‘Why future investments in oil & gas projects will be in deep-water areas’
Daniel Alaigba is a versatile Facilities Engineer with over 13 years professional experience covering Project Construction Management, Operations Management, Business Planning and Business Analytics with one of the international oil and gas companies. In this interview with Ngozi Okpalakunne, he says while climate change has been a theme since the 1990s, the awareness of the impact is certainly amplified now with the euro zone fully embracing decarbonisation of their energy supply with very aggressive targets. He also talks on other issues. Excerpts:
The Coronavirus pandemic has left in its wake a lot of disruptions in all areas of human endeavour, including the oil and gas sector, what major disruptions has your industry witnessed because of the coronavirus pandemic and how is your industry recovering from these disruptions?
The world basically shut down in March and April 2020 and this led to near-zero fuel demand for global transportation resulting in a sharp drop in crude oil prices. In fact, there was a day where the crude oil price was negative during the pandemic. So, 2020 was a loss year across the entire oil and gas value chain. Globally, NOC and IOCs took steps to reduce both CAPEX and OPEX, by stopping major projects, laying off personnel, renegotiating contracts; so, there was really a lot of disruption.
Also, office workers and non-essential field personnel had to transition to working from home. Just before COVID-19 pandemic, the upstream industry had begun to embrace digital acceleration to increase efficiency and reduce costs, so the impact from working from home was minimal and, in some cases, resulted in cost savings such as reduced personnel travels, feeding, paper usage. Field personnel had to undergo quarantine per NCDC and DPR guidelines and test negative before going on field rotation, so more days spent in the field resulted in increased costs for the industry.
As the world opened back post pandemic, we began to see increase demand for crude oil and gas. Also, OPEC curtailment helped to manage the oversupply in the market, so oil price has risen steadily over the past one year. While prices have risen major IOCs and independents are still not going ahead to recommence major projects except for maintenance type and safety related projects due to the uncertainty in fossil fuels demand.
What is the future of the oil and gas sector post-Covid-19?
In the short-term meaning between 1 to 5 years from now, oil and gas will remain relevant and will continue to be the backbone of the global energy industry. While price will continue to remain challenged, the industry will continue to focus on cost reduction and opportunities to increase efficiency. I anticipate that some major IOCs will consolidate to survive and remain profitable for investors who currently want higher returns as against increasing future productions. In Nigeria we will see more local players taking up greater share of the industry as IOCs divest especially from the onshore assets.
There seems to be a shift globally from fossil fuels (hydrocarbon) to renewable or clean energy, which will no doubt cause some disruptions in the energy sector. In your opinion, how is the energy sector, and major oil and gas companies and producing nations responding to or preparing for this shift?
While climate change has been a theme since the 1990s, the awareness of the impact is certainly amplified now. The euro zone has fully embraced decarbonisation of their energy supply with very aggressive targets, China and India who are both major importers of fossil fuels are also aggressively investing billions of dollars in renewable energy supply. So, it appears that peak oil price and oil demand is already behind us. Historically, companies that do not embrace change get disrupted until they go into oblivion. Some IOCs are rebranding and restructuring their business to adapt to the shift to renewable energy. The responses varies as you move from Company A to Z. while some companies are completing shedding off all carbon assets with a focus on renewables, others prefer to mix things up, since oil and gas will continue to remain relevant although decreasingly so up till 2050. I think that Nigeria finally passed the PIB, which is now the PIA, in response to the global energy competition. If the enabling fiscal terms to attract investment for resource development are not in place, then value erosion will increase until the subsurface reserves have no value in future. It’s a pick and choose game for energy investors right now, and countries need to ensure that they can maximise production of their reserves to derive the maximum revenue before 2030.
Let us get to your profession now. As a Lead Construction Engineer, with the responsibility for leading construction management activities for the Crude Oil Export Project; what does your work entail?
My work starts with safety and ends with safety. There is saying in the industry that ‘we do the work safely or not at all, as there is always time to do it right’. So, I must ensure that the contractor has the appropriate processes, procedures, personnel, tools, and equipment to execute the work. Construction management is a field job, so you are on site with the contractor daily to ensure the work is being done according to client project specifications. The crude oil export project involves retrofitting crude oil export shipping pumps and replacement of an existing export pipeline. The work is both management and technical; you have got to manage people, cost, and logistics and interpret project technical specifications. I managed high risk work going on both onshore and offshore. The offshore scope involves a whole lot of subsea installation involving diving operations.
What is the most challenging project you have delivered? How did you feel after delivering such a project?
I was involved in the delivery of the Escravos Gas Gathering project, a 121km gas-gathering project. I went through the project from detailed engineering design, procurement and fabrication and offshore installation of the pipelines. Offshore pipeline installation can be quite challenging especially in brown field development when you do the subsea tie-in to existing gas pipelines and offshore platform modifications. This was a flares-out project, so I was happy to be part of the team that eliminated the flaring of a large volume of natural gas in the western Niger delta area of my employer’s operation.
You have worked in the oil and gas industry both in Nigeria and abroad for 13 years now. What has your experience been and what would you term your greatest achievement so far?
I am very fortunate to have worked for one of the largest energy companies in the world. I joined the company as a surface facilities engineer in 2008 and the first thing they did was to put us through a development training programme where we went through both classroom trainings and three work assignments within our first 5 years. So, between 2008 and 2014 I had worked in Lagos, Warri, offshore field locations and Houston TX, USA. I have primarily worked on major capital projects in engineering design, procurement, yard fabrication and site installation. I also worked in operations as a Terminal Engineer managing the gathering and processing of crude oil and gas to ensure export specifications are met. Due to my exceptional performance in my company, I also had exposure to the strategy and business planning department where I had the opportunity to work with other IOCs colleagues in an OPTS project to look at ways to reduce upstream costs and increase returns for both Nigeria and the IOCs. I consider this work as my biggest achievement because we were able to come up with a solution where surplus inventory could be traded. One of the challenges with major projects is waste of surplus materials costing billions of dollars, so a way to ensure efficiency by utilising these surplus materials was developed.
What would you remember as the biggest challenge you have ever faced in your career? How did you resolve them?
One of the biggest challenges my company faced was to get one of her new major projects running profitably and I was the management business analyst for this enterprise. Cost of operations was way too high, so I ran several economic analyses with different scenarios of sales prices, production and cost; we needed to challenge the enterprise to get on a path to profitability by looking for opportunities to produce reliably and reduce costs. I had to work with that enterprise to high-grade capital projects that ensured reliable production and led to lower operating costs within a 3-year period.
What is Facilities Engineering, how has it impacted production and delivery? What would you say is the future of facilities engineering and construction projects? How prepared are you for this future?
Facilities engineers are responsible for the design and development of surface facilities such as production platforms, FPSOs, Tanks, vessels, subsea installations, piping and pipelines for the gathering, processing, storage and export of crude oil and gas. The industry is very developed. Current focus is on simplification and standardisation of facilities design – to meet the minimum functional objectives in a cost-effective manner. Without surface facilities, there is no oil and gas production. The surface facilities engineers typically work with the subsurface team (petroleum and drilling) as well as the operations team to ensure oil and gas production.
Globally, future investments in new oil and gas projects will be in the deep-water areas where facility engineering will be required in the design and construction of large FPSOs and subsea facilities. Facility engineers will also be required to design systems to eliminate emissions (carbon capture projects) as the investment climate changes in favor of a lower carbon future.
Are you involved in any form of mentorship of young people/engineers, whether in Africa or abroad as a way of giving back to society? What is the focus of this mentoring programme, if there is such, and how is it structured?
I have held supervisory positions in my company, where I had to mentor my direct reports in project management. I also came up with an initiative to have my group, recruit NYSC and ONDs for one-year internship and we trained this guys in asset integrity management at that time and exposed them to offshore crude oil and gas facilities processing. My company had a structured process for interns and as the Terminal Engineer I coordinated the field experience training for NYSC interns.
What’s your family life like? We know it could be quite a bit of a challenge for people in your profession, especially when you must be on a project for a long time?
I have a great family. I am blessed to have married the daughter of the Bishop Charles Ighele, a renowned marriage and family TV minister and general overseer of the Holy Spirit Mission Church. My wife is very accommodating; she has maintained a flexible job since we got married in 2010 ensuring that our children always had a very loving and caring parent to be with them whenever I was away. I make up for lost time with my wife and children when I am on time off work by spending quality time and taking them on road trips.
How rewarding is your job, given the risks involved?
Apart from the financial compensation package, which is one of the best in Nigeria, working in the oil and gas industry, has enabled me to acquire project management, operations management and business planning and leadership skills that I can apply in any other endeavor in future.
How do you relax, when you are not thinking of field, technical and support functions in oilfield operations?
I am a soccer enthusiast; I relax by watching soccer. You know my parents were very conservative Christians, so we did not have TV. The first TV my mum bought was after I had gone out by 1:00am in the night to my neighbor’s house to watch one of the Super Eagles matches being played, I think in Japan.
What would be your advice to aspiring and early career Facilities Engineers?
I would advise students and early career engineers to focus on understanding the technical disciplines – understand engineering design, technical drawings, code, and standards and utilise their internship opportunities to gain field experience before transitioning to project management type roles. This is necessary to ensure that the engineer scan design and build projects that can be operated safely and meet the design operational intent without costly rework.