Industry must fill talent gap for both today and tomorrow as it seeks long-term value creation
Petronas’ Jumasri Terimo: Petronas looks to school partnerships and upskilling programs, along with automation and integrated contracting strategies, to address key challenges
By Stephen Whitfield, Associate Editor
Jumasri Terimo is Head of Wells Technology and Technical Assurance at Petronas.
From your perspective at Petronas, what do you see as the biggest near-term challenges for the global drilling industry?
Currently, getting talents who are the right fit for our sector is a challenge. Learning from several years of downturns, the human capital resources in the drilling industry have generally been kept to a minimum level.
With the sudden increase in drilling activity we’ve seen, we have seen a need to find the right talents. The significant gap in the level of experience and expertise in talents today has impacted the overall quality of the services rendered, not only to Petronas but to other operators, as well.
We have to see what we can do to attract people with the right aptitude and skills to the industry.
Can you talk about what Petronas is doing to attract new talent?
We look at the education value chain and have built a talent pipeline right from universities, as well as technical and vocational education centers.
We create better access for youth to attain a quality education, especially in the areas where we operate, by investing in student sponsorship programs. Our signature initiative, the Petronas Education Scholarship Program, which started in 1975, has so far benefitted more than 37,000 students.
We have designed programs that meet industry requirements and global standards through Universiti Teknologi Petronas and Institut Teknologi Petroleum Petronas. These two institutions have proven to provide a conducive environment for the development of the next generation of talents, with state-of-the-art facilities, relevant and certified syllabi, as well as expert educators.
Petronas also provides various upskilling programs and structured training sessions to its entire workforce. For example, in upstream, we have a program called All-Rounded Drilling, where new graduates are exposed to classroom and on-the-job training sessions.
I think through efforts like these, we have been able to position Petronas as a desirable employer.
In 2021, Petronas announced its aspiration to achieve net-zero carbon emissions by 2050, and in 2022 you launched a green energy subsidiary, Gentari. How will climate-related goals impact your investments to drill traditional oil and gas wells in the next 2-5 years?
At Petronas, we intend to provide the world with the energy it needs today, with consideration for the climate goals of the Paris Agreement. We recognize that each country has its own energy access, affordability and security concerns that require a unique spectrum of solutions to address.
With a strong integrated energy portfolio, we are focused on delivering our core responsibilities while transforming to meet the energy needs of the future – in line with our aspiration to achieve net-zero carbon emissions by 2050.
Petronas will produce energy from its core portfolio and cleaner energy solutions as differentiated products that are aimed to be safe, reliable, cost optimized and emissions abated. Gentari, an independent entity focused on cleaner energy solutions, will capture opportunities in the energy transition alongside our core portfolio through lower-carbon solutions in three offerings – renewables, hydrogen and green mobility. That is our long-term goal.
Still, Petronas’ production is still expected to be largely from our core areas in the short- to mid-term period. As of 2018, 63% of Malaysia’s energy mix consists of oil and gas. This is a significant amount even in the future, despite the declining percentage of oil and gas in Malaysia’s future energy mix.
Given this high demand, our investments in drilling new oil and gas wells remain a focus. We are, however, looking to be more effective in how we operate and reduce our emissions in the traditional part of the business.
We are working collaboratively with our contractors to see how they can reduce emissions while working on our projects by optimizing our drilling days and improving our efficiency. This translates to lower fuel consumption while the projects are being carried out. This is in line with our efforts to be a low-carbon business at Petronas Upstream.
As we aspire to achieve net-zero carbon emissions by 2050, we are committed to pursue profitable and scalable growth for long-term value creation in cleaner energy development. We will see investments in new technologies to help with continuous operational improvement. We are also looking at innovative contracting strategies to help provide a sufficient and stable cash flow that will allow us to invest in growth.
Can you elaborate on those contracting strategies?
We have stepped away from the traditional model of paying our business partners based on unit price and managing the operation ourselves. The current model sees us bundling services together. We are trying out concepts where we share the risks with our business partners. We compensate them on a consolidated basis. By doing that, we are encouraging our business partners to make their services more efficient and cost-effective.
What are some challenges and benefits you’ve seen to this approach?
By consolidating the contracts, the service provider has a bigger volume, and it eases our ability to manage our operations.
A bundled, integrated contract, or consolidated deal, also provides better value for our business partners and us. Both parties would also share mitigation responsibilities.
On the other hand, when we integrate everything, the monetary value of each contract is huge. Therefore, if there is any performance issue with a business partner, the impact will also be significant. We continue to improve the industry’s health and lucrativeness for as many players as possible. This will allow everyone – be it operators, partners and service providers – to benefit from a robust ecosystem.
Going back to sustainability, what would you like to see drilling contractors do in the next two years to help Petronas reach its carbon reduction goals?
What’s important now is for Petronas, together with our service partners, to set the baselines and establish what we are monitoring and controlling. This is a collaborative effort. Our combined focus will be on driving long-term value creation through responsible investment while collectively reducing our environmental impact and carbon emissions.
As we are still transitioning to new technologies, we will be working together with our rig contractors on innovative features to help us progressively adopt decarbonization and emissions reduction compliance.
How will operators approach cost reductions in the next couple of years?
We really need to focus on improving our efficiency as a way to reduce our costs. The focus areas will be on digitalization, automation and remote operations. That’s how we can improve efficiency and reduce costs, and effectively get better project economics. For example, our Remote Operations Platform – piloted at Resak, offshore Terengganu – is expected to gain us a potential 30% OPEX reduction.
Most of the potential cost reductions and efficiency improvements for E&P projects will probably be captured in the design phase. Having said that, we can also achieve improvements during the drilling phase with the implementation of digitalization and automation.
One thing that we learned from the COVID-19 pandemic was that we don’t need to be in an office setting to be effective. That’s become a good thing for our business as we know we can operate our business remotely and travel less, reducing our carbon footprint in the process.
How have supply chain and inflation issues affected your drilling projects? How can companies effectively deal with these bottleneck and cost issues?
I think this is something that we can’t really control. We know that the pace of supply of equipment and materials is not as fast as we want, so we have to prioritize our projects.
Consolidation will help to stabilize the price even when supplies are low. By maintaining rigs for longer periods of time, drilling contractors can offer us more attractive rates and we can maintain the same crew. Longer-term contracts are good for business partners because they are able to plan ahead around their resources, equipment and personnel.
How can operators and drilling contractors continue to innovate on technology while both are maintaining capital discipline?
It is a symbiotic relationship. We need each other. The operator needs the drilling contractor to support our business, and vice versa. This is a win-win situation. Technology is continually evolving, and we must acknowledge that, as part of this maturation, there will be a trade-off in capital investment, given the volatility of the industry and the shift of fiscal focus over the last few years.
In the long term, it is crucial for us to pursue and deliver more innovation in the technology space. This will give us positive returns through process optimization, efficiency improvement and ensuring sustainability, among other things.
Petronas is committed to collaborating with our business partners to tackle challenges and advance the industry together. We believe that sharing resources among industry stakeholders will allow us to innovate and push ahead to achieve collective success. This is where advancing technologies together will help us arrive at new capabilities and, ultimately, reap the benefits together. That’s how we are going to evolve.
We cannot work in isolation. As the industry strives for cost optimization, contractors would need to adapt by maintaining good service at reasonable pricing and terms.
At the end of the day, we will be at the losing end if we don’t invest.
If you look specifically at well completions, what do you see as the biggest challenges and technology gaps in the industry today? What is Petronas focused on?
In Malaysia, we are looking at two areas: gas and depleted reservoirs. Our production is shifting into a more gaseous base. This means we are facing more challenges in designing wells with a higher grade of material for delivering gas.
Since 2017, the contamination reading of CO2 and H2S in our Malaysian production wells has increased from 3% to 10%. The challenges we face today range from choosing the right metallurgy, connection types and completion components.
The other challenge is in the sand production operation. We are working with our partners to optimize our completions sooner, while keeping well costs at a level where we can still yield economic value. DC