The Great Crew Change OS3
A file from ‘The Roughneck Files: Exploring Energy & Water circa 2030 (E&W~2030)’
If in 2030 one were asked to reflect on the state of the energy & water industry in 2015, they would deem it fragmented and segmented. Whilst it sat in that broken state, one would add that the prime mover, Oil & Gas, was in transition, and incumbent Low Carbon Energy was gaining traction, market share, as well as friendly media coverage.
An exploration into the 15 year future of constituent industries of the energy and water sector in an era of unprecedented innovation and disruptive change must be done through as many lenses as possible; the establishment, the vested, the aspiring, the ambivalent, the opposed, as well as students of future innovation, technology, and market share trends. These are The Roughneck Files…….
This file is the first piece of a conclusion drawn from university level debate bracketed with extensive study, and immersion in both the Canadian and British Oil and culture. This particular millennial vision shares insight into and on:
- the state and future of the Oil & Gas industry including innovation, future scenarios and existential risks, in particular, The Great Crew Change;
- the acceleration of innovation and price performance of low carbon energy including its impact upon the energy industry in general, the Oil & Gas industry in particular…..
The Great Crew Change OS3
The Great Crew Change (‘GCC”), a prophecy foretold for decades, surfaced in 2008 in an effort to coin the looming existential risk to the Oil and Gas Industry. Esteemed academics, authors, and analysts have finally chosen to revisit this phenomena as the current oil glut inspires urgency and uncertainty within the different tiers of the industry. This very year marks the eligibility of 50% of the curated oil and gas industry to retire. This retiring generation of baby boomers witnessed and contributed to some of the greatest breakthroughs in Oil and Gas, flourishing beyond compare until the bust of the 1980s but still persevering beyond. These veterans, like great historians, can provide a profound wealth of knowledge and perspective on the evolution of the O&G industry as well as the evolution of the Western World itself, as they’ve observed the dissolving of the USSR, the conflict and growth of the Middle Eastern powers, the rise and turmoil of the various South American nations, and the thorough transformation of North America, especially Western Canada. Although wise and worldly, as these veterans glance back at the past 7 years of mismanagement and lost opportunity, the GCC existential risk to the O&G industry today escalates. As great creators and fondlers of wealth and knowledge many allow their judgement to be clouded by the infamous bonanza mentality.
Oil & Gas IQ recently published a grave analysis of the situation in 2015, in congruence, a Forbes article published in April shared similar sentiment but guilelessly branded a Great Crew Change 2.0 (GCC 2.0). Generally speaking, the release of any new Operating System is followed by dismay from the public as the tendency to cling to the kind and familiar overwhelms. Many spend time hovering their index fingers over the update button but only few take the leap. Few is only substantial when many follow, and such only occurs when two situations arise: success, or failure of the familiar. Trends in recent years demonstrate the population of the few has been minuscule, this was embodied in the overall performance GCC and GCC 2.0 as they demonstrated no distinction from each other as Operating Systems, nor have they proved particularly fruitful. In order to guarantee the survival of the O&G industry we must introduce the GCC OS3.
It is important to acknowledge that the surfacing of the Great Crew Change in the years of 2008/09 coincided with the Shale revolution, and thus little attention was paid to propagating the GCC. No real innovative thinking or product of such can be recognized other than ‘lip service’ GCC programs enforced by select major players. This occurrence not only speaks to a lack of vision and foresight, but also ignorance of the accelerating pace of technological innovation in the broader low carbon energy sector. Appreciation of this was demonstrated online by select veterans as tweets declared:
“The legacy of the O&G baby boomer will be measured not by oil & gas achievement or legend, but rather how well it prepares the next generations for the energy challenges of the future.”
This notion encompasses the ‘should-be’ efforts of the GCC OS3.
The Shale bonanza proved most prominent in the US. Innovation within the industry largely halted beyond it. Considering the global economy was recovering from the 2008 crash one can see how attractive this bonanza seemed. Even the likes of China tried to follow suit, and with intense Saudi involvement, each nation drove manically towards achieving maximum market share. One can measure the near static pace of innovation in the field at that point through the slow adoption of Big Data in the industry. Furthermore, the most obvious of indices can be seen as the lack of meaningful decrease in the cost of production. Complacently waiting for a margin bounce back as we are now is far from conducive to growth. Such a strain of linear thinking is far from impactful in an exponentially evolving world.
Circulating rhetoric predicts a dire surge in demand outstripping the supply glut, thus surmising that shale is dead. Though the bonanzas awaiting exploration beyond traditional borders suggest we are to combat a greater contribution to the oversupply. Whilst the Chinese reduce exploration in their shale deposits due to complexity and cost, the Argentinians, homing the 3rd largest deposit in the world, prepare themselves to enter the playing field on a grand scale. Moreover, the situation in Iran suggests a re-entry into the O & G sphere, and should it be executed properly, it will pose a great threat to North American market share within the industry.
Whilst the global situation unravels, ungracefully co-existing with the aforementioned mismanagement of the last seven years, the price competitiveness of low carbon and alternative energy resources has increased exponentially. Markets are swiftly morphing themselves into energy mix users as the price performances of the low carbon and hydrocarbon technologies move towards par by 2030 thus igniting a carbon-based conversation, which way do we lean if the price is the same? It is therefore necessary to aggressively innovate and commence the transition to a nimble, agile and diversified value-added energy mix and water industry responsive to meet massively shifting demand.
O&G needs to embrace and emphasize its new persona as a value-added Energy & Water industry. The GCC OS3 is the opportunity to do so, embracing this call to action, the O&G industry would no longer be a public enemy or a profit-seeking machine, it would be an active member of the global community, working towards a mutually beneficial but uncertain end.
The zeitgeist of the incoming generation, “the millennials,” boils down to a culmination of green thinkers, skeptics, soul searchers, materialists, and the growing minority, technocrats. Unfortunately, its fallback tends to be a merchant for laziness, the millennial requires a call to action, or stimulus. These millennials will be running the industry in 15 years’ time. In order to captivate this generation and pass the torch with confidence, the baby boomers need to prepare and train the millennial into the new energy mindset. The millennial does not share the same bonanza mentality as the baby boomer. The millennial, being raised in a sustainably conscious world, and being the child of the economic crash of the late 2000s reacts positively to growth and the dissemination of knowledge. With only seven to ten years remaining in the working lives of the baby-boomers, the GCC OS3 takes hold with a more pressing nature.
This phenomena is greatly prominent in Western Canada. Disruption has occurred in the form of an oil supply glut, with prices wavering in the $50 range, the economy of the nation, especially the Western provinces, suffers incredibly. As the oil goes, the government attempts to address their meandering hydrocarbon economy with short-term thinking. The new direction the conversation is going in is vital to progress in the political sphere and philosophy of the nation. Many, most habitually the older generations, who place more faith in the hands of their leadership, follow the rhetoric without complaint. Whereas the younger, more skeptical generations resonate more with the idea of leading the salvaging of this issue with mass innovation of the system, structure, and industry.
The next seven years are an opportunity to invest mass time, capital, and thinking into the vision and challenge that is the GCC OS3. It is essential to learn how to innovate the industry on all frontiers in order to ensure longevity, and the position of Energy leader of the future. We must leverage technological advancement and transform from a solely O&G entity, into an integrated Energy and Water operation actively responding to a paradigm in demand. Considering the aforementioned lack of differential between the GCC OS1 and OS2, as an operating system, the GCC OS3 must address the areas in the greatest distress, such as Western Canada. As aforementioned, with Alberta and British Columbia in recession, the rest of the Canadian economy falters. The infrastructure already in place in the Oil Province of Canada provides the opportunity to begin defining the baby boomer legacy and the course of the future of Energy, whilst keeping Canada at the forefront of this movement.
Our potentiality has no bounds. The goal is to sustain, engage, grow, develop, and integrate, with that comes great wealth of margin, knowledge, and progress. OS3 is a roadmap and a game plan vital to the conundrum at hand. In order to compete, O&G companies, who formed and contributed to this hydrocarbon economy until today have to utilize their experience to retain, build, and prepare the O&G legacy. The next decade will be the most stirring of the baby-boomers career and the establishment of the Energy industry. The fate of the industry now relies on how swiftly we take action.
….The Roughneck Files: E&W~2030….09.08.2015