Exploration First: Lessons from 38 Years in Oil and Gas

The mission is the purpose that justifies a company's reason for being, the vision is the objective it aspires to achieve, and values ​​are the ethical principles that will guide its activity. If a company is dedicated to finding and exploiting hydrocarbons, exploration should be the main and a preponderant task. Proper organization must be ensured to achieve the reserves restoration within a reasonable time frame, knowing that hydrocarbons are a non-renewable resource, and therefore exploitation must be optimized to achieve the greatest possible wealth generation. Being a risky business, business models must be updated periodically as more information is obtained about potential unexploited reserves in the subsurface — and even undiscovered ones, if possible. The useful life of current and future reservoirs must be considered to make the best decisions and better risk administration. Additionally, since hydrocarbons are strategic for each country's energy autonomy and a platform for catapulting a potential energy transition, it is important to have well-balanced companies and give real weight to information.

From my perspective, with over 38 years in the hydrocarbon exploration business at a national oil company, human resource management, effective communication, political decisions, and misunderstood leadership are factors that have always represented important areas of opportunity.

In the 1980s, the bulk of technical staff was hired through a union, and promotions were not based on talent, skills, or attitude, but rather on seniority, making staff incentivization very difficult. Information permeated through the command chains, so a great deal of information was not discussed with the team, limiting real understanding of the situation and the possible range of solutions that could be considered. In many cases, the boss was the one who decided the path to follow, often without the consensus of the team. Instructions repeatedly came from the current political establishment, and in times of prosperity, the consequences of those instructions were not evident in the short term.

In the 1990s, the hiring of technical staff shifted to being done directly by the company, and personnel at all levels were hired, bringing in personnel trained in private companies, with different ways of working and a different vision as well. An individual performance evaluation system was established, which was highly biased and, apparently, for HR, was binary (either comply or fail), with consequences seen only in the penalty for non-compliance. Communication permeated more among work teams, and decisions were more consensual, but always biased by the boss's opinion. The country’s six-year presidential term and policy continued to be a burden on medium- and long-term objectives, as they constantly changed with the six-year term, and organizational structures came and went. However, something important to highlight was the presentation of a project to generate a comprehensive exploration and production database. This revolutionary project, presented in the early 1990s, was unauthorized and restricted only to seismic data, which is currently the best-organized information a company has.

In 2000, with deepwater exploration in the Gulf of Mexico, well log databases were consolidated. However, this was not a management effort, resulting in isolated and disconnected databases (or rather, information repositories). The resulting lack of personalized repositories and less complicated access to information led to a proliferation of personnel training, with very weak career plans, no standardized definition of job profiles, and a tremendous waste of personnel skills with completed training. The political decision to invest large amounts of money in areas as large as the Gulf of Mexico, where the lack of production infrastructure exists, seems overly aggressive and unbalanced, from my perspective. All of this, coupled with the Energy Reform, where there was no gradual transition to allow for investment readjustment in the blocks granted in the zero round, caused confusion and the acquisition of information delivered to the regulatory entity without having the benefit of that information.

From 2020 to date, a severe disconnect has emerged between information technology (IT), skills development, and training teams, and exploration and production entities. IT assumes the company's mission is to manage IT resources and cybersecurity, regardless of the requirements of exploration and production and the company's other entities. The training and skills development team assumes the company's role is to train personnel without a specific career plan or properly established job profiles. Additionally, it assumes the sanction of contracts that, from its perspective, do not contribute to meeting the goals of restoring reserves and increasing hydrocarbon production. This is due to a complete lack of knowledge of the real requirements of exploration and production teams. 

From the above, if we consider that exploration is the trigger for the entire hydrocarbon business, and based on the experience accumulated over 38 years, from my very particular perspective, daily operations could be facilitated if we understand that all efforts should be focused on discovering new hydrocarbon deposits and their rational and optimized exploitation, any effort by any entity that is part of the company that does not contribute to this purpose should be reconsidered. Of great importance is to organize all the information in a central database, including an energy sector database organized in such a way that machine learning and artificial intelligence algorithms allow the generation of models in real time, and even more so that it allows risk management by generating models that allow optimized decision-making.