13 votes

Google, Amazon and Microsoft are now in the oil business

13 comments

  1. [9]
    Kuromantis
    Link
    Inevitable pinging of @Loire because they're an oil worker. Got any commentary?

    Inevitable pinging of @Loire because they're an oil worker. Got any commentary?

    5 votes
    1. [8]
      Loire
      (edited )
      Link Parent
      The oilfield is in a pretty big cultural transition right now. There's the tail end of the old guard, dominantly boomers, that are used to the old way of doing things. You know the oilfield you...

      The oilfield is in a pretty big cultural transition right now. There's the tail end of the old guard, dominantly boomers, that are used to the old way of doing things. You know the oilfield you see in the movies, started straight out of highscool and made their way into management with thirty years of experience, drill baby drill, slinging pipe by hand, put-a-hole-in-the ground-science-be-damned types. Real Act 1 Armageddon, There Will Be Blood shit.

      On the other end is the new guard slowly leaking into leadership. Late Gen X's and whatever early boomers aren't anti-oil. This group is highly educated, very data and tech savvy and they are ready to shake things up. This group is pushing more and more technological reform into the industry.

      Almost every major company is pushing "Oilfield 2.0" which is one of those cringy marketing terms that basically means the operators like BP, Exxon, Shell, etc want to automate as much of the process as possible. To date it's been dominantly service side oil companies making the push so the process has been slow. Focus is largely on digitization of grunt work that have been human for much too long. While there's a lot of smart people working for us we simply can't match Silicone Valley's expertise in terms of machine learning, AI, automation etc.

      The issue the operators have all come to the realization that $100/bbl oil is never going to happen again. So how can they keep making those insane profit margins? Well oilfield workers are paid abnormally well so why not cut them out of the equation and lower OPEX.

      What is shocking about this video, to me as a former geologist, is that Silicone Valley isn't turning their massive resources towards automating the grunt work but instead they are targeting the education-intensive exploration process. A lot of geologists, geophysicists and reservoirs engineers could be made redundant depending on the success of this automation. Those were not the jobs that were "supposed" to get eliminated.

      From a personal "the sky is falling perspective" it's mildly disappointing to see. The oilfield was one of the last industries outside of Silicone Valley and Finance that paid their employees well. With theae jobs on the cutting block its just another industry where all the money will flow straight to the useless shareholders and C-suite.

      Edit: Don't let the majors like BP convince you that they are suffering. While the service companies and junior operators are going under or struggling as a result of the 2015 oil bust the big boys are right back to similiar profit kevels as they had when oil was at 100$ a barrel. BP made 12.7 billion in prpfit during 2018. Shell increased to 21 billion. Exxon came.in at 20 billion in 2028. Where did that profit come from? By squeezing everyone else out.

      18 votes
      1. [3]
        Autoxidation
        Link Parent
        Thanks for the insight. I'm pretty sure university geology departments are still touting the "most of the workforce will retire in the next 10 years" mantra they were almost a decade ago trying to...

        Thanks for the insight. I'm pretty sure university geology departments are still touting the "most of the workforce will retire in the next 10 years" mantra they were almost a decade ago trying to get students interested in a geo career. The 2014 crash scared me away from the industry and I went to pursue other things (and ironically ended up in machine learning research, but for other disciplines).

        5 votes
        1. [2]
          Loire
          Link Parent
          It's been happening, it's just that many arn't being replaced. I'm fairly certain none of my BSc graduating class found an explicitly geologist job. Many of them don't work in anything technical...

          I'm pretty sure university geology departments are still touting the "most of the workforce will retire in the next 10 years"

          It's been happening, it's just that many arn't being replaced. I'm fairly certain none of my BSc graduating class found an explicitly geologist job. Many of them don't work in anything technical at all. My MSc "cohort" is fairly similar two or three are explicitly geologists, a group of of us are in tangentially related fields, the rest are struggling.

          Don't get me wrong, I don't regret the degree. I make a lot of money and feel like 60% fulfilled in my role. But if I was tasked with speaking to a senior highschool class, "Geology" would not be my suggestion.

          4 votes
          1. Autoxidation
            Link Parent
            Which is really a shame, since it's very interesting.

            Don't get me wrong, I don't regret the degree. I make a lot of money and feel like 60% fulfilled in my role. But if I was tasked with speaking to a senior highschool class, "Geology" would not be my suggestion.

            Which is really a shame, since it's very interesting.

            3 votes
      2. [2]
        skybrian
        Link Parent
        I don't know much about it so I'm curious why you think the price of oil won't go up again?

        I don't know much about it so I'm curious why you think the price of oil won't go up again?

        3 votes
        1. Loire
          Link Parent
          Too much external pressure keeping it down at the moment. Shale blew open the doors on reserves increasing supply . Consumption, while still growing, is slowing and expectated to flat line towards...

          Too much external pressure keeping it down at the moment. Shale blew open the doors on reserves increasing supply . Consumption, while still growing, is slowing and expectated to flat line towards the end of the 20's. Renewables rapidly becoming economically competitive. Shifting public perception against the industry. Too much petroleum still in storage from the last downturn.

          Look at the Iranian attack on the Saudi refinery back in September. The shutdown eliminated 5% of the entire world's global petroleum production. Five point seven million barrels a day. In the past that sort of geopolitical event would have caused oil prices to skyrocket. Analysts, used to the old ways, were predicting 100 dollars a barrel by November. Instead we got a 20% increase that lasted maybe a week and collapsed back to 60$/bbl.

          The arithmetic has changed and without a massive shakeup (like a war with Iran...) It's going to stay that way.

          9 votes
      3. [2]
        Kuromantis
        Link Parent
        Wow. That's super interesting. Do you have any idea why the 'old guard' is the 'science-be-damned' type despite oil extraction being one of the most technically challenging and knowledge-heavy...

        The oilfield is in a pretty big cultural transition right now. There's the tail end of the old guard, dominantly boomers, that are used to the old way of doing things. You know the oilfield you see in the movies, started straight out of highscool and made their way into management with thirty years of experience, drill baby drill, slinging pipe by hand, put-a-hole-in-the ground-science-be-damned types. Real Act 1 Armageddon, There Will Be Blood shit.

        On the other end is the new guard slowly leaking into leadership. Late Gen X's and whatever early boomers aren't anti-oil. This group is highly educated, very data and tech savvy and they are ready to shake things up. This group is pushing more and more technological reform into the industry.

        Wow. That's super interesting. Do you have any idea why the 'old guard' is the 'science-be-damned' type despite oil extraction being one of the most technically challenging and knowledge-heavy things to do in the last 200 years? I would expect someone working high up on big oil to be like a stereotype shareholder: really smart and informed but morally indifferent to nearly anything.

        Almost every major company is pushing "Oilfield 2.0" which is one of those cringy marketing terms that basically means the operators like BP, Exxon, Shell, etc want to automate as much of the process as possible. To date it's been dominantly service side oil companies making the push so the process has been slow. Focus is largely on digitization of grunt work that have been human for much too long. While there's a lot of smart people working for us we simply can't match Silicone Valley's expertise in terms of machine learning, AI, automation etc.

        The issue the operators have all come to the realization that $100/bbl oil is never going to happen again. So how can they keep making those insane profit margins? Well oilfield workers are paid abnormally well so why not cut them out of the equation and lower OPEX?

        Good question.

        What is shocking about this video, to me as a former geologist, is that Silicone Valley isn't turning their massive resources towards automating the grunt work but instead they are targeting the education-intensive exploration process. A lot of geologists, geophysicists and reservoirs engineers could be made redundant depending on the success of this automation. Those were not the jobs that were "supposed" to get eliminated.

        Maybe that's the answer to your question above. Those are the 'smart' oil workers who are paid well, thus dumping them (you?) Will indeed make OPEX cheaper and turn them a larger profit.

        From a personal "the sky is falling perspective" it's mildly disappointing to see. The oilfield was one of the last industries outside of Silicone Valley and Finance that paid their employees well. With theae jobs on the cutting block its just another industry where all the money will flow straight to the useless shareholders and C-suite.

        Yeah I agree. This is a quite practical demonstration of automation being an important issue.

        2 votes
        1. Loire
          Link Parent
          It's a mindset and a culture that permeated throughout the industry and still does in some forms. Old school oilfield is really starnge to our modern sensibilities. You could start at the very...

          Wow. That's super interesting. Do you have any idea why the 'old guard' is the 'science-be-damned' type despite oil extraction being one of the most technically challenging and knowledge-heavy things to do in the last 200 years? I would expect someone working high up on big oil to be like a stereotype shareholder: really smart and informed but morally indifferent to nearly anything.

          It's a mindset and a culture that permeated throughout the industry and still does in some forms.

          Old school oilfield is really starnge to our modern sensibilities. You could start at the very bottom, no education, and with enough time and skill, make your way to the very top. A family member, straight out of highschool, started pushing a broom in a a wireline shop, helping out, learning the equipment. Eventually they started sending him to the field as an "operator", the grunts that manhandle the equipment in the field, then he was promoted to "engineer" (despite not actually being an engineer), the people that run the equipment and read the data then he was made a shop manager, then a district manager, then he was head of Canadian operations, then Mexico, then U.S., then he was global vice president Wireline Operations for one of the biggest oilfield service company in the world, essentially as high as he could go before entering the executive level. He never had more than his highschool diploma. And this is moderately common in that age group for the oilfield. A lot of the boomers and some older gen x-ers in management simply don't have an education.

          To be honest I don't know how they succeeded. Of course there we educated professionals in some segments, the highschool diploma obviously didn't develop the tool that measures thermal neutron moderation. But all in all they just figured it out through trial and error and became very good at their specific roles.

          That was the case up until the seventies. American oil reserves were fairly easy targets up until that point with minimal science required, at least compared to today. And then suddenly that wasn't the case. U.S. oil reserves begin a long 38 year decline. The easy oil was gone. New reserves weren't being located fast enough. "Peak Oil" became a very real risk. Two oil shocks in '73 and '79 threatened the western economies. American oil consumption was still growing rapidly. It was a crisis.

          So in comes science. Up to the 70's every well was basically vertical, any deviation was an accident. Now directional drilling, the process by which we can bend the wellbore to hit specific targets was the product of cooperation between mathematicians, engineers, and the old boy drillers who actually knew the work. Geologists and geophysicists were brought in to use their knowledge to model and predict new reservoirs. Mechanical engineers to develop knew pumping techniques to keep wells flowing longer. Companies like Schlumberger, Halliburton and Baker Hughes began expanding like crazy to offer all sorts of technical services. The science-be-damned types were working side with the science types but the oldschool oilfield mentality still dominated. This was the status quo beginning in the 80's and growing through to about 2008. Then the shale revolution changed the game again but that's a story that could be a post all of its own.

          The last ten years has seen the slow exodus of that old guard and the disintegration of that culture.

          Obviously I have to generalize a bit. You can't tell the history of a century old industry in a single post. Not every operations manager was uneducated or a science-be-damned type, but it's certainly a mindset that is/was prominent in the industry.

          6 votes
  2. [4]
    thundergolfer
    Link
    This video seemed astroturfed over on r/videos. There were a lot of shitty arguments about why this isn't a problem, like saying this is equivalent to Microsoft letting Shell employees run Windows...

    This video seemed astroturfed over on r/videos. There were a lot of shitty arguments about why this isn't a problem, like saying this is equivalent to Microsoft letting Shell employees run Windows on their laptops.

    The most annoying bad argument though was the "If X doesn't do bad thing, then someone else will, so it doesn't matter if X does bad thing." Infuriatingly dumb.

    5 votes
    1. [3]
      Loire
      Link Parent
      I can see part of the argument: Until consumption decreases the oil is going to come out of the ground one way or another, Silicone Valley's interference will just get it done with less man power....

      I can see part of the argument: Until consumption decreases the oil is going to come out of the ground one way or another, Silicone Valley's interference will just get it done with less man power.

      With that said you can't make your core values environmental sustainability and then simultaneously open up departments dedicated to the oil field.

      5 votes
      1. [2]
        thundergolfer
        Link Parent
        Consumption is inherently tied to the cost though. These companies are actively working to keep costs down, so are partly responsible for increased consumption.

        Consumption is inherently tied to the cost though. These companies are actively working to keep costs down, so are partly responsible for increased consumption.

        1 vote
        1. Loire
          Link Parent
          To a degree. Petroleum is fairly unique in that consumption doesn't change all that much with rising cost. It's not something people can really forgo as conscious consumers. Your daily commute...

          Consumption is inherently tied to the cost though.

          To a degree. Petroleum is fairly unique in that consumption doesn't change all that much with rising cost. It's not something people can really forgo as conscious consumers. Your daily commute doesn't change. Your heating requirements don't lessen. Your electrical requirements will remain the same. Other industries that are dependant on petroleum can't just cut back. Product still needs to get from point A to point B. DOW still needs to create X amount of some petrochemical, etc.

          That isn't to say consumption doesn't decrease at all, but consumption was still growing rapidly even when oil was above $100/bbl.

          2 votes