The Struggle Over Oil

The panelists were Prof. Philippe Le Billon, geographer at the University of British Columbia, and Manana Kochladze, biologist, founder of the environmental watchdog group Green Alternative and winner of the Goldman Environmental Prize 2016. Moderator of the discussion was the Head of the Politics Department at the University of Linz Prof. Karin Fischer.

The opening statements were dedicated to the question of who are the “main actors” in the political and economic oil network, as well as what role they play, and what drives them. Looking at reserves, Prof. Le Billon stated that the two biggest players are Saudi Arabia (conventional) and Venezuela (heavy oil); however, looking the resources, the United States are the clear leader ahead of Russia. He also provided an insight in the economics of oil production: Assuming 100USD oil price, 20USD are lifting costs. This number will only vary slightly despite oil price changes. The oil producing countries’ governments take another 33USD as royalties etc., 40USD go to the consumer countries’ governments as taxes and corporate profit would only be 7USD. In the current price environment, this means that ca. 1/3 of the oil price are lifting costs (as they are quite independent of the oil price), governments take 63%, and only a mere 3-4% are left up for the international oil companies (IOCs). This implies that IOCs are striving to reduce lifting costs.

Mrs Kochladze focused her opening statement on the communities, and their role: Only in the past 20-30 years, oil companies started to involve the locals in their business and saw them as equal stakeholders in projects – a cause for many conflicts in the past, some of which lasting until now. Another aspect of her statement was the way how the mindset of oil companies, and especially the governments of oil producers, works when it comes to justifying big investments: Economically challenging projects such as transit pipelines are split into sections, which will increase the profit and throughput per dollar spent: Imagine a pipeline that costs 1bn USD and has an expected throughput of 1bcf of gas, that would mean 1bcf/USD. But splitting the pipeline into four sections, which obviously have the same throughput, the performance will increase to 4bcf/USD, making the project look a lot better! However, the overall economic feasibility remains the same and often even questionable).

The topic of the discussion slowly moved into the direction of conflicts over oil, and how they affect the geopolitical situation. The consensus that was reached was that there are five different reasons for conflicts over oil:

  • “Peak Oil” – the struggle over the remaining reserves
  • Geopolitical aspect – oil as a strategic resource, and as a diplomatic “weapon”
  • Climate change – migration and other social changes caused by it
  • Environmental conflicts – both unarmed resistance against projects as well as “environmental terrorism” (i.e. violent opposition) as means to deal with oil companies and (often autocratic) governments of the oil producing countries
  • “Conflict Oil” – like blood diamonds, oil is a major economic factor for any party involved in armed conflicts

It was also stated that oil was the “excrement of the devil”, as it is not only the cause for conflicts, but also for the local communities, which are often suppressed to make prestigious projects possible.

“Oil is a very practical fuel. Thus, it will be hard to replace it in transportation, but it is fairly easy to replace in other areas, such as heating and energy production, or for the production of packing material.”

Philippe Le Billon

Finally, the question of how to cope with increasing oil prices, the environmental impact of oil and finding alternatives to fossil fuels was raised. As we live in the “Oil Age”, petroleum simply is our most important natural resource. A population increase will inevitably lead to an even higher consumption, both by direct causes such as transportation and heating, and by indirect ones, such as the production of many consumer goods. Visionary takes on this problem will be needed to succeed – and electrical mobility is seen as such a thing by the panelists. Moreover, the private car will – according to the panelists – vanish from cities, and the bicycle should become the number one means of transportation there.

The second half of the session was dedicated to questions from the audience. Geopolitical questions, such as the role of Iran and China as well as of the new US government were discussed as well as more technical ones in the direction of the feasibility to get rid of fossil energy sources altogether in the near future, or the impact of a transition towards e-mobility on environment and global economy.

The geopolitical aspect was answered in the following way: While the decision of US President Trump to include Exxon Mobil CEO Rex Tillerson (Secretary of State) in his cabinet may not mean too much (and is not even unusual as Dick Cheney, Vice President under George W. Bush was CEO of Halliburton), the nomination of Scott Pruitt as the head of the Environmental Protection Agency) is clear signals towards the energy sector: He is assumed to facilitate hydraulic fracturing operations in the US, securing the US role on the global oil market on a longer time. As for China, the focus will probably be to spend the accumulated money on oil projects in the Caucasus and the Balkans, thus weakening the role of Russia for Europe’s supply security. The lifting of sanctions against Iran on the other hand will primarily have regional effect: the mid- and downstream industry in the neighboring countries will be affected, as those will be the countries that will have to ensure the transportation to the consumers in Europe.

The discussion was concluded with the final statement that oil demand has peaked, and will probably decline in the developed countries. However, especially in the US there is a significant correlation between oil price and consumption, which will not assist in moving on towards other resources.

(We would like to point out that the above opinions, especially on political topics, are the reproduction of the ones stated in the panel discussion, they do not necessarily reflect the ones of the Student Chapter.)

Soft Skill Workshop by AOC, Career Strategies for young professionals

As students we are constantly increasing our knowledge about specific technical topics during the course of our studies. Nevertheless success is not only based on technical skills. The oil industry is a global industry and more than ever it is necessary to master soft skills as well. To cover this highly interesting and important topic, the Montanuniversitaet Leoben SPE Student Chapter organised a two days softskill-workshop which took place from the 2nd to the 3rd December 2016.

The workshop was held by Lori and Dwyann Dalrymple who are running their own company, which is specialised in teaching industry professionals and students how to utilise soft skills in the work life.

The workshop began by giving a presentation. The presentation had to be prepared at home, about a topic of our choice. The presentation was recorded for further evaluation. Several different topics were addressed. The topics ranged from people talking about their hometown, to an introduction how to use a specific software properly.

The afternoon was dedicated to the topic, “How to make you a dynamic presenter”. Lori gave a lot of useful insights how to improve the presentation style and the overall communication skills. What was obvious from the beginning, often only little changes can make a big difference. Furthermore it is very important to know who is going to be the audience. Especially for presentations in the oil industry where it is very likely to face a multicultural audience. These and more techniques how to improve the presentations were introduced during the afternoon session.

The second day started by a mock interview session. Dwyann who already has more than thirty years of experience in hiring and also firing people, faced us with some ideas how a real interview session could look like. We had to answer questions about ourselves but also some questions which were a little bit outside of the box. Have you ever asked yourself which animal you would like to be? Maybe you should ask yourself before the next interview.

Afterwards we continued by giving the same presentation than yesterday but this time with incorporating all the learned techniques. The presentations were recorded and feedback about that material is going to be sent to all the participants in a few weeks.

Workshop Participants together with teacher Lori Dalrymple on the left
Group Picture

Finally at the end of the second day Dwyann gave two interesting technical presentations. One about hydraulic and fracturing and the other about the production of water, possible causes for that and how to deal with it. This was a perfect opportunity for the participants to see how soft and technical skills can be combined to be an effective presenter.

In the end the Montanuniversitaet Leoben SPE Student Chapter would like to thank Lori and Dwyann very much for their time and effort to make this workshop possible. It was a great pleasure for us to learn from your experience, expertise and knowledge. We are looking forward to repeat that in the future.

If you want to have further information about Lori and Dwyanns expertise and their company please follow the link to their homepage:

East meets West-Krakow at its best…

This year the 7th Edition of the famous East meets West Congress took place in Krakow. Students from all over the world followed the invitation of the AGH University of Science and Technology SPE Student Chapter. From the 20th of April to the 22nd of April all the participants were enjoying the hospitality and the great atmosphere in one of the most beautiful cities of Poland.

The journey to Krakow began on the 19th of April at 10 o’clock in the morning. 6 of us were going there by car. The rest of us arrived by plane on the same day. After successfully passing the border control in the Czech Republic and 7 hours driving we arrived at the dormitory in Krakow. After check-in we started a small city tour through the city centre of Krakow which ended in a famous polish restaurant. We ordered grilled ribs with a special honey-mustard sauce. After we finished it was time for the Ice-Breaker party. It didn’t take very long to break the ice because everybody was looking forward to meet some new people.

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The next day started with the opening ceremony of the congress. A singing performance was accompanied by speeches from the organizers and university representatives. After the first coffee break, one of the congress highlights took place, a panel discussion with the topic “Managing the current economic situation in the Oil and Gas Industry”. Industry representatives and highly ranked experts gave insights and personal opinions about the reasons of the recent crisis. It was a highly interesting discussion with an overall positive message. That the oil prices are going to recover sooner or later. After lunch several different companies presented themselves to the students, such as Orlen Upstream, Ernst&Young, MOL and FMC Technologies. Before dinner we decided to explore the city of Krakow by ourselves. The day was concluded by a gala dinner where traditional polish cuisine was served.

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The second day of the congress was dedicated to the student paper contest and the poster session. Students from different universities presented their research and showed the great diversity of the petroleum industry. After lunch the poster session took place. Two posters from students of the Montanuniversitaet Leoben were presented. Florian Gamperl presented his research “Drilling Rate Models for PDC Bits”. Christian Mudrak and Nicola Zivelonghi presented their research in the field of reservoir engineering with the title “Flow Behaviour Investigation of a Sandstone Reservoir”. The judges and also the other students were satisfied by the work of the presenters. Later that day we decided to go on a Segway tour to visit the Jewish Quarter of Krakow. Our guide gave us a historic overview about the development of the Jewish community in Krakow and their very sad history during the Second World War. Our day was concluded with dinner in a steak restaurant.

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On the final day of the congress PhD students had the chance to present their current research. Not only technical, but also questions about socio-economic growth were raised during this session and led to some interesting discussion which even continued into the coffee break. After the coffee break, the closing and awarding ceremony was held. It was great to see when Christian Mudrak and Nicola Zivelonghi from our university received the first price in the poster competition. Finally, the congress was over but this doesn’t mean that it was time to leave. There was one more evening to be spend in Krakow. Therefore, we decided to visit an alt mine which is located a few kilometres outside of Krakow. The Wieliczka salt mine is 700 years old and it is one of the most famous mines in Europe. The route for tourists brings you to a depth of 135 metres under ground. On the way several sculptures made out of salt can be seen. One of the highlights in the mine is the underground chapel. This time we decided to have our dinner in the Hardrock Cafe of Krakow. Finally we had one more night to spent time with the wonderful people we met here.

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There is this saying that departing is never easy but you have to leave to come back. Therefore, we left Krakow with new friendships, great experiences and without a doubt that we are going to come back.

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We would like to thank the students of the AGH University of Science and Technology SPE Student Chapter for their hospitality and the amazing program they have prepared for us. It was a great pleasure to be able to participate in this great event and we are looking forward to be back in Krakow in 2017.