someone, yet it pays off in increased trust, stronger relationships, and

Transitioning from Engineering to LeadingJean Kelley, Jean Kelley Leadership Alliance

Jean Kelley, founder of Jean Kelley Leadership Alliance, specializes in executive coaching, assessment, and leadership development, working throughout the world. She and her Alliance have helped thousands of leaders improve their performance. She has three books to her credit, has had over 100 trade association magazine articles published during the last 3 years, and provides weekly advice to viewers and listeners via local radio and television. Kelley is

an alumna of Harvard Business School’s 3-year executive program and also is an Autocross Championship sports car driver.

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greater productivity. A simple nod and a smile go a long way in making people feel important.

Share Information OpenlyMany engineers assume team members know the most current information and therefore do not feel the need to reiterate or share. In truth, people do not know what you know unless you tell them. Conducting regular meetings with everyone on the team—both the technical and nontechnical people—is very important. In this way, employees are on equal footing from an informational standpoint which leads to increased success in their daily jobs.

Unfortunately, many engineers do not see the need for meetings. Oftentimes, they think that emailing someone information is enough. If some team members prefer one-on-one or verbal communication, whether in a formal monthly meeting environment or via a quick weekly “check-in,” �nding a way to accommodate them will facilitate effective communication even if the leader personally does not like meetings.

Also, it is a good idea to invite nontechnical people in the department to attend technical meetings. This provides an opportunity for them to better understand other facets of the department as well as improve overall situational awareness. When a leader invests a little time helping people in the department learn more about what they do, the company will perform better in the long run.

Give People Your Undivided AttentionListening is a key skill of great leaders. When someone comes into your of�ce to talk with you, do you continue working as they talk, check your email, or �nish up a report—or do you push yourself away from your computer, keep your phone in your pocket, and look directly at the person addressing you?

Often engineers and other technical professionals tend to be so focused on the task at hand that they barely look up from their work even when someone is addressing them.

It is important to realize that team members are more than just information suppliers. They are looking to the leader for guidance, to be a sounding board, and to assist with (not take over) problem solving. They need the leader to actively participate in the conversation with them. Not only does this make them feel valued, but it also spurs creativity and innovation—both of which are needed in today’s corporate environment.

The bottom line: When someone is talking, forget the task you were doing and instead focus on the person. If you are unable to stop, it is a good idea to schedule a time in which appropriate focus can be provided.

Build Social CapitalBuilding social capital is critical to any leader’s success. Not only should a leader build social capital with people within their department, but they should also build it with those in other departments and in other companies who might be a resource to them.

Social capital simply means building connections with people on a personal level. A leader should ask their employees about their hobbies and interests, their birthday, and their kids’ names, and then talk about these things occasionally to build rapport. Remember what leadership expert John C. Maxwell said: “People do not care how much you know until they know how much you care.” To be a great leader, a person needs to treat others like human beings instead of objects. Part of this is getting to know your peers; someday one of them may be your boss or at the very least in a position to potentially make your work life very stressful.

Break Down Departmental SilosCommunication between departments is crucial yet very often infrequent or nonexistent. For example, when a drilling engineer, production engineer, and reservoir engineer working on the same prospect do not communicate regularly, a good deal of duplication of effort can occur. While the engineers are all pursuing the same goal (producing hydrocarbons), communication failures

can lead to repetition of the same work or omitting a task completely because each thought someone else had it covered. Each wastes time and this directly negatively impacts the company’s bottom line.

To remove departmental silos, be the �rst to extend information, praise, or acknowledgment to someone not directly on your team. In other words, give positive recognition to people across departmental lines. Also, ask for their advice and involvement even if it is something you do not require. When you adopt and promote a “We win together/We lose together” philosophy, everyone from each department will be eager to contribute.

Take the LeadThe skills used to create value as an individual contributor will not necessarily help solve the challenges faced in a leadership role. People skills—relationship management and communication with others—will be vital keys to success.

Additionally, the business climate in the oil and gas industry often requires working across cultural lines with people from all over the world. At some point, a leader will undoubtedly be required to communicate with people who are very different from themselves. Without having already developed good soft skills, such communication could prove dif�cult.

Final NoteDeveloping communication and relationship management skills does not mean leaders must change their personality. Nor does it require a huge investment of time. In fact, spending just 10% of your time enhancing your people skills could yield a reduction in miscommunication errors, workplace con�ict, and work�ow inef�ciencies.

In the end, by developing an awareness of others in their environment; relating to them in a friendly, supportive, open manner; and knowing what makes them tick, leaders will become respected and will drive good team performance and produce results. TWA

10

Forum

Entrepreneurs are intelligent and innovative, driven by the desire to offer a unique product or service within a certain market. In the oil and gas industry, entrepreneurship has �ourished and given us many of today’s important inventions and technologies. A few examples include the development of steam-assisted gravity drainage (SAGD) by Roger M. Butler beginning in the 1970s while employed at Imperial Oil in Canada; the use by companies such as ProSep of electrostatic grids to treat oil and water emulsions in treating trains; and the development of various arti�cial lift technologies including research on beam-pump slippage and gas lift valve performance.

Entrepreneurs have also started some of the largest companies in the world, including the largest public energy company in the world by market capitalization, ExxonMobil. ExxonMobil and many other Standard Oil subsidiaries were started by arguably the most successful entrepreneur of all time—John D. Rockefeller. Other examples include Leon Hess, who founded the Hess Corporation in 1933, and Erle P. Halliburton, who founded Halliburton in 1919.

But let’s be real. Successful entrepreneurs don’t only come up

with great inventions, they also solve market needs.

Two excellent examples of today’s young professional entrepreneurs are Komal Walsh, an independent consultant and mechanical engineer in Calgary, Alberta, and Maria Nass, founding member and �ow assurance engineer at FlowAssure Engineering in Houston, Texas. Walsh and Nass agreed to speak with us to share some insights into their life as young professional entrepreneurs.

Question: How would you de�ne entrepreneurship in the oil and gas industry?

KW: Entrepreneurship is about opportunity. For me in particular, Alberta’s oil-sands construction sector has been steady over the past few years and offered a number of people including myself the opportunity to take on the risk of starting their own business venture.

MN: Being an entrepreneur is in general about taking risks and �nding new solutions and improvements to challenges with a service or a product, while understanding that nothing is scripted or laid out for you. With entrepreneurship there is no secured career plan, no proven method or recipe for success, but

rather a constant and daily desire to �nd solutions to a variety of problems. This is valid for any industry, but the difference with the oil and gas industry is that it involves solutions that apply over a multi-year or even multi-decade timeframe.

Another difference is that errors within our industry could carry catastrophic consequences for humans, the environment, and assets. For these reasons, innovation, led by entrepreneurs in the oil and gas industry, is more gradual as stakeholders are more conservative and make decisions more slowly compared to other industries.

Question: Do you have any speci�c role models or reasons for wanting to be an entrepreneur?

KW: I’ve always focused on continued development of my hard skill sets so I look to industry-leading subject matter experts as my role models. Many of these specialists are very successful career freelancers who consult with a number of the major oil and gas �rms and are invited to participate on industry boards and committees. Although some of these “hired guns” may have never expanded their companies in terms of manpower, I do consider these individual experts entrepreneurs since they are able to successfully market their services and are actively sought out within the oil and gas community.

MN: Wanting to be an entrepreneur is about creating something new where nothing existed before. It is more about the journey than about the destination as one goes through the different phases from concept to execution. I also like that I have more control over my career and

Entrepreneurship in YPs: What Does It Take?TWA editors M. Taha and J. Dragani interview Maria Nass, FlowAssure Engineering, and Komal Walsh, Independent Consultant

Maria Nass is a founding member of FlowAssure Engineering, headquartered in Houston, Texas. She earned a BSc in chemical engineering at Universidad Metropolitana in Venezuela, an MSc in petroleum engineering and project development at the French Institute of Petroleum (Institut français du pétrole, IFP), and an MSc in petroleum engineering at Texas A&M University. Nass is a registered professional engineer (petroleum engineering) in the state of Texas.

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what I want to do. I have better control of my schedule (although I confess that I now work more than I did before) yet I have freedom to pursue the things that I am truly passionate about.

Question: In your view, what value do entrepreneurs provide the industry? Do you see a difference between young professional entrepreneurs (say, with under 10 years of experience) and so-called experienced entrepreneurs (say, with over 10 years of experience)?

KW: Highly technical subjects are oftentimes best handled by outside subject matter experts. There is value added for organizations that may only require these professional services periodically unlike some other full-time employee roles that are required day-in and day-out to run a business.

There is no shortcut to gaining experience. It’s important for younger entrepreneurs to understand the maturity level of their business and then tailor their services to suit. Younger entrepreneurs need to continually seek out more seasoned professionals and be prepared to work with an open mind-set. This is a time-tested formula that has seen many young professional entrepreneurs successfully mature their businesses.

MN: Entrepreneurs participate in the creation of new products and new services (not to mention the creation of jobs too!). Having a healthy pool of entrepreneurs in this industry enhances competition which in turn fosters innovation. I don’t believe years of experience play a deterministic role in entrepreneurship, but what I can say is that it takes a lot of energy, stamina, and effort to embark upon an entrepreneurial activity; based on that, probably the most important thing is the level of passion and commitment, more than age and years of experience.

Question: Do you view your business as a success? Why or why not?

KW: Yes, I consider my business entirely successful so far. I’ve managed to stay

focused on a formula I believe will yield great professional and personal satisfaction over the course of my career. In the grand scheme of things, my business is still in its infancy but I consider myself very fortunate to have found something I genuinely enjoy and excel at. Running a business is not a sprint, it’s a marathon, so it’s very important to �nd a niche where you can stand out in a �eld where you enjoy the work, since you can potentially be running that business for a very long time.

MN: Yes we view our business as being successful. As a newly founded company, we have established a set of milestones to help us keep our development on track. At the moment we have exceeded our expectations in terms of revenue and growth. We were on track throughout 2013, leading to a solid delivery for the year.

Question: What were the three biggest challenges starting as an entrepreneur? Do you have any advice for newcomers?

KW: (1) Coordinating opportunities so the overlap between jobs is manageable can be a challenge. A young entrepreneur will always be eager to take on new work but I would strongly advise anyone starting out to be realistic about how much work they can handle at any given time. It’s resource management 101 which can be dif�cult to apply in the real world where the bottom line is a real consideration. Sometimes this may mean passing up good opportunities that do not �t ef�ciently

within your schedule without the risk of diluting quality of service.

(2) Fostering and maintaining a strong professional reputation and delivering quality work is fundamental to the success of any professional; however, as an independent consultant, these elements are also instrumental in building your company brand in an environment where your professional network and professional reputation are keys to securing future work.

(3) Select a �eld that will bring you professional success only in addition to personal satisfaction. Understand your aptitudes and choose something you enjoy! As the face of your business, it’s important that people are able to recognize your enthusiasm towards your work. Remember, running a business isn’t a sprint, it’s a marathon; but by picking the right �eld, it won’t feel like one!

MN: (1) Dealing with insurance, taxes, and legal aspects of the business—you want, need, and have to get it right from day one. (2) Get a client before you quit your job to become an entrepreneur. (3) Love what you do or what you plan to do as an entrepreneur. You will be working on it all the time.

Commentary Walsh and Nass are excellent examples of young professionals who have recognized an opportunity and sought out competitive advantage by becoming leaders in their sectors and offering services that apparently are scarce and/or specialized.

Komal Walsh is an independent consultant with his own construction and facility engineering consulting �rm, headquartered in Calgary, Alberta, Canada. He has been running this business for over 2 years. Komal is currently working with Cenovus Energy as a facilities construction engineer in the oil sands sector. He earned a BSc in mechanical engineering from the University of Ottawa and holds a professional engineering designation in the province of Alberta.

12

Economist’s Corner

The draw toward entrepreneurship is clear: The opportunity to control your own destiny, reach your full potential, and reap large pro�ts all while doing what you enjoy sounds pretty good, right?

The oil and gas industry is a veritable breeding ground for those who want to make this dream a reality. However, this dream cannot be achieved without a signi�cant amount of personal risk and hard work

YPs Can Be EntrepreneursAccording to the Global Entrepreneurship Monitor’s 2011 and 2012 reports, there has been a dramatic increase in startup businesses in many countries throughout the world. Given a sympathetic underlying government policy and public support, entrepreneurship is a real possibility in many aspirant YP entrepreneurs’ career roadmaps.

Since its beginnings in the mid-1800s, the capital-intensive oil and gas industry has borne witness to many visionaries who overcame myriad obstacles to set up successful businesses.

Most lessons they learned apply to those who want to take advantage of opportunities and test their self-belief, creativity, and determination to do something for which they have a passion.

What Matters Most? Starting a business is constrained, more than anything else, by �nancial considerations. Among these are �nancial readiness to fund the project, access to capital funding from the market, and the risk of departing from monthly in�ows. Each year thousands of potentially successful businesses fail because of poor �nancial management. Entrepreneurs especially must be realistic about funding.

Getting a bank loan can be a challenge for a startup company, so most entrepreneurs need to cover costs by putting up a signi�cant portion of their own savings, or charging their credit cards. The graphical representation (Fig. 1) illustrates a typical life cycle of a startup and the relevant capital sources at each stage to meet the growing business’s �nancial needs.

The most important aspect of starting a business is, therefore, estimating its

Entrepreneurs’ Economics: Key Lessons From YP EntrepreneursRandall Collum, Genscape; Jenny Cronlund, BP; and Prakash Deore, Fujitsu Consulting

Randall Collum Jr. is managing director of supply analytics at Genscape, Inc., a global provider of fundamental energy data and analytics. He formerly served as founder and chief executive of�cer of Spring Rock Production, LLC, a North American oil and gas production forecasting company, acquired by Genscape in April 2012. Before starting Spring Rock, Collum was at Merrill Lynch Commodities Inc. (MLCI) for 5 years, where he was vice president, strategic analysis.

For more than 5 years prior to joining MLCI, he worked at BP, where he served in BP’s North American Strategy group and in the Gulf of Mexico asset. Collum earned a BS in chemical engineering and an MS in petroleum engineering from the University of Houston, and a certi�cate in �nance and accounting from Rice University. He is a registered professional engineer in Texas. Genscape Inc. is the originator of real-time power supply information for energy market participants. It was founded in 2000 in the US and expanded to the European market in 2004. Today, Genscape is part of Daily Mail and General Trust’s USD-2.2-billion portfolio of digital, information, media, and events businesses.

Fig. 1—A startup’s typical life cycle, showing relevant capital sources at each stage.

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�nancial needs. A startup will need enough funds to survive until it turns a pro�t. Many sources recommend securing approximately 6 months’ to a year’s worth of projected expenditures in order to start a business.

Estimating how much that is can be dif�cult, but it must be done. This involves developing a complete, well-thought-through business plan. Because most new businesses require signi�cant personal �nancial commitment, taking the time to create a business plan is of utmost importance.

A business plan is a document delineating the viability of your business and that it can make money. It summarizes all aspects of the business venture, including analysis supporting the rationale for its existence, and its �nancial, operational, and marketing strategies.

A business plan ultimately sells your business, and proves you have thought through exactly why and how it will run. This is very important for attracting �nancial backers, potential clients who will pay for your service or product, and well-quali�ed employees enthusiastic to work for you.

Essential to a Business PlanAn essential part of a business plan’s �nancial strategy is a �nancial management plan. Your �nancial management plan should include an estimated cash �ow statement, income statement, and balance sheet. A cash �ow statement shows how funds �ow into and out from your business over a certain period (typically monthly or quarterly). This statement helps project when and under what circumstances the business’s breakeven point could be reached.

Your projected income (or pro�t-and-loss) statement estimates the results of your business from an accounting point of view over a speci�c period of time (typically quarterly or annually). It is used to make a case for your business’s potential to generate income.

A balance sheet is a status report of a company’s �nancial condition at a speci�c point in time. While not particularly useful for startup businesses,

it is usually required by lenders and investors.

However, it is important and required for a startup’s business plan to include a personal balance sheet that gives a snapshot of personal assets and liabilities.

Dispelling MisconceptionsLike all businesses, a startup’s viability revolves around money.

Risk. As mentioned earlier, most �nancial risk is on a personal level. You may not be willing to risk your own personal �nances, because, if the venture fails, your savings are essentially lost.

You may also be required to assume personal �nancial obligations exceeding your personal net worth, and thus expose yourself to bankruptcy.

To take that amount of personal risk, you must be truly passionate about the business you are starting.

Passion. Passion is important, because you must also be satis�ed with a lower quality of life until the business gets established. Long hours and groundwork needed to launch a business can be staggering. Especially if you are risking your own personal savings, you have to be willing to cut back on your personal life to keep your business a�oat until it turns a pro�t.

According to Randall Collum Jr., managing director of supply analytics at Genscape, a global provider of fundamental energy data and analytics, “You have to have an idea that you believe strongly in and then you have to be willing to put forth the effort to develop that idea. Ambition is the key, along with the drive that comes with it. When you’re starting your venture—working 7 days a week, 20 hours a day, it’s that ambition and drive and belief you will be successful that keeps you going.”

Collum was formerly the founder and chief executive of�cer of Spring Rock Production, a North American oil and gas production forecasting company that was acquired by Genscape in April 2012.

Work. Another misconception about starting your own business involves the level of work and effort to keep it going. Many businesses that get off the ground ultimately fail because the entrepreneur

is more enthralled by starting up a business than by keeping it running—lacking the drive to continue until it makes money—and sustain it thereafter.

Taxes. Do not overlook the need to pay taxes. No matter what country you live in, taxes on small businesses exist. For example, in the US, small-business owners must get a tax identi�cation number, then pay quarterly taxes. The taxes also need to be accounted for.

Legal Structure. Do the research to determine what type of legal structure is best for your business and register it as such with the various government entities you will need to contact.

There are several steps involved. The US Small Business Administration has a helpful article, titled “How to Register Your Small Business in Five Easy Steps,” on its website (www.sba.gov).

There are many types of legal structure, and in the United States, many entrepreneurships start out as a sole proprietorship, in which one individual owns and runs the business, and there is no legal distinction between the owner and the business.

But depending on your business plan, you may want to expand to form a type of corporation. For example, a C corporation is a corporation that, under United States federal income tax law, is taxed separately from its owners; an S corporation is a corporation whose shareholders are subject to tax on income based on their shareholdings; and a limited-liability company (LLC) is designed to provide the limited liability features of a corporation and the tax ef�ciencies and operational �exibility of a partnership.

Networking. Do not underestimate the power of networking.

Genscape’s Collum says, “[The best way for entrepreneurs to manage their �nances is] networking, networking, networking. My funding source was someone I had met 5 years earlier and just stayed in contact with. I never expected to have that person fund the business, and it wasn’t until I told him my idea that he offered to put up the startup funding.” TWA

The United States’ �rst driller, “Colonel” Edwin L. Drake, was not a petroleum engineering graduate. Not only were such studies unheard of then, but the petroleum industry as we know it today did not exist. He had no oil well drilling quali�cations because he was to become one of the �rst individuals to undertake what was then an unknown venture.

Drake was picked up in 1857 by a group of American investors in their newly formed Pennsylvania Rock Oil Co. partly because, as a retired railway conductor, he had free access to the railways. Drake was not even a colonel; his employers gave him the title to make him sound impressive. He was at best a jack-of-all-trades, though he apparently had an uncanny gift of the gab, and could probably even sell ice to Eskimos.

In India, too, as early as the 1850s the dispatches of some British Army of�cers, such as Lieutenant R. Wilcox, Major A. White, and Captain P.S. Hannay in the Brahmaputra Valley’s rainforests in Assam, spoke of oil exuding from river banks and traces of bubbly gas.

The actual discovery of oil seeps in Assam was made in 1869 by a company not even remotely connected to oil—the Assam Railways & Trading Company—and in 1889, it was this very trading

company that drilled its �rst oil well, which discovered India’s oldest still-producing oil �eld.

Nonpetroleum ONGC Pioneers With a few exceptions, the pioneers who were the nucleus of India’s Oil and Natural Gas Corporation (ONGC) when it was formed in August 1956 were largely from nonpetroleum backgrounds.

The �rst chairman, K.D. Malaviya, possessed a degree in oil technology but this actually referred to vegetable oil.

Almost all the early stalwarts were on deputation from the Geological Survey of India with expertise in geology and geophysics. The �rst eight drillers were all engineering graduates. Likewise, the �rst 130-odd young pioneers, recruited by ONGC through India’s Union Public Service Commission, by and large comprised postgraduates in geology and physics. Most of them later rose to occupy senior positions in the organization.

The fact that oil men in those days came from nonpetroleum backgrounds was not a matter of choice but necessity. Undoubtedly, it was very creditable for those pioneers to have adapted so well to their rough-and-tumble environment. Those ordinary men worked hard and

learned quickly as if born to the job. It is no wonder that many of them later became legendary, with tales of their daredevilry and quick wit told and retold in oil �elds all over the country.

Today’s Petroleum Job Market Today, several universities and institutes in India have programs teaching petroleum engineering and its related subjects. Examples include the Indian Institute of Technology Madras, the Indian School of Mines, the Maharashtra Institute of Technology, Pandit Deendayal Petroleum University, and the University of Petroleum and Energy Studies. Such programs exist all over the world.

There are studies tracking the annual number of US petroleum engineering graduates and postgraduates. However, there is no reliable information of this nature available on a worldwide basis.

While the annual number of US petroleum engineering graduates and postgraduates is somewhere between 1,000 and 2,000, it would appear that worldwide the number is many times higher.

Petroleum job opportunities worldwide have grown enormously. For example, in India in 1956 there were only two exploration and production (E&P) companies operating in India—Oil India Limited and ONGC. Today, there are nearly 30 E&P companies in India, along with several multinational and overseas contractors working offshore. Therefore, there are now many opportunities available in existing companies in India for petroleum universities’ and institutes’ young graduates and postgraduates.

YP Entrepreneurs The question now is, What are the prospects in India’s growing oil and

Whither Enterprising Young Exploration and Production Professionals?Raj Kanwar, Founder of SK Oilfield Company

Raj Kanwar is a law graduate with a master’s degree in political science from Agra University, India. He has served in the journalism, public relations, and advertising professions at different stages of his career. He became an entrepreneur by starting SK Oil�eld Company in 1970, which has now grown signi�cantly, both within and outside India. He retired in 2000 at the age of 70 to return to his �rst love of writing. Kanwar writes articles regularly in Indian national

and regional dailies; is contributing editor, south Asia, for World Oil; India correspondent for Indo American News of Houston; and author of Oil and Natural Gas Corporation’s of�cial history, titled Upstream India, published in 2006.

14

Pillars of the Industry

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Pillars of the Industry

gas industry for YP entrepreneurs? Entrepreneurial skills are not picked up at university; these are mostly ingrained or acquired later.

By de�nition, an entrepreneur is an individual who takes initiative to organize a business in order to bene�t from or take advantage of an opportunity. In other words, he or she starts a business, invests money, assumes all the risk, and then reaps the resulting reward if everything goes well.

There are of course many examples of �rst-generation entrepreneurs making it to the top of the business charts in India and elsewhere. But then there may be 10 failures per solo success amongst the new entrepreneurs.

However, this is not to say there are no prospects for a determined YP entrepreneur. A few opportunities exist in numerous oil�eld services but then one has to possess the requisite staying power and deep pockets. It is rare for YPs straight out of university to start an enterprise on their own unless they are savvy enough to put together a group of experienced and dedicated professionals to join the venture. That is easier said than done.

If you have a burning desire to become your own boss, I recommend that you �rst join a good company to learn the business, and then venture out on your own when you feel you have acquired enough rudimentary know-how to perform successfully.

One warning, though: You must be careful not to go against a former employer by directly competing with it, as this is a small industry and it could cause issues down the line. It will be fair and square if you seek the blessing of an erstwhile employer, or still better, become its subcontractor. The latter option is the best and a win-win situation.

Working as AgentsToday, a fairly large number of overseas manufacturers and service providers appoint agents in India in order to promote and market their products and services. This is a fairly well organized segment and occupies a niche position in the E&P industry.

I set up my business, SK Oil�eld, in this sector in 1970 as the accredited representative in India of reputable overseas companies manufacturing equipment for the oil and gas E&P industry. There were two or three major corporate entities then that had set up separate agency divisions to cater to the needs of this uncharted market. But mine was the �rst privately owned company to enter into this new, exciting territory.

I was both sole worker and proprietor of SK Oil�eld. With no funds and no engineering or even science background, it was a foolhardy venture.

But then it was my only option, something akin to a drowning man grasping at straws. My newspaper, Witness, which I had started in Dehra Dun in August 1964 with hope in my heart and prayers on my lips, was on its last legs. I had exhausted both my patience and the savings I had set aside over the years in my jobs with ONGC and a private  company.

On top of this, I married in January 1965 and by 1970 had two children.

The First US-Dollar Check Starting the company was hard going as I had expected. However, with technical guidance from a couple of friends in ONGC and backed by my �uent English writing skills and perseverance, I sent letters to a few American companies and was soon able to get nonexclusive representations from two. The next step of getting an order was even harder; it then took me 2 years to see my �rst US-dollar check.

Gradually, year by year, more and more foreign companies came into my stable until the company’s count of overseas principals reached a baker’s dozen. Thus, over the �rst 10 years, I was able to establish a name for myself in the young and growing ONGC.

In February 1980, SK Oil�eld Equipment Co. Pvt. Ltd. was formally incorporated. I employed a few professionally quali�ed staffers and also appointed my own representatives in Duliajan and other work centers in ONGC’s widening oil patch. Flushed with discoveries in Gujarat and Assam, ONGC

became more enterprising and decided to go offshore; it set up its own of�ces in Bombay (now Mumbai). I followed suit and opened an of�ce there to cater to ONGC’s growing requirements.

With the opening of oil and gas blocks to private Indian and multinational companies under the New Exploration Licensing Policy, which became effective in 1999, several Indian and foreign companies set up shop in India. This vastly expanded the number of customers that came SK Oil�eld’s way; as a result, the number of clients SK Oil�eld caters to now has increased to over 25.

What the Future Might Hold Today, however, this particular segment is virtually saturated with Indian agents of all kinds. Further, some of the major service companies, offering a wide range of products and services, as a rule do not work through agents.

The entry of Chinese manufacturers in this once Western-dominated segment has also made the situation more challenging; these companies invariably quote the lowest prices. Thus it would be a brave entrepreneur—professional or otherwise—who would enter this segment.

I do not wish to dishearten a young professional who has exceptional entrepreneurial skills and some innovative ideas. There is certainly plenty of room for innovation in every industry and there are also many angel investors ready and willing to help fund a worthwhile enterprise. Just remember: Startups do emerge off and on and some of them do hit the jackpot, given enough of wits, guts, and luck.

My son, Manav Kanwar, has been the driving spirit behind the ongoing expansion of SK Oil�eld during the past few years. Now it ranks among the top companies in this niche segment—with new of�ces in Gurgaon for the National Capital Region and in Mumbai, and an expanded Dehra Dun of�ce.

In 2000 when I reached 70, I turned in my papers, saying, “Enough is enough.” Since then, I have been devoting my time to reading and writing, which I really love and enjoy doing. TWA

16

SPE 101

Although it is a large association—more than 110,000 strong covering 141 countries worldwide—SPE is also quite accessible. Each member’s contribution does make a difference. One way to achieve this is by engaging in your local section activities. Sections ful�ll SPE’s mission locally. Each corresponds to a geographic region where the petroleum industry is present. Today, SPE members can af�liate with any one of 214 sections worldwide. It is hard to �nd an area of the E&P industry for which SPE has no associated section.

Sections are the primary way SPE ful�lls its mission “to collect, disseminate, and exchange technical knowledge concerning the exploration, development, and production of oil and gas resources, and related technologies for the public bene�t; and to provide opportunities for professionals to enhance their technical and professional competence.” When you visit the SPE.org website and search for a conference, forum, or workshop, the number and variety of venues and themes you �nd come from SPE International’s efforts combined with and responding to members’ demand and the ceaseless work of member volunteers in all the sections.

Sections are committed to their local industry context and must also meet their members’ needs for both technical and personal development. To achieve this, sections promote technical dissemination events, such as seminars and discussion panels. These present opportunities for you to learn or to share your expertise with other members. Also, regular section publications (such as newsletters) keep members informed about local industry events. Another important role of local sections is to help the development

and integration of the next generations of industry professionals. As part of SPE’s mission, sections support students and student chapters, establishing partnerships with universities. In addition, some sections promote community service and recreational events.

YPs play an important role inside local sections. Their involvement in SPE activities helps SPE grow and improve. In return, SPE offers YPs opportunities to develop. Most sections have YP committees that promote events and activities addressing YPs’ needs.

Sections are also key in recognizing individual contributions to the industry. Sections raise the SPE Awards Committee’s awareness of outstanding members. So, even if your location is remote, your efforts can be identi�ed and achieve recognition by the overall SPE membership.

You can also be part of your local section’s governance. Each section’s Board of�cers are elected annually, with a number of positions any member can occupy. You could run for election as its volunteer chairperson. You would represent the section—locally, addressing member needs and coordinating section activities, and globally, reporting to the SPE International board. The chairperson is also responsible for the section’s annual report. Leadership and communication skills, as well as commitment to the local industry, are required to be a section chairperson.

You could run as secretary, where you would document section meetings, registering every decision made or idea proposed, and also keep an up-to-date list of members and their contact information. As membership

chairperson, you would be responsible for recruitment initiatives and member retention.

Because SPE is a nonpro�t association, section budgets are dimensioned only to support section activities and events. The role of treasurer is thus of primary importance, with responsibility for budget planning and keeping track of section expenditures on events, student support, and internal meetings. He or she ensures the section has the �nancial resources to properly operate and promote its activities.

Section YP committees are typically led by a YP chairperson. This essential position also ensures YP representation on the section’s board of of�cers. Also, student chapters can count on having a YP liaison who facilitates support from the section.

Involvement with your local section is valuable. Being in contact with other skilled professionals from your local industry gives you an excellent chance to network. Moreover, through such involvement, you can acquire soft skills to enhance your management abilities and learn how to work on teams with peers from different backgrounds. You can also share your technical experience and expertise by contributing to local forums and events.

No matter how you decide to participate, by attending your local section events or volunteering for election as an of�cer, rest assured you are providing a valuable contribution to your local industry. That is why SPE strongly encourages members to get involved with their sections—so go ahead, make a difference!

For more information, please visit www.spe.org/sections. TWA

How an SPE Section Works and What It Does for YouPaulo Pires, Petrobras

17Vol. 10 // No. 1 // 2014

Discover a Career

As I stood in front of the owners laying out my vision for the company, it never dawned on me how little I knew about the adventure I was about to begin.

Eight days before my 28th birthday, I was unanimously voted the chief executive of�cer (CEO) of an 11-year-old oil�eld service company.

The company I was taking over had plateaued. Its current management was nearing retirement, and it needed to do something to revitalize itself while it was still viable.

At the time, I was one of the company’s youngest employees, but having worked there since it was formed in 2000, I knew every moving part of the company intimately. I knew what our biggest problem was: We were stuck in “small company” mode.

However, understanding our problem was merely the �rst step. We had to identify the steps we would need to take to get ourselves out of that rut.

Planning and LearningWith the help of the person who would end up being my right-hand man on this journey, we sat down and hatched our plan. We laid out a roadmap, the �rst of many ambitious plans we would devise to grow our company.

With our plan in place, we set out in a sprint toward our goal. Success came easily in the beginning, but as we progressed down this road, we learned a number of dif�cult lessons.

As an excited new CEO, I took on the task of working harder than I ever had before, trying to perform as many jobs as I could.

Before long, it became obvious that it would be very hard to be an effective salesperson while I was busy in the of�ce writing programs; tricky to dispatch truckloads of our products to customers while I was in the �eld helping out with a job; and nearly impossible to keep a close eye on accounting while re-stacking pallets in the warehouse.

It soon became apparent that, although I could do every job in the company, I was really only gifted at a couple of those jobs. I was doing the company a disservice by running it this way and spreading myself too thin in the process. By doing a lot of jobs I was good at, I wasn’t ever able to really do what I did best.

We had that �rst “aha moment,” so we sat down and wrote out the �rst lesson we learned: Allow our employees to do what they do best every day.

The next learning opportunity came in the form of a series of bad hiring

decisions. No one had prepared me for how daunting a task it is to hire a team of employees. Sure, in my short career I had hired a number of people, but this time it was different.

Earlier in my career we just needed people to �ll a job. Now, we weren’t looking for just anybody; we were looking for a unique set of people whom we had not yet determined how to identify.

Dealing with the fallout surrounding bad hires will make you learn in a hurry, and we eventually found a method that has worked for us.

In this process we learned our second major lesson: Whom we have in the company is equally important as what we do as a company.

Looking at Products and ServicesWe then took a look at our product and service offering. It jumped off the page when we saw it; we hadn’t released a new product in years.

We began looking at what new products we could offer—something that would continue to set our company apart. This began as we identi�ed the current state of the market.

Fluids are one of the few things that ever contact a reservoir and can account for upwards of 30% of the completed cost of a well; therefore, the importance of �uids in drilling and completion operations cannot be overstated.

With the continual need to drill quicker and more ef�ciently, �uids are being pushed to extremes. Wells with deeper total vertical depths, longer laterals, smaller holes, high bottomhole temperatures, and so forth have demanded that �uids evolve with drilling practices.

Although the �uids used in drilling and completion operations have evolved

Discover a Career as a Young Entrepreneur in Oilfield Services Brandon Hayes, Drillchem Drilling Solutions

Brandon Hayes is chief executive of�cer of DrillChem Drilling Solutions, which provides �uid additives for the drilling, completion, and horizontal directional drilling industries. Previously, he was DrillChem’s vice president of engineering, where he focused on the prevention of pressure transmission from the wellbore to the formation in drilling operations, polymer selection and optimization, solid and liquid frictional forces, and suspension dynamics in large-

diameter horizontal drilling applications. He has been with the company for 13 years, having started his career at DrillChem during high school. Hayes earned a BS in chemical engineering from the University of Louisiana at Lafayette.

18

Discover a Career

tremendously over the last decade, �uid-related issues such as lost circulation, stuck pipe, low rate of penetration, excessive friction, and unstable formations continue to be problematic for the petroleum industry.

As the industry continues to push itself to deliver lower-cost wells, these obstacles present a real problem.

Operators are searching for ways to optimize their �eld development and transition it into a manufacturing mode.

The goal became being able to repeatedly drill very similar wells for roughly the same cost, in the same amount of time.

Though the United States’ domestic rig count is nowhere near record levels, the overall number of wells being drilled per year is skyrocketing due to the decreasing amount of time it takes to drill a well. Because of this, money lost on �uid-related problems creates a barrier preventing companies from stabilizing their costs from well to well.

The focus of our product and service offering became “Driving innovation to create ef�ciencies for our customers.” This focus was a value-added principle around which all of our product lines would soon revolve.

A New PhilosophyWith purposeful intent, a new culture began to emerge at the company.

The average age of the employees began to fall quickly as we searched for personnel to �ll the age gap—the so-called “Great Crew Change”—that has existed in the industry for some time.

We �lled our ranks with motivated individuals in the beginning stages of their careers and excited to be part of something great.

We fostered an atmosphere where employees began feeling privileged to work here.

There was an excited buzz going on and everyone we encountered, be it customers, vendors, or prospective employees, could feel it.

The company started to take on a new life, as we began to have higher and higher expectations for each other.

Through this change, we identi�ed and adopted a new philosophy: Create a dynamic atmosphere that demands excellence.

Fine-Tuning Core PrinciplesAs we wove our way through the next couple of years, we started to �ne-tune the core principles that de�ne our company today. As I said at the beginning, our original plan was de�nitely not our last. We learned that business plans must be �uid, and regular adjustments are often necessary.

Following the principles we evolved, our company has grown to more than �ve times the size it was 2 years ago. We have a group of people working here whom I really care about, stakeholders excited about the company’s direction. And most importantly for me, I have a job I love. TWA

Undoubtedly, there are many other examples of successful young professional entrepreneurs like them, who have taken a similar course of action in their �eld of growing expertise.

For any aspiring young professional entrepreneurs, there are some key pieces of information to take from our interview subjects and the research they have completed.

First, all successful entrepreneurships must offer a product, service, or business that meets some real market demand. The term “creative destruction,” adapted and popularized by renowned economist Joseph Schumpeter in his 1942 classic book, Capitalism, Socialism, and Democracy, may be used to elucidate

success in entrepreneurship. New successful start-ups have the ability to destroy established conventions of business and escalate economic growth by offering new ways of doing business, new products, or new services.

In addition, understand and research your market before deciding to embark on a new business venture. As Nass mentioned, get at least one client before you quit your job to become an entrepreneur.

Second, as both Nass and Walsh highlighted, all entrepreneurs must love what they do. Entrepreneurship is a learning experience for all �rst-timers and setbacks are common, even for those who feel they are doing everything right. However, entrepreneurs with a

passion for their work will be prepared to put forth the additional time and effort to ensure their services are excellently delivered and their business remains a success.

Third, do some research and seek out advice from experts before embarking upon the journey of entrepreneurship. Talk to a lawyer, accountant, and insurance agency to understand the legal, tax, and insurance implications of running a business. Both Nass and Walsh mentioned the importance of these professional services to their business.

And, last but not least, talk to other successful entrepreneurs. They are the real entrepreneurship experts and can likely offer the best advice. TWA

ForumContinued from page 11

19Vol. 10 // No. 1 // 2014

Technical Leaders

Question: People often say that if you have an entrepreneurial idea you think is great, you need to follow your passion and your heart and go for it. Would you say this statement is true—or is it important to consider all the risk and �nancial factors and take it step by step?

RL: Passion for an idea is unquestionably an essential ingredient for entrepreneurial success. It creates the type of inner energy that makes it easier for you to overcome hurdles and convince others to join in the journey.

This does not mean disregard for being careful and thorough. On the contrary, it enables the right mind-set and attitude to tackle challenges diligently and systematically.

The question of risk is an interesting one. Certainly an assessment of risk is important as an entrepreneur examines how to make his or her idea a reality. However, it is not a question of whether or not to pursue the opportunity.

There is a moment when the entrepreneur’s passion reaches a point of no return and he or she simply has

to follow through. Once that “tipping point” is reached, the question of personal risk is moot. Again, it does not mean carelessness in the pursuit of an idea; it just means that the pursuit will be relentless.

HR: Passion is de�nitely important and is one of the traits that differentiates entrepreneurs from others, but evaluating risk before you jump is very important. This is especially true in industries like oil and gas that typically require signi�cant time and money to bring a new idea to market. Even though an entrepreneur has only so much passion, you do yourself a disservice if you don’t make an effort to judge whether or not you are investing your time and energy on something that will be important to customers. You also will need to convince others—investors, employees, and partners—to join you on the journey, and they usually won’t be persuaded based only on your passion.

Question: Great ideas don’t fall from trees and entrepreneurs are not just

lucky people who have great ideas that pop into their heads. Is there an ideal environment in which entrepreneurs can create great ideas?

RL: There is de�nitely an ideal environment for entrepreneurship. It all starts with an attitude of curiosity and a thirst for �nding better ways of doing things, which is why often such companies are spawned and grow around academic institutions. Universities foster a sense of inquisitiveness and a sense of alertness to problems that need to be solved. The academic environment makes it easier for the entrepreneur to engage others, to gather like-minded people who want to make a difference. And it creates a concentration of the support systems that make it easier for entrepreneurs to get started, such as access to capital, to mentorship, and to the necessary infrastructure—legal, accounting, and human. This is why there has been such a geographic concentration of entrepreneurial companies in areas like Route 28 in Boston and, of course, Silicon Valley in California.

HR: A great idea that gets transformed into a great business is generally something customers really need and as a result will pay for. As engineers, we often are familiar with great technology so the challenge is to �gure out if there are customers who might be able to make use of the technology.

Alternatively, you can spend time with customers and really gain an understanding of their needs, that can then lead you to �nd a great solution to their needs.

Advice to a Young Entrepreneur:The Way Ahead Interviews Established EntrepreneursRicardo B. Levy and Howard Rosen, Stanford University

Ricardo B. Levy is an entrepreneur whose career spans 3 decades of founding and building successful businesses. Born and raised in South America, he completed engineering studies at Princeton and Stanford with a PhD in catalytic chemistry. In 1974, after a number of years with Exxon, he co-founded Catalytica, a research and development �rm. The company’s discoveries resulted in over 100 patents and led to the formation of three companies, one of which under

his leadership became the largest supplier to the pharmaceutical industry in North America. Levy currently serves on several public and private corporate boards and on the advisory board of the Santa Clara University Center for Science, Technology, and Society, a global incubator of social entrepreneurs. He is a lecturer at the Stanford University Chemical Engineering Department and authored Letters to a Young Entrepreneur, a book published in 2010.

20

Technical Leaders

Some great ideas have come from entrepreneurs solving a problem they have—that is, they are their own customer. However, it is helpful if you can prove there will be more than just one customer!

Question: How important is it to �gure out what your goals and strategies are way before implementing a new idea venture?

RL: Almost by de�nition, a new venture is pushing new horizons, so there are a lot of unknowns. This makes it hard to be too “wise” about the elements of the business too soon.

Of course, it is important to think of strategy and goals, but this is a very iterative process and is part of �ushing out the venture concept and identifying potential challenges and approaches. At best, at the beginning, the entrepreneur has some overarching concepts that frame the venture, with �exibility in the development of speci�c strategies and tactics as the ideas are tested and re�ned.

HR: It is typical, as you get to know your potential customers better and what your technology can do, that you will modify your idea or sometimes �nd yourself pursuing something very different from what you started with. Your goals and strategy therefore need to be �exible.

It is helpful to have some high-level goals so you can keep track of what you really want to be doing.

For example: Is there a speci�c industry you want to be working in, customer or technology type, business size or timeframe, or impact on society that is important to you?

Question: If you have a clear set of goals and a well-de�ned strategy, how would you go about executing this strategy and �nding the necessary resources? An entrepreneur generally needs a team to develop the idea. What are the needed qualities of such a team?

RL: As your question implies, the �rst task of an entrepreneur is to engage others. It is critical early on to test the

soundness of an idea: to con�rm that it is novel, that it satis�es a need, and that it provides bene�ts not provided by others. This becomes an iterative process and will involve many people, including both those we engage to help us and those we want to bene�t.

Even the very setting of goals and strategies becomes a team effort and is, in fact, a very effective way to fully engage the team and establish a commonality of purpose and synchronization of actions.

A good team understands the venture’s purpose and has very open communication about the challenges the purpose poses. This openness includes recognition of individual strengths and shortcomings and starts with the entrepreneurial leader.

To the extent that the entrepreneur has suf�cient self-awareness to admit limitations, and �nds people who will supplement and complement his or her capabilities, a venture has a good chance to succeed.

HR: The dictionary de�nition of an entrepreneur is “someone who pulls together the resources needed to start a business.” So, part of an entrepreneur’s passion is around �nding a way—no matter what it takes or how many people say it won’t work—to assemble the required people, money, equipment, and facilities to make their idea a reality.

One point of confusion is that people often think the only entrepreneur in a company is the person with the idea. This isn’t true. Everyone who joins the effort early on is an entrepreneur—or should be—if they are going to be a strong

member of the team. Being passionate is one key trait.

It also helps to have diversity on your team, in terms of technical and business experience as well as gender and ethnicity. There will be many problems to solve and hurdles to overcome so having a team that brings a range of approaches is bene�cial. The team is a key criterion—oftentimes the number-one criterion.

Question: Experienced professionals often advise young professionals to build their network from the beginning of their career. Is surrounding yourself with a great network of professionals within your industry even more important for a young entrepreneur?

RL: Yes. A network is essential, especially since, in the early stages of a venture, resources (especially �nancial) are limited. We depend on �nding the most talented people who can help us—whether full-time or part-time. Being directed to this talent by people we trust is invaluable. This trust factor is built every step of the way.

In my own experience, I credit many elements of my success to the legal, accounting, and technical resources I accessed early on. Many came from the network and goodwill I had developed over my academic and early professional career. (Here is a note to the �scally conscious young entrepreneur: Do not compromise on the quality of external counsel because of cost: 10 minutes with a very expensive attorney is worth much more than 4 hours with a cheap one.)

Howard Rosen has spent over 30 years in the biopharmaceutical industry in various technical and management roles, including serving as president of ALZA Corporation after it became part of Johnson & Johnson. He currently serves on the boards of directors of �ve private and public biopharmaceutical companies and teaches entrepreneurship at Stanford University. He earned a BS from Stanford University and an MS from the Massachusetts

Institute of Technology—both in chemical engineering—and an MBA from the Stanford Graduate School of Business. Rosen holds seven US patents and was elected to the National Academy of Engineering in 2005.

21Vol. 10 // No. 1 // 2014

The value of your network goes beyond just professional services.

I believe one of the entrepreneurial leader’s most important tasks is to build, early on, a very effective board of directors.

The best way to do this is through references from those you trust, such as your teachers and mentors.

HR: As with many things, it is often through knowing people—having a network—that you �nd the right ingredients for building the team you need for a new business. A strong network can also be the source of mentors, business/technical advice, and introductions to potential customers, partners, and investors. It takes time to build trust with people, so starting early in your career is helpful.

Question: Can anybody be an entrepreneur, given that the great idea is already there, or are there some people who were born to be entrepreneurs and business leaders?

RL: I believe everyone has the potential to be an entrepreneur, but not everyone has the desire or the inner strength to be an entrepreneurial leader. You need to have a particular attitude to be a successful entrepreneurial leader. For example, for the entrepreneurial leader, roadblocks and hurdles are challenges and opportunities, not negative events. Individuals who are discouraged by roadblocks would not make good entrepreneurs. To succeed as an entrepreneur, one requires an optimistic disposition, or the venture is doomed from the start.

Yet here is a caveat: You can be a very important participant in an entrepreneurial venture without necessarily being the ever-optimistic entrepreneurial leader. In fact, the best entrepreneurial leader will look for team members who can provide a good dose of realism and a careful examination of worst-case scenarios. The ability to engage such individuals to join in the adventure is one of an entrepreneurial leader’s leadership qualities.

HR: Anyone can be a strong contributor, an entrepreneur, in creating a new business. But there are some typical traits of entrepreneurs—passion, total commitment, comfort with ambiguity, trust—so you need to have a high sense of self-awareness. Are you really willing to let your startup consume you? If not, you may not ultimately enjoy or excel in an entrepreneurial environment.

There is also a difference between “leaders” and “managers.” You ultimately need both to be successful.

Question: What are the most important factors a young professional entrepreneur should consider before considering starting a new business?

RL: I am going to interpret the designation “young professional entrepreneur” as a YP who has made a choice to be involved in starting and building new ventures. So the �rst thing that is needed is passion about an idea or concept.

It should be recognized, however, that the idea does not have to initiate with the entrepreneur. It may come from others who have much greater domain expertise. When it comes from others, the entrepreneur needs to adopt the idea and fully internalize it.

The next steps are pretty clear: con�rming the need, understanding the strengths and limitations of the approach, making sure the bene�ts are truly there and likely to be appreciated by customers, and, �nally, having a good grasp of the competitive environment.

HR: If you have the passion, then it is useful to gain a sense of what the commercial potential is (the need), what some of the initial technical challenges may be for your solution (the approach), why your customers will want to buy (the bene�ts), and who your competitors are or will be. This last one is often overlooked by entrepreneurs. Just because there are competitors, it doesn’t mean you shouldn’t go forward but it does help you understand how your business will be differentiated and  successful.

Question: Can you tell us about some success stories of young professionals you have helped in developing their own businesses?

RL: This is a very good question, and makes me realize the very point we have made in this interview several times: that the effort of an entrepreneur—especially in engineering- and science-based industries like oil and gas—is a full-time, long-term endeavor.

I have been engaged in this entrepreneurial adventure for over 3 decades, and my focus has been to do everything in my power to make our ventures successful. Ultimately, we formed three companies from the roots of our initial research and development effort, and one became very successful and was sold to a European conglomerate.

Along the way, we helped many companies in the chemical, petrochemical, and pharmaceutical industries with their technical and process development challenges, counting many big players in the industry as our customers and partners.

Hopefully, we also inspired others with our example of successful entrepreneurial growth.

The joy of teaching young people, which I am doing at Stanford University, is new for me and although I expect many of my students at Stanford to be strong entrepreneurial contributors, they are still at the formative stage. Ask me again several years from now.

HR: A chemical engineering student of mine actually dropped out of Stanford to start Theranos, Inc., a company that has developed new systems and chemistries for doing blood testing for clinical trials of new pharmaceuticals. They just announced a partnership with Walgreens to do point-of-care blood testing in pharmacies. The company is still private and over the past 10 years has grown to having over 500 employees.

Another group of four chemical engineering students decided to start a company to develop improved

Continued on page 30

22

Soft Skills

Often, the next innovation is found by solving systemic problems. The following two young professionals are examples of entrepreneurs solving such problems in today’s oil and gas industry.

Introducing Two Excellent Young Professional Role ModelsTim Duggan, 32, is the chief executive of�cer (CEO) of Skynet Labs and comes from a family of business-savvy men and women. He has applied the entrepreneurial spirit he imbibed through his family to a business that serves the oil and gas industry.

Duggan combined this drive with understanding a market need and using his intelligence to develop secure real-time oil and gas analysis and optimization software to support drilling engineer

professionals and mission-critical exploration and production operations.

Allison Lami Sawyer, 30, is the CEO of Rebellion Photonics, a company that offers real-time gas-cloud imaging to monitor, quantify, and display explosive/harmful gas leaks for oil and gas �eld locations.

She explains how she serendipitously came upon the basis of her multimillion-dollar idea in a technical journal about cell science.

Duggan zeroed in on the dangers of relying on manual drilling calculations, whereby decisions could be made using erroneously calculated data. His app simpli�es the calculation of work�ow at the upstream engineering level, based on software that centralizes

and solves problems formerly calculated manually.

Sawyer saw an opportunity with hyperspectral imaging. Originally developed for biological applications, a gas-cloud imaging camera takes images at a certain frequency that detects gas concentrations in parts per million. The camera can detect the potential for explosive gas leaks in real time. An alarm sounds in 5 microseconds when the environment shows a critical concentration of gas.

These young entrepreneurs’ companies are solving challenges in the oil and gas industry today.

Read on to �nd out how they began and the lessons they learned during their journey. TWA

Young Professionals Speak: What It Takes to Succeed as an Entrepreneur

Living on the Edge: The Cutting EdgeTim Duggan, Skynet Labs

I come from a family of entrepreneurs. Growing up, I was saturated with the challenges and daily struggles but also the excitement and certain freedoms that entrepreneurship can bring. It was incredibly thrilling around our dinner table listening to stories from my dad, mother, and sister, who all were in business for themselves: Dad would teach me about oil exploration and drilling, Mum would teach me about handling staff and cash �ow, and my sister would explain to me about growing value in a product.

By de�nition, an entrepreneur starts a business by taking on great �nancial risk to turn innovation into reality. Managing the risk and ensuring the business does not fail are the exciting parts.

With great risk can come great reward, but beware that sometimes risk only returns intangible rewards of knowledge and experience rather than tangible, monetary ones.

At the age of 21, I started my �rst media company, Mercury Boy Inc. After 3 years, it grew to the point where I made a nice living for myself, while my friends went to college and traveled around the world.

Still in the pre-iPhone era, I then had the opportunity to work for a small mobile marketing and technology organization called Mount Wilson. At the young age of 24, I was fortunate to be given a lot of control and a large development investment budget. Soon thereafter, I was learning the ropes of the mobile and

tech business from my older colleagues. In the organization, we worked with large global names to deliver quite a number of deployments across Internet, iOS, Android, and Blackberry platforms, but I was always looking for a product I could personally bring to market. Having identi�ed creative ways to deploy apps, I sought the opportunity to apply the technology unhindered by established or onerous protocol.

After 3 years in the company, I decided to leave and start a software and Web services company, Mercury Digital, with a focus on Web/mobile-platform design and technology.

Throughout my life, my father—Peter Duggan, a senior drilling supervisor—shared insights with me regarding

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the oil exploration industry and gaps where technology could be used. I had understudied him my whole life and quizzed him about exploration drilling over the dinner table or when we were on holiday.

One day after my dad came back from a drilling operation in the North Sea, he told me about a €6-million problem the operation had experienced due to a stuck pipe incident. He said he could prove it was due to some errors in the calculations of a junior engineer.

When I asked my dad how the calculations were validated, he said it was done the same way everyone else did it: They used a pen, paper, and some Excel sheets.

I was amazed to �nd out there was no calculation database, no automated quality-checking method, and no sharing or reporting of these calculations, which are mission-critical for ef�cient and safe drilling.

I rapidly started thinking of a solution to �x this problem. I traveled around Europe to talk with senior drilling engineers and drilling planners—and found out everyone experienced the same problem as my father. At that point, I realized I was on the cusp of something big.

While developing and introducing this change to the oil industry, I learned a lot about drilling and exploration from top-notch industry experts, some of whom I now count as advisors to my present company, Skynet Labs, which I formed to help change how oil and gas drilling calculations are being deployed.

We started with mobile applications that deliver �eld calculations to �eld engineers’ mobile devices. Our larger products facilitate bringing �eld data back to the of�ce, enabling smart analysis of drilling and �eld data.

Success FactorsPersonally, I have found that three things need to be in place simultaneously for success to occur: a relevant idea in a high-value industry, access to �nancing for the idea, and timing.

Regardless of the industry or idea, if two of these three things do not align, it is impossible to move ahead.

Good concepts and ideas are a dime a dozen; execution is the key consideration in determining a concept’s success.

Value Your Mentors—Having a sound and sage group of mentors around you is particularly important for an entrepreneur. I have a group of eight business mentors who help me when I need advice on key parts of the oil and gas business.

Mentors act as a sounding board for your ideas. They give your ideas a health check to see if they can surmount existing and potential future barriers. They also help test your hypotheses and help you stay on course.

Fail Fast—There are many lessons I’ve learned over the last 9 years in business, but one sticks out the most: Fail fast. If you have an idea and get some validation early on, this is great. I have had what

I would call soft failures in business whereby it was my money that was lost on concepts that did not go anywhere.

I started a content website around 2004 with two partners. We all put in some investment of money and time and, while the business was a runaway success, there was not a large business there. So when we were offered a large content contract, we took it and delivered on the contract.

However, we later identi�ed that while it was good then, it would have been best to wind up the business at the end of that contract as the model would not scale.

Deciding not to fail fast can waste time, energy, and money, which are valuable commodities in starting up a business.

Face the Realities of Entrepreurship—Entrepreneurship is a lifestyle and impacts every waking hour (and probably impacts the quality of sleep you get).

You will forget to return close friends’ phone calls. At times, when deeply focused, you will forget you have loved ones back home.

Every day in a startup is like waking up to a new world where you drive to an unknown destination. Most of the time this is exciting: sometimes this is scary; and sometimes it is the greatest thing in the world.

To enjoy it, let it be something you are passionate about, and let it be this that makes you almost run into the of�ce while keeping in sight where you want to drive to.

Final NoteTo summarize, entrepreneurship is not something for everyone, and there are many clear pitfalls.

Coming from someone who has gone down that road, I’ve found you do need to give everything you have to it for it to be successful; however, it is possible you may never get to the level of success you desire.

In order to be successful, you will have failures, but hopefully they are not career-ending, and you have enough mentors and friends to pull you back up again so you can try again. TWA

Tim Duggan is the founder and chief executive of�cer of Skynet Labs, a venture-capital-backed technology startup developing secure real-time oil and gas analysis and optimization software. In 18 months, Duggan has led the company through two accelerator programmers: one in Dublin, Ireland, and the other energy- and oil-technology-speci�c in Houston, Texas. He has secured investment funding, sealed partnership contracts, and fostered a

multinational team of 18 dedicated professionals located in Dublin and Houston of�ces to deliver software product to market. Duggan’s expertise in business development and digital technology is broad and deep. He learned about the oil and gas industry, speci�cally exploration and drilling dynamics, at a very young age from his father who was a 45-year industry veteran. Duggan also has 10 years’ digital media experience.

24

Soft Skills

I just want to hit a home run in this life, and successfully founding a tech startup feels like a home run to me.

When I was a very young girl in Alabama, I begged my mother to let me join my brother’s baseball team. I wanted to hit a home run. It is nearly impossible to do that in Little League softball with that large ball. So my mom went to battle for me and got me on a team with the one coach in the league who did not mind having a girl.

Evidently, I like adventure, and entrepreneurship offers the closest thing to that. Growing up, I thought Steve Jobs and Bill Gates were rock stars.

I cannot remember the day I decided to be an entrepreneur. It must have been a gradual decision that started when I was very young. It did take me years to actually admit, out loud, that I wanted to be an entrepreneur.

People really do look at you like you are crazy, so it takes courage to say you want to be an entrepreneur before you have a concrete idea of what kind of company you will start. Sometimes, I think �nding the starting line for entrepreneurship was, in many ways, harder than actually running the company.

How Rebellion Photonics BeganI was in the process of starting a different company that recycled tires to produce plastics when I met my current co-founder, Robert Kester. I had read one of his technical papers describing his new innovation—snapshot hyperspectral imaging for �uorescence imaging on microscopes in medical research applications. His research had been funded by a United States government agency, the National Institutes of Health, so his focus had been on biological applications.

The �rst time I met Robert, I asked the question I was dying to con�rm: “Can you take the camera off the microscope and use it in the real world?” When he said, “Yes,” that really marked the founding of the company. Even back then, over 4 years ago, when the technology was still in the proof-of-concept

stage, it was obvious to both of us how big this was going to be.

We shook hands in the student bar at Houston’s Rice University in November 2009 and the company has been our life ever since.

Soft Skills Entrepreneurs NeedIt does matter what role you play in the startup. As CEO, I have to be ready to pitch and inspire at the drop of a hat. Also I need to be able to calmly carry a great deal of stress. Networking is an important but less tasteful part of what I do. When I arrive at an event, I tell myself I have to stay for so many minutes, and then I can leave if I haven’t hit my rhythm.

My chief technology of�cer, Robert, needs different soft skills. He does some presenting at conferences, but more importantly he leads the technical team. Therefore he needs (and has) strong leadership skills as well as communication skills so he can keep the team on track.

Follow Your Gut Early on I made a bad hiring decision, which can really hurt a very small company. I hired on the basis of the résumé and did not listen to my gut. Hiring is a complex art.

You do not want to be hiring “mini me’s,” but at the same time you cannot underestimate the importance of company culture. When the tech team is in the zone, they inspire me, and that is when I am most proud of this company. Rebellion’s corporate culture is hard to describe, but I will say I really enjoy coming back home to the of�ce after a tough meeting. I would say

the one de�ning characteristic is that everybody is nice. We aren’t sexy or obviously tough.

So my biggest mistake was to hire someone with a fancy résumé who threw that beautiful equilibrium that fosters innovation out of whack. My main job is to create an environment where smarter minds can make the magic happen. Lesson learned.

A Typical WorkdayThere is no typical workday in entrepreneurship. My schedule comes in waves—sales wave, investment wave, hiring wave. These waves are punctuated daily by my human �re-extinguisher duties. Also, I try to shield my technical team from as much of the real world nonsense as I can so they can get the real work done.

On Sundays, I try to let myself be utterly lazy. I have gotten pneumonia twice in 2 years, so I think it is important that I force myself to unwind. My old brown mutt has been an excellent role model in this respect.

Final NoteIn summary, Rebellion Photonics is something I am very passionate about and it gives me ful�llment. In addition to the perks it can bring, it has given me the opportunity to mentor young women interested in entrepreneurship. Frankly, the world needs to change the way it treats women in leadership positions and I am looking to do my little part to make that happen. Someday I envision my granddaughter will be judged not by the standards of her gender but by the true requirements of her role. TWA

Hitting Home RunsAllison Lami Sawyer, Rebellion Photonics

Allison Lami Sawyer earned an MBA from Rice University as well as an MSc in nanoscale physics from Leeds University (England). Before Rebellion Photonics, Sawyer worked at the Houston Technology Center, the region’s largest technology startup incubator. She was listed on Inc. Magazine’s “30 under 30” list in 2012.

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Tech 101

Expectations and requirements for subsea-well emergency response preparedness were stepped up as a result of the Macondo blowout and oil spill that began 20 April 2010 in the US Gulf of Mexico. A key change is the requirement to have subsea capping stacks ready to be deployed that are capable of handling the speci�c blowout scenarios projected for each GOM well, no matter how challenging.

It is very important to distinguish between a subsea blowout preventer (BOP) and a subsea capping stack. The name of each piece of equipment gives some useful clues. As the names implies, a BOP is a safety device meant to prevent a blowout from occurring—that is, to prevent an uncontrolled �ow of liquids and gases from reaching the surface. The BOP is always present when drilling, and any time the drilling team suspects �uids and/or gases could be released from the wellbore in an uncontrolled manner, they can activate the BOP to prevent such an outcome.

A capping stack is not needed when drilling. It is the centerpiece of a containment system kept in readiness at an onshore location. It is only deployed after the BOP has failed to serve its purpose and a blowout has occurred. A “capping stack” is a piece of equipment

that is placed over the blown-out well as a “cap.” Its purpose is to stop or redirect the �ow of hydrocarbons and to buy time for engineers to permanently seal the well. It is massive and can weigh as much as 50 to 100 tons, presenting logistical challenges in quickly transporting it to the emergency occurring at the blown-out offshore well.

Before the capping stack arrives, a remotely operated vehicle (ROV) inspects the seabed site and engineers zero in on precisely what equipment is needed. Then debris is removed and the wellhead is prepared. After the equipment arrives, the capping stack is carefully maneuvered into place over the wellhead.

Once fully operational, the capping stack provides a dual barrier for containment—a BOP ram, plus a containment cap. The stack’s valves can be closed to cap the well (“cap only”) or, if necessary, the �ow can be redirected to surface vessels through �exible pipes and risers (“cap and  �ow”).

Macondo Changed Requirements for Offshore Blowout InterventionA capping stack had never been developed for or used before 2010 speci�cally to contain a deepwater blowout. In 2010, while the Macondo well was

still leaking, other ways of containing the �ow of oil were tried—including a containment dome (7 May), top kill and junk shot (26 May), a cap for funneling oil and gas to a surface ship (3 June)—all of which failed.

Meanwhile, the �rst capping stack speci�cally designed for the leaking Macondo well (Fig. 1) was being put together. It was a basic design consisting of three rams, a wellhead connector, a mandrel on top, a couple of double-block drilling valves on the choke-and-kill outlets of the middle ram, and associated ROV panels. It was installed on the lower marine riser package on 12 July.

This system did successfully cap the well, and provided the opportunity for engineers to perform a static kill (3 August), drill a relief well during August, and �nally complete a bottom kill, which led to the US federal government declaring the well dead (September 21).

One of the immediate de�ciencies noted was the lack of a readily available backup capping stack for use should the

How Offshore Capping Stacks WorkMauricio Madrid and Antony Matson, Trendsetter Engineering, Inc.

Mauricio Madrid is director of projects at Trendsetter Engineering, Inc. In addition to being responsible for overall project management oversight, he also manages multiple project teams with technical and commercial disciplines to develop, register, and commercialize multiple high quality, differentiated, and proprietary products for the company. Madrid serves Trendsetter Engineering in overall project coordination, planning and execution, cost and schedule

management, and design management, ensuring the company meets its commitment to quality and safety. Beginning his career at ExxonMobil Development Company, he has worked exclusively in the oil and gas industry as a subsea engineer/project manager. Madrid earned a BS degree in mechanical engineering from Texas A&M University.

Fig. 1—Macondo capping stack onboard Discover Inspiration11 July 2010.

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Tech 101

�rst one fail. Fortunately, it didn’t fail, but until the well was declared dead, several alternative designs for capping stacks were quickly generated.

On 22 July 2010, four major GOM oil and gas operators committed to establish a nonpro�t company devoted to providing always-ready state-of-the-art emergency well containment services and technology to all operators in the US GOM. The resulting company, the Marine Well Containment Company (MWCC) consortium, was created 10 December 2010 and by 31 March 2011, consisted of 10 member companies.

Today, consortia such as the MWCC, the Helix Well Containment Group in the US, and the Emergency Preparedness Offshore Liaison Group in the UK continue to advance their capabilities so their members can go on safely exploring for new sources of oil.

Offshore DeploymentThe basic operational need of the stack is to attach and seal on a subsea well during an active blowout, then shut in safely. To achieve this, �rst a mandrel or hub pro�le must be exposed (either at the wellhead or on top of the BOP). In special

circumstances, a “crossover” transition spool can be installed for interface to the capping stack, similar to what was done to install the Macondo capping stack.

The running tool for the stack must take into account the �ow coming from the blown-out well. Computational �uid dynamic (CFD) studies have been conducted showing that when installing a capping stack in deep water on a high �ow rate blowout well, as the stack is positioned over the plume and as it approaches the wellhead interface, a water post-effect occurs allowing stability and centralization of the stack in relation to the wellhead. This is very convenient!

In fact, Bernoulli’s principle helps explain the water post-effect in that the �uid �ow out the top of the well and through the capping stack bore creates a force-centering effect on the stack when it is being landed, thus aiding in the make-up of the stack to the wellhead mandrel.

Running to Depth and InstallationThere are typically two types of running tools available for use with capping stacks to date.

One type is a connector designated “H4” with a large-bore perforated pipe section or open pipe section that allows the same through-�ow as one single 18¾-in. bore. The second type is a spreader bar that attaches to a frame with the bore completely unimpeded.

The stack can be installed with the outlets open or closed, but each blowout scenario has to be analyzed to determine what will handle �ow best.

For example, in some cases, having the outlets open could cause a “Venturi effect”—a jet effect that results in a reduction in �uid pressure and could create hydrate formation problems in deepwater scenarios as seawater is inadvertently sucked into the bore. If possible, it is preferred that the bores are opened when installing the stack because this reduces the number of subsea operations that must be performed by the ROV to cap a well, thereby reducing overall response time.

On at least two outlets there is also a subsea connector with a choke package. The chokes are used to “soft shut in” the well, meaning that the chokes slowly constrict �ow from the well by gradually restricting the outlet bore size such that the �ow gradually reduces to near zero. As chokes are wear items and take the full differential pressure of shutting in the well, they are placed on subsea connectors such that they are removable and serviceable with the stack in place.

Each choke is individually shut in by the ROV. Since a closed choke is not considered a barrier, once the choke is shut in, the gate valve in line with it will also be shut. As a result, erosion wear on the valve sealing surfaces is minimized since there is little to zero �ow and pressure drop through the valve during actuation, providing a recognized sealing barrier on each outlet.

More Capping Stack CapabilitiesDuring the capping operation, chemicals can be injected into the well through several strategically placed chemical injection ports (Fig. 2). These ports are located upstream of all sealing devices in the diverter spool central bore, and on the four outlets on the stack. This allows

Fig. 2—UK-based Oil Spill Response Limited’s Subsea Well Intervention Service’s 15,000-psi capping stack designed to cap a well in up to 10,000 ft water depth.

H4 Upper Mandrel

Guidance Saddle forRunning Tool (not pictured)

Acoustic Modem x2

Steel Flying Lead

ROV Control Panel

Multicore HydraulicFlying Lead

HCH4 or H4 Wellhead Connector

TEI 24 channel cobra head

Diverter Spool

4 diverter legs

Dual Gate Valves

Chemical Injection Panel

TEI Vertical Connection Systemc/w/ gasket change-out, softland and drawdown tooling

Retrievable Chokes

Dual 18 ¾” 15K Ramwith Blind Rams

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an operator the option of injecting into multiple locations on the stack.

For example, dispersant could be injected into any or all of the ports to minimize the environmental impact of the oil �owing out of the blown-out well thereby minimizing the oil sheen on the surface. Methanol or glycol could also be injected to mitigate the formation of hydrates in deepwater capping scenarios.

In addition to the ports, sensors are placed on the diverter spool to monitor pressure and temperature during all shut-in operations. To transmit this information to the surface, an acoustic system is �tted on the stack that transmits pressure and temperature readings through acoustic signals. The signals are picked up at the surface by a computer and a dunker that contains a surface-deployed directional acoustic transducer and the transceiver electronics. The acoustic system is powered by a local replaceable battery on the capping stack, eliminating the need to run a cable or subsea umbilical during capping stack installation operations.

Offshore Capping Stack ControlsAll controls on the stack are direct hydraulic from an ROV stab or operated by an ROV torque tool. This control philosophy is robust, and easy to understand and operate under emergency capping scenarios. Once all gate valves on the outlets and the BOP are shut in, the well is considered capped, though the operator can

continue to inject chemicals as needed and can continue to monitor pressure and temperature.

It is an industry-recommended practice that two barriers (e.g., rams and gate valves) exist between hydrocarbons and the environment. To achieve this once the stack is shut in, the running tool is removed and a secondary cap is installed to seal the bore with a metal VX-type seal on the upper H4 mandrel instead of relying on the rams’ rubber seal. Also, the subsea connectors with chokes are removed and replaced by connectors with blind rams to provide the secondary barrier on all the outlets.

In some well control cases, it may make sense to pump kill �uids down the stack. In that scenario, the subsea con-nectors with chokes can be replaced by subsea connectors with �owlines running to the surface for pumping down kill �uids such as mud or cement. The idea is that the capping stack will only be shut in long enough to drill the relief well to kill the well at its source and cement it in.

The Future of Well ContainmentToday, specialized service companies have built a portfolio of capping stacks for every offshore scenario, including systems uniquely designed for shallow-water Arctic drilling operations, for which glory holes (also known as well cellars) are excavated below the sea�oor to protect well equipment such as BOPs from ice ridge scouring.

Capping solutions have also been developed for tension leg platforms that have a forest of risers underneath them, with some risers no farther apart than 15 ft, requiring a very compact capping stack that can be maneuvered and installed in close proximity to other wells.

International communities of operators, such as UK-based Oil Spill Response Ltd. (OSRL), formed in 1985, now have speci�c efforts devoted to emergency subsea well intervention services and technology. OSRL’s Subsea Well Intervention Service stores and maintains capping stack equipment across four regions, with locations in Norway, Singapore, South Africa, and Brazil.

In addition, emergency offshore containment companies have evolved the containment system approach to address the time and vast amount of resources it takes to mobilize a capping stack after an incident has occurred. Since a capping stack’s immensity and weight present time-consuming logistical challenges, the next step in subsea source control hardware is to bring response capability closer to the drilling operation. The Mudline Containment Device (MCD) is a type of capping stack that provides direct capping and containment capability in a drill-through package.

Having an MCD in place in lieu of or while waiting for the arrival of a capping stack could greatly reduce emergency containment response time should a well control incident arise. The MCD is installed directly on the wellhead and features an independent control system and power supply to act as a backup to traditional drilling control systems.

Regardless of the type, subsea capping stacks’ existence and deployment-readiness are now the norm. As the subsea drilling industry continues to evolve, more solutions are emerging for subsea blowout containment. Subsea capping stacks are undoubtedly here to stay and have added greatly to the offshore oil and gas industry’s emergency preparedness and response capabilities. TWA

Tony Matson, project manager, is responsible for the execution and delivery of multiple projects at Trendsetter Engineering, Inc., including managing their commercial and technical aspects. He has an extensive background in project controls disciplines. Since joining Trendsetter Engineering, Matson has developed and implemented fundamental project controls processes enabling improved project performance. Responsibilities include project planning, coordination and

execution, cost and schedule management, and design management. Matson joined Trendsetter Engineering in 2012 after working in downstream petrochemical construction for a major engineering, procurement, and construction contractor. Before working in oil and gas, he worked in automotive manufacturing and earned a BS degree in management from Kettering University in Flint, Michigan.

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Academia

Fiscal regimes describe all legislative, taxation policy, contractual, and �scal elements under which petroleum operations are conducted in petroleum provinces or nations.

There are far more petroleum �scal systems worldwide than petroleum-producing provinces. Kaiser and Pulsipher (2006) give some explanations for this phenomenon, including the fact that contracts originating under several different �scal regimes may be in effect at any given point in time.

Other reasons cited include adoption of more than one �scal arrangement during a licensing round, changes in political and economic conditions as well as in prospectivity assumptions of �rms seeking the right to explore and develop petroleum resources, and the host government’s motivation to maximize economic rent collections from its country’s endowed resources.

Host Governments vs. InvestorsUsually, the primary objective of the host government in a petroleum-

producing nation is to ensure maximum economic bene�ts for the country without necessarily seeking total control of all exploration and production (E&P) terms and conditions, investments, and/or production. Other objectives may, however, be pursued, including ef�cient resource development, access to technology, skilled national manpower, investment funding for local E&P activity, and sustainable economic growth (Iledare, 2008).

On the other hand, investors tend to view host countries’ �scal regimes critically on the basis of their �nancial objectives.

E&P �rms or investors bidding for the right to explore and develop petroleum in a host country desire to receive a fair and satisfactory return on investment in a quick and orderly manner. Thus, some �scal instruments and terms are negotiated while others are determined through the host country’s legislative process, keeping in perspective the host government and E&P �rms’ objectives.

One important and critical concern to investors in deciding where to search for and develop oil and gas resources is stability in a host government’s �scal arrangements (Johnston, 2003).

To attract investors to a petroleum region, an area must not only be highly prospective in the geologic sense, the area must also have a dynamic, ef�cient, and stable �scal arrangement.

Dynamic and stable �scal systems literally may require surrendering a great proportion of economic rents to investors to ensure the prospect of high rewards in countries with high exploration risk and low prospectivity.

Of course, if exploration risks are low and geologic prospects are high, then the host government can be expected to capture signi�cantly high economic rents.

Investors have no obligation to develop petroleum resources in a given country when factors affecting the balance between the inherent risks and rewards are incoherent, no matter how promising the economic opportunities look..

Concessionary vs. Contractual Fiscal SystemsCertainly, the host government exhibits great in�uence and considerable leeway to avoid terms and conditions that could easily dampen investors’ interest in maintaining an operational presence in its country. Thus, over the years, operators and petroleum-producing countries’ host governments have negotiated their interests using two basic �scal systems—concessionary or contractual.

The fundamental difference between the two �scal arrangements has to do with ownership of petroleum resources and how taxes are imposed. In a concessionary system, the host

Upstream Petroleum Economic Analysis: Balancing Geologic Prospectivity with Progressive, Stable Fiscal Terms and InstrumentsOmowumi O. Iledare, Louisiana State University, Center for Energy Studies

Wumi Iledare is a professor of petroleum economics and policy research at Louisiana State University’s Center for Energy Studies and a distinguished fellow of the Nigerian Association for Energy Economics. Iledare, a recipient of an SPE Regional Award in management and information, is also a senior fellow and past president of the US Association for Energy Economics; 2013 president-elect and executive council member of the International Association for Energy

Economics; and an associate editor of SPE’s Journal of Economics and Management. He serves as an adjunct or visiting professor of petroleum economics at �ve universities in the US and Nigeria, and has contributed to professional education and human capacity development by teaching petroleum economics at various professional organizations and businesses worldwide. Iledare earned a BSc degree in petroleum engineering with honors from the University of Ibadan, Nigeria; and also an MS in energy resources from the University of Pittsburgh’s School of Engineering and a PhD in mineral economics from West Virginia University—both with an emphasis on oil and gas economics.

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government transfers ownership of resources to private entities, and in return gains a royalty or tax. Under a contractual system, the host government retains ownership of the petroleum resources.

A unique feature in all contractual arrangements is the cost-recovery limit (CRL) speci�cation, which is based on allowable capital and operational expenditures with a “ring fencing” clause incorporated in most cases.

Classification of Fiscal Terms and InstrumentsFor the purposes of this discussion, the �scal instruments and terms in a typical petroleum �scal arrangement are classi�ed as pre-discovery provisions, post-discovery contract terms, and pro�t-based elements.

Pre-Discovery Signature Bonuses and RentalsSignature Bonus and Rentals—The application of pre-discovery payments in petroleum �scal arrangements is common worldwide. Nearly half of all countries with petroleum �scal systems include at least one form of pre-discovery payment to the host government.

The types of pre-discovery payment evident in �scal regimes are signature, rentals, and discovery or prospectivity bonuses—they are not necessarily legislated but are negotiable. Such bonuses are classi�ed as front-end loaded payments that are highly regressive.

Post-Discovery Royalties and Production BonusesRoyalty—Royalties can be paid in kind or in cash and represent a cost of doing business. They are tax-deductible in oil and gas economic calculations.

The tendency in most �scal arrangements is to de�ne royalties using a sliding scale according to water depth, location, hydrocarbon type, and/or value.

If royalty rates are speci�ed by value, they are designed to allow the host government to share in windfall pro�ts subsequent to any unexpected increase in crude oil and natural-gas prices.

Production Bonus—Production bonuses provide future revenue to the host government when various levels of production and discovery are reached. Production bonuses permit the application of a sliding-scale payment schedule to rectify the repressiveness of production bonuses on the economic performance of E&P projects.

It is also apparent that there is a conscious recognition that production bonuses are payments that can create a barrier to entry, and reduce project cash �ow as well as a venture’s attractiveness. Thus, the determination of production bonuses is allowed to be contract-speci�c.

Crypto Fees—Crypto fees are indirect means through which a government can receive additional revenue through levies, imposition of duties, and other �nancial obligations imposed on oil and gas producing companies. For example, the more prominent crypto fees or taxes in Nigeria include 3% of a project’s annual capital budget as a contribution to the Niger Delta Development Commission (NDDC) and an education tax of 2% of a project’s chargeable pro�t.

It is important to note that the instruments and terms highlighted above are not favorably disposed to assets’ pro�tability. They are front-end loaded and tend to lower pro�tability of assets in economic terms.

Post-Discovery Pro�t-Based TakeCorporate Income Tax (CIT)—Before the introduction of reform bills in Nigeria, for example, upstream companies were exempted from paying corporate income tax. Instead, a special petroleum pro�t tax (PPT),  based on assessable pro�ts, was operational for every production-sharing contract (PSC) in Nigeria and the amount varied depending on location and hydrocarbon type.

It is interesting to note that a new taxation layer, called the Nigerian Hydrocarbon Tax (NHT), is being proposed. NHT, in my opinion, is analogous to severance taxes (taxes on production) paid to US petroleum-producing states by onshore petroleum-

producing companies. This apparent double taxation is, however, not uncommon worldwide.

Education Tax—Several �scal regimes in developing economies have an education or training tax in addition to a value-added tax (VAT). The former is based on quanti�able pro�t, which does not include capital allowances and the latter is based on sales.

Allowances—Interestingly, there can be a clear speci�cation for an investment tax credit (ITC) and a petroleum investment allowance (ITA) as incentive mechanisms to drive E&P investment. It must be stated, however, that ITCs and ITAs are effort-based, so allowances on the basis of output (reserves addition or production) and/or prices are under consideration.

Pro�t Oil—Cost-recovery limit (CRL) speci�cations determine the pro�t oil (PO) to be shared between the host government and the contractor. Pro�t oil is de�ned as hydrocarbon revenues remaining after royalty and cost oil.

Commonly, there are provisions for a sliding-scale CRL based on volume, value, or some other variable to make the CRL dynamically progressive and less regressive.

The general consensus is to set the CRL at 70% to 80% of gross revenue less royalty. This is to ensure some minimum pro�t oil for distribution until all eligible costs are recovered.

The pro�t-sharing ratio is determined on a sliding scale in all Nigeria’s existing PSCs and the proposed reform bill. This is tied to either cumulative production or the R-factor (i.e., the ratio of cumulative cash receipts to cumulative expenditures in the conduct of petroleum operations as de�ned in the related contracts).

The Way ForwardDemand for environmentally friendly alternative energy sources is increasing, but fossil fuels are still the main energy source in the global economy. It does not appear that the status of fossil fuels

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Academia

will change any time in the near future. Increasing amounts of petroleum need to be found and developed to meet the growing energy needs of the developing world.

As alternative technologies are being developed, the search for new fossil-fuel sources will continue to stretch into more remote areas worldwide.

Certainly, technological advancements of the last several decades have improved ef�ciencies in exploration, drilling and completion, and production operations. These enhancements have given the industry the potential to search for and produce petroleum in a cost-effective and environmentally responsible manner.

As a result of improvements in seismic imaging, for example, areas once considered untouchable have become prime targets for petroleum exploration and development.

All of the above notwithstanding, the search for and development of

petroleum resources having become more globalized, besides geological prospectivity, the attractiveness of �scal regimes has become a lot more relevant to investment �ow than in years past. This has increased the level of competition in the bidding process for oil and gas blocks and/or leases worldwide.

Thus, in order to attract investors, petroleum-producing regions must not only be highly prospective in a geologic sense, they must also have dynamic, ef�cient, and stable �scal arrangements to facilitate optimal hydrocarbon resource development and reward.

A dynamic and stable �scal system must include terms whereby host governments willingly give a signi�cant proportion of economic rents to investors in order to promote the prospect of sustainable investment �ow. High exploration risk and low-prospect regions must balance government take with attractive �nancial returns to investors. TWA

Selected ReferencesIledare, O.O. 2008. Petroleum and

the future of Nigeria: Challenges, constraints and strategies for growth and development. IPS Monograph Series No.5. Institute of Petroleum Studies, University of Port Harcourt, Nigeria. 30 pp.

Johnston, D. 2003. International exploration economics, risk, and contract analysis. Pennwell Books, Dallas, TX. 401 pp.

Kaiser, M.J. and A.G. Pulsipher. 2006. Capital investment decision-making and trends: Implications on petroleum resource development in the U.S. Gulf of Mexico. U.S. Dept. of the Interior, Minerals Management Service, Gulf of Mexico OCS Region, New Orleans, LA. OCS Study MMS 2006-064. 130 pp.

batteries for electric vehicles after they graduated with their BS degrees rather than go to graduate school. After a year, during which they found incubator lab space and a small amount of funding for experiments, they decided commercializing the technology was going to take too long and require too much money. The four went off to different graduate programs but, based on how much they learned about being entrepreneurs, I am con�dent they will be involved in successful new businesses in the future.

Question: In your opinion, are there any speci�c factors a young entrepreneur in the oil and gas/energy sector needs to consider?

RL: As opposed to our colleagues in the software industry, ours is an industry of long lead times, large capital investment, and strong dependence on intellectual property.

We need to recognize that our ventures will be long term and will require persistence, patience, and great focus both on the details of our ideas and on the quality of our results. It becomes a life-long adventure, one I have embraced with great joy because it has allowed me to be engaged with exciting teams for long periods of time and, perhaps most importantly, to attempt to make a difference in some of the most important needs of the world: energy and health care.

I therefore encourage young entrepreneurs to choose carefully what venture they will dedicate their lives to, make sure they are totally dedicated, and stay very �exible as they face the many ups and downs that are inevitable in a multiyear endeavor. My advice: Never give up, and never run out of cash!

HR: There is tremendous unmet need in the energy sector both in the more traditional areas like oil

and gas and newer areas like solar, wind, fuel cells, and batteries, to name a few. A few speci�c challenges that exist are that creating new businesses in the energy industry often take many years and signi�cant investment. There are also signi�cant factors, such as oil prices, that are outside the entrepreneur’s control. In addition, there can be some inertia caused by the large capital investment already made in plants and equipment; on paper a new technology may look very cost competitive but when the infrastructure for the current technology is already in place and paid for, it can in fact be cheaper to use the current technology on an ongoing basis.

Overall, there is an opportunity to have a huge impact on society by starting new businesses in the energy �eld, so if you are up to the challenge, go for it! TWA

Technical LeadersContinued from page 21

31Vol. 10 // No. 1 // 2014

YP Guide

In this issue, “A YP’s Guide to” takes you to three continents—North America, Asia, and Africa—each with a story that shows how rooted in geography and how varied energy entrepreneurship can be.

NORTH AMERICA: Los Alamos, New Mexico, USALos Alamos is renowned for various reasons, most notably for being home to one of the locations of the Manhattan Project, a US-led initiative from 1942 to 1945 (during World War II), devoted to development of atomic bomb technology. However, what is not so well known is the connection it has to the oil and gas industry.

The Los Alamos National LaboratoryOpened in 1943, the Los Alamos National Laboratory (LANL) currently employs 10,312 people and is located 98 miles from Albuquerque, the state’s most populous city, and 35 miles northwest of Santa Fe, New Mexico’s capital city. LANL is managed and operated by Los Alamos National Security, LLC (LANS), under contract to the US Department of Energy’s (DOE) National Nuclear Security Administration. LANL’s more than 2,000

individual facilities are housed on 26,500 acres of DOE-owned property, most of which is open space.

LANL’s mission is “to develop and apply science and technology to ensure the safety, security, and reliability of the US nuclear deterrent; reduce global threats; and solve other emerging national security and energy challenges.” In November 2004, the

Energy Technology Company (ETC), the research arm of Chevron, established an alliance with LANL to develop novel solutions to various problems the oil and gas industry faces, such as how to improve downhole telemetry. Improvements in seismology and drilling techniques continue to push our exploration boundaries deeper within the Earth and along longer horizontal

Shruti Jahagirdar, Harshad Dixit, and Jim Stiernberg

THE YOUNG PROFESSIONAL’S

GUIDE TOGUIDE TOContinental Savvy: Energy Entrepreneurship Worldwide

Technical Area 3, Los Alamos National Laboratory, Los Alamos, New Mexico. Photo courtesy of and as taken by Los Alamos National Laboratory (14 December 2012).

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YP Guide

sections, but communicating with these new-found depths eventually becomes a signi�cant problem. Valuable reservoir condition information, including temperature, pressure, and �ow rate data, is required for optimizing production at the surface.

LANL introduced Chevron to technology used by the military to transmit a signal from a faraway source in the �eld without using any power. Known as Radio Frequency Telemetry and Sensor Technology, it was adapted by the Chevron/LANL alliance team for use downhole. By 2010, �eld trials had been conducted, in which real-time communication was established between deep wells and the surface without the need for wires, cables, or batteries. This is achieved through manipulation and recording of electromagnetic re�ectance, which is effective even in high-temperature (over 315°C) environments. In 2010, Chevron commercialized this wireless technology, which delivers real-time, continuous electromagnetic data on reservoir conditions—temperature, pressure, and �ow rate—from sensors in oil and gas wells, including very deep wells already producing oil and gas and drilling operations for new wells.

LANL not only contributes research in oil and gas-related hardware, but also aids in the development of software. Simulation is crucial to many aspects of the industry, such as reservoir surveillance and �ow assurance. Other disciplines, such as oceanography, also play into hydrocarbon exploration, for example when considering the consequences of deepwater blowouts like Macondo that began 20 April 2010 in the US Gulf of Mexico.

LANL ocean scientist Mathew Maltrud obtained results from his �rst supercomputer simulation of the Macondo oil spill plume less than a month following the blowout. But currents in the Gulf of Mexico are too complex to be accurately predicted more than a couple of weeks into the future. So Maltrud and colleague Phil Jones, with collaborators from the US National Center for Atmospheric Research and the University of Kiel in Germany, carried out dozens of

plume behavior simulations, each based on a different but realistic Loop Current scenario. The researchers were able to draw a number of timely conclusions that held up well a year after the blowout.

These projects only offer a sample of the problems the highly trained scientists of the Los Alamos National Laboratory are working to unravel.

The Town of Los AlamosAround 12,000 people (2010 number) populate the four mesas that constitute the town of Los Alamos census-designated place (CDP). Los Alamos’ population is the best-educated in New Mexico, with nearly 60% of all adults holding a bachelor’s degree. Its counterpart and sister city in Russia, Sarov, was also a nuclear weapons research city and birthplace of its country’s atomic bomb. Los Alamos indeed has an interesting history due to its crucial role in the Manhattan Project and its US military “highly classi�ed” security status that extended well beyond the end of World War II.

Interestingly, according to a post on the US Library of Congress site by Margaret M. Wood, one of its librarians, the sale of the �rst home in Los Alamos to a private citizen did not occur until the 1960s. The reason for this was the US Atomic Energy Community Act of 1955. One of the three major purposes of this Act was to provide for the “orderly” sale of property within the community to private purchasers. This Act laid out the procedures for the sale of residential property to private persons. However, Los Alamos was not included, as the town was still considered a security risk.

In September 1962, an amendment to the 1955 Act was �nally passed “to provide for the disposal of federally owned properties at Los Alamos, New Mexico.” This provided for the sale of residential properties to private purchasers once each residential structure had been appropriately classi�ed as to what type of dwelling (e.g., single-family house, apartment house, dormitory) it represented.

Los Alamos could not be situated in a more scenic environment, which seldom

reaches extreme temperatures below freezing or highs above 32°C. The formation of this area deals with geology of an entirely different nature than what most petroleum geologists work in. The land has been shaped by volcanoes dating back several million years up to as recently as approximately 50,000 years ago.

The town of Los Alamos and LANL adjoin the eastern side of the Jemez Mountains. There are two prominent calderas within the Jemez Mountains that typify intracontinental volcanism and provide a large, �at surface convenient for settling. The Ancestral Pueblo people farmed this land, and carved out dwellings in the volcanic facade or constructed homes with blocks of the same material. Bandelier National Monument, a 34,000-acre park whose northeastern boundary is shared with LANL, is open to the public. Bandelier offers a lot of insight into the Ancestral Pueblo people who once lived in this area and provides amazing vistas for those brave enough to climb to the highest kiva (religious chamber used by male Pueblos) at Alcove House.

ASIA: Kuala Lumpur, MalaysiaKuala Lumpur is the capital city of the island nation of Malaysia. It is a “global city” with a diverse population estimated at 1.6 million people as of 2012, spread over an area of 243 km2. The Greater Kuala Lumpur area, comprising 10 local authorities including Kuala Lumpur, is an urban agglomeration of 5.7 million people as of 2010. Kuala Lumpur is one of the major oil and gas industry hubs in southeast Asia due to its proximity to shipping lanes and its close economic ties to other southeast Asian nations.

Malaysia had 3.7 thousand million barrels of proven oil reserves at the end of 2012 (BP Statistical Review of World Energy, June 2013). While this may account for only 0.2% of the world’s oil reserves, the location and developed infrastructure of Kuala Lumpur make it preferred by oil and gas service providers as a place to locate their southeast Asia regional of�ces. Petronas is the national integrated oil company

33Vol. 10 // No. 1 // 2014

of Malaysia which owns all the nation’s petroleum resources.

As the business hub of Malaysia, Kuala Lumpur hosts a number of opportunities for young professionals with an entrepreneurial spirit. Many international conferences, high-pro�le events, and programs are starting up in or drawn to Kuala Lumpur to ride the wave of global interest in growing Asian economies.

• The 4th Annual Global Entrepreneurship Summit—the �rst in east Asia—was held 11–12 October 2013 in Kuala Lumpur.

• The Junior World Entrepreneurship Forum’s (JWEF) Malaysian chapter was launched 2 July 2013 at INTI International University & Colleges, Kuala Lumpur. During the JWEF Malaysia launch, future activities of the chapter were introduced, including the “Unipreneur” (University Entrepreneurs) program. The Unipreneur program is a hands-on workshop conducted by young entrepreneurs for university students to introduce them to the essential requirements for setting up businesses. Proposed program modules include business plan writing, business canvas strategy

sessions, and entrepreneurs’ sharing forums.

• Launchpad organizations like “Startup Malaysia” help young people with business plans meet venture capitalists with �nancial resources. Startup Malaysia held a 4-day Global Startup Youth Bootcamp 8–11 October 2013 in Kuala Lumpur.

• Malaysian universities like USCI University offer honors BBA and MBA programs in oil and gas management so students can gain an understanding of oil and gas from a business administration and management perspective. The honors BBA program at USCI includes three 2-month cooperative/internship placements.

Opportunities abound in Kuala Lumpur and entrepreneurs �nd the environment conducive to developing ideas and implementing their plans.

An interesting business venture is Sona Petroleum, a special purpose acquisition company (SPAC), formed to acquire exploration and production (E&P) oil and gas assets, started by E&P industry stalwarts from Malaysia. Sona Petroleum was able to raise more than USD 160 million from its oversubscribed

initial public offering (IPO) in July 2013—making it the largest-ever SPAC IPO in Malaysia.

A SPAC raises money through the stock exchange without a single asset other than the experience of its board and management and a plan to buy assets or other �rms that will form the core business of the SPAC. Sona Petroleum does not have any operational experience as an entity but the management team is composed of experts across the E&P value chain. They are currently looking to acquire equity interest in production assets in southeast Asia, Africa, and the Middle East.

The dynamic business environment, �ourishing oil and gas industry, and numerous tourist attractions make Kuala Lumpur a promising destination for young professionals. It is a melting pot of different cultures and ethnicities. The population consists of a mix of people of Malay, Chinese, and south Indian origin and a large number of expatriates from all over the globe. English is widely spoken, while Bahasa Malaysia is the of�cial language.

Even the architecture in the city re�ects contrasting origins—from its ultramodern skyline featuring the famous Twin Towers (Petronas’ headquarters) to colonial-style buildings, Asian traditional buildings, and buildings inspired by Malay Islamic art. The of�ces of most oil and gas companies are concentrated around the Twin Towers in the Kuala Lumpur Convention Center area.

AFRICA: Global Village Energy Partnership Africa is the world’s second-largest continent after Asia, with a total surface area (including several surrounding islands) of 30,221,532 km2. The eastern region of Africa is home to the great wildlife sanctuary of the Serengeti plains and the Rift Valley lake system which stretches across the countries of Ethiopia, Ruanda, Burundi, Kenya, Uganda, Democratic Republic of the Congo, Tanzania, and Zambia.

While African countries are rich in natural beauty and cultural diversity, they also are still regarded

Skyline of Kuala Lumpur, Malaysia. Photo courtesy of Leung Cho Pan.

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YP Guide

as developing nations. According to the United Nations, the majority of the population lives under the poverty line. Signi�cant oil and gas discoveries in Africa have put the continent on the world map as a major contributor to world energy demand. However, the irony is that most African countries struggle with getting daily electricity supplies and fuel for daily household activities like cooking.

The Global Village Energy Partnership (GVEP) was launched at the 2002 United Nations World Summit for Sustainable Development in Johannesburg, South Africa. It works mainly in Africa and the Caribbean. GVEP International is a nonpro�t organization that works to increase access to energy and reduce poverty in developing countries. To achieve these goals GVEP helps entrepreneurs establish and grow small energy businesses. According to GVEP, there are 2.5 billion people who rely on wood, charcoal, animal dung, and kerosene for fuel, and 1.5 billion people in the developing world who live without electricity altogether.

GVEP had a 5-year Developing Energy Enterprises Project (DEEP), operating in Kenya, Uganda, and Tanzania, that started in March 2008 and ended in February 2013. It aimed to deliver energy access to 1.8 million people in Kenya, Tanzania, and Uganda. The target was substantially exceeded, as it reached 4 million bene�ciaries by the program’s end.

DEEP provided services such as business and technology training plus a loan guarantee scheme to energy entrepreneurs. With focused training in technology and business, each entrepreneur was taught to set realistic production and sales targets. A mentor, who also assisted in getting loans approved, was assigned to each entrepreneur.

Over 900 micro and small energy enterprises were supported by DEEP. The program created around 3,000 jobs in the region. Here are two outstanding examples of entrepreneurs supported by the DEEP program contributing to the

energy industry in a small way but surely making a difference:

Fausta Ntara produces various kinds of improved cookstoves that she sells to households, wholesalers, schools, and hospitals. She is based in Tanzania and started her business in 2003. In the beginning, she attended several seminars in Dar es Salaam where she learned about charcoal stoves and acquired the technical knowledge that would provide the foundation for her business.

She received further training in management, record-keeping, and planning after enrolling in the DEEP program. This enabled her to improve her customer relations and the quality of her products. As her revenue increased, Ntara used the extra savings to send her daughter to school. Her business contributes to the preservation of the environment since her clients use less charcoal and �rewood.

Patrick Mwangi is Kenyan and a trained aircraft technician who produces and sells biomass briquettes as well as briquette-producing machines. He started designing his machines several years ago but faced serious technical dif�culties. Mwangi came across GVEP by chance while making general enquiries about renewable

energy, and then enrolled in the DEEP program. He bene�ted from the training he received in the program, leading to increased sales, and he is now considering new activities for his company, including recycling. Mwangi has reinvested his extra income to buy an of�ce and new equipment. He takes part in training workshops to share his knowledge and know-how on briquettes.

The Global Spirit of EntrepreneurshipThe energy industry is very dynamic and is faced with new challenges every day with the prospect of depleting fossil fuels on the one hand and the discovery of oil and gas in ever-challenging frontiers on the other. There is constant tension between humanity’s desire to use renewable sources of energy and at the same time create new technologies to tap oil and gas in dif�cult environments.

The spirit of entrepreneurship can be seen across the world, and the oil and gas industry is no exception. Entrepreneurial ambitions are not restricted by continents or countries; opportunity exists everywhere and young professionals clearly make the most of it! TWA

The kitchen in Zigu English Medium School in the commune and town of Mahina, Mali, used to have four sets of three-stone �res, but now has four improved boilers and four cookers—all produced by Fausta Ntara. Photo courtesy of Global Village Energy Partnership.

35Vol. 10 // No. 1 // 2014

YP News�ash

2013 SPE Young Member Outstanding Service Award Winners

Jenny Cronlund Reservoir Engineer, BPWhat does volunteering with SPE mean to you?

As an SPE volunteer, I am granted access to a prestigious group of industry leaders. I am able to both network and work with them and with my colleagues worldwide to create a place where knowledge-sharing and networking can thrive. SPE is truly a great organization, but it’s only as great as the volunteers who fuel it. I’m happy to do my part.

What are YPs’ greatest challenges?While we are driven to “git ’er dun,” we must also strive to slow down, do our homework, and learn from experienced leaders in the industry while their expertise is still available, instead of barreling through tasks.

Whom would you like to thank?I would like to thank the Society for its recognition of my contributions, and my nominators and the election committee for choosing me out of the ranks of very quali�ed candidates. Even more, I’d like to thank my husband. We have sacri�ced many hours apart while I have volunteered and contributed my time to the Society. I appreciate his support in taking care of our two boys while I am working in this industry and with SPE.

Madhavi Jadhav Reservoir Engineer, SchlumbergerWhat does volunteering with

SPE mean to you? Volunteering with SPE brings out the best in you. It helps me to connect with

my colleagues and seniors around the world; at the same time it gives me a chance to mentor upcoming engineers in this �eld. It delivers many messages about you, the ability to achieve, good leadership skills, multitasking capabilities, wide vision, and team work.

What are YPs’ greatest challenges?The most challenging part is to convince your managers you have the capability to handle things on your own. Having said this, YPs should be ready to catch up with challenges the industry throws at us. Oil industry professionals are citizens of the world and this requires them to be open to change and have extraordinary adaptability and respect for other cultures.

Whom would you like to thank?I take this opportunity to thank my parents who have always supported me through thick and thin. I would also like to thank my nominees and recommenders for recognizing me for this award, including the SPE Mumbai Section and the Board members for giving me the opportunity to serve as a YP liaison for almost 3 years. Finally, I am thankful to my university, where the initial seeds of volunteering with SPE were sown.

Brian Chacka Production Engineer, Denbury ResourcesWhat does volunteering

with SPE mean to you?Volunteerism is a highly rewarding opportunity to improve the lives of others by dedicating a small amount of time and resources. Teaching and mentoring are two of the most empowering, enlightening ways to utilize my available time. They allow me to share knowledge and experience to assist in others’ growth while also educating and challenging me to improve myself. Helping others to advance and achieve their goals is a very ful�lling cause to me.

What are YPs’ greatest challenges?At the risk of sounding clichéd, I tend not to look at things as challenges, but as opportunities. There may be dif�culties or distractions along the way, but I think most successful young professionals realize we have tremendous opportunities in front of us with the current status of our industry and society.

Whom would you like to thank?I would especially like to thank my mother Cheryl, and my father Lyle. I would also like to thank Greg Dover, who gave me the opportunity to start my career at Denbury Resources; Danny Bell, who helped provide opportunities and strongly encouraged me to get involved with SPE; Pat Handren, who has been a great teacher and mentor; and David Hamilton and the SPE Dallas Section who nominated me and supported me for this prestigious award.

Nael Sadek Automation Support Manager, LufkinWhat does volunteering with

SPE mean to you?It means giving to the Society, community, and the industry and not only taking from it. My life approach is to give and take, not take and give. When I volunteer, I get to enjoy seeing the positive impact on the lives of others I have helped whether in their career or personal lives.

What are YPs’ greatest challenges?To be able to achieve a balance between work, building a career, personal life, and outside work activities.

Whom would you like to thank?I would like to thank my family who has encouraged me and supported me during my career, my company Lufkin who sponsored my attendance at SPE conferences, and my country Egypt whose River Nile runs in my veins. TWA

Your Best Shot

Another Gorgeous Day to Be Working on Fairley-04, Brunei Darussalam Photo by Hadini Zainal-Abidin, head of production optimization (well reservoir and facilities management), Darat Asset, Brunei Shell Petroleum. A chopper can be seen �ying into view over a remote offshore production platform in the South China Sea before disappearing over the horizon, dashing hopes of an early crew change. It was taken in February 2010 with an Olympus mju 1030.

Good Morning! Star Energy (Kakap) Ltd. Indonesia’s Platform Greets Another Day

Photo by Muhammad Titis Redjoso, safety engineer, Star Energy (Kakap) Ltd., Indonesia. This photo shows Star Energy (Kakap) Indonesia’s platform, located in Natuna Sea, 486 km northeast of Singapore and 1,247 km north of Jakarta. It was taken in July 2010 with an Olympus digital camera.

Submit your entry today to bestshot@spemail.org. This contest is open to all SPE members. The two best photographs will be published in each TWA issue. Your image must be in JPEG format, with a �le-size limit of 4 MB. Submit photograph information with camera speci�cations. Provide your full name with your position, company name, and company location.

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