INTERCULTURAL ISSUES IN THE UPSTREAM OIL & GAS
INDUSTRY
University of Warwick: November 15, 2012
Glen Burridge
NDB – New Digital Business Ltd
Structure of Presentation
1. Overview of Upstream Oil & Gas business
2. The Three-Way Intercultural Challenge
3. The Consequences
4. Possible Solutions
1. Overview of Upstream
Oil & Gas Business
The Upstream Oil & Gas Industry
2. The Three-Way Challenge
A. The NATIONAL Challenge
Algerian
Egyptian
Pakistani
Algerian-American
Living in US
British
Living in Hungary
7 Production Engineers
British
British
6Living
Reservoir
Engineers
in France
Living in Indonesia
7 Geologists
3 Managers
2 Geophysicists
2 Admin Support
2 Software Support
1 Petrophysicist
1 Data Manager
British
Living in Australia
British
American
Portuguese
Living in UK
B. The ORGANISATIONAL Challenge
Operating Company
P3
Partner 1
Operator
P2
Project 1
Consultants
P4
Advisors
Project 2
Service Co 1
Government
Contractor 2
Contractor 3
C6
C4
C5
……Contractors n
…………..…………Sub-Contractors x many n?
C. The TECHNICAL Challenge
People
Process
Technology
People
The Technical Challenge I - People
Process
• The Big Crew Change:
- Large number of highest experience staff to retire in coming decade
- Missing Generation of mid-career professionals
- Budding economic powers providing increasing share of workforce
- Steadily more gender-balanced professional workforce
• Knowledge Transfer:
- Professional operational status: 5+ years
- Project-specific expertise: 6 months+
- High degree of training, but poor mentoring of new staff
- Poor knowledge capture & transfer from experienced staff
• Geoscientists (“Geo’s) vs Engineers:
- Large-scale, 4D conceptually-driven thinking of geoscientists
- Focused, measurement & building-driven view of engineers
Technology
Engineer
Geologist
Geophysicists
So, an Engineer, a Geologist & Geophysicist are in a room with the Boss.
The Boss asks the Engineer “What’s 2+2?” The Engineer replies “4.0000″.
Then the Boss ask the Geologist the same question. The Geologist replies” Oh,
somewhere between 3 and 5″.
Finally, the Boss ask the Geophysicist the same question. The Geophysicist replies ” What
would you like it to be?”
Well Engineer
/ Driller
Production/Facilities
Engineer
Reservoir
Engineer
Geophysicist
Geologist
Petrophysicist
People
Process
Technology
The Technical Challenge II - Process
• Long, complex, projects with multiple partners & web of contractors:
- Differing perceptions of lines of command
- Matricial vs hierarchical decision-making structures
- Opposing motivations -> poor integration
- Vastly different psychological contracts (Handy, 1999)
• Project Governance:
- Nationalisation of JV projects often written into Production contracts
- Ability of host country to effectively manage resources
- Training and technology transfer aspects often poorly executed
- National identity strong in management, but workforce diverse
- Major disparities in remuneration, roles and expectations
- Mentality conflict of operational expediency vs project management
- Office-based vs Operations (off-shore vs on-shore)
Explore
Develop
“Cloud
Thinking”
Produce
Explore
Develop
Produce
Explore
Develop
Produce
People
The Technical Challenge III - Technology
Process
Technology
• Increasingly difficult targets:
- Geopolitical constraints
- No Elephants Left to Discover?
- Extreme physical environments (deeper water, arctic)
- Multitude of environmental considerations
- Rarely a “silver bullet” technology
• Unrelenting levels of:
- Heterogeneous technology development
- Complex infrastructure testing & deployment
- Potentially massive data overload (which patterns, trends important?)
- Residual risk and carried uncertainty (the subsurface is never “known”)
3. Consequences
Examples of 3-Way Cultural Challenges faced by Oil & Gas Managers:
•
Differences in interpretations / recommendations between local and expat subsurface staff:
Need to reconcile & select most appropriate fitting all necessary criteria
•
Critical Issue / Error / Risk Reporting:
Face, power-distance, individual vs collective responsibility
•
Goal Conflict:
Idiocentric Corporate multinational company goals vs Allocentric National
Polychronic perspective
•
Large project planning:
Point outcomes vs consensus building. Time perceptions. Delegation.
•
Roles & Responsibilities:
Power-Distance, Linear vs Circular decision-making, Matrix vs Hierarchy. Multiple projects
•
Uncertainty handling (sub-surface environment, external constraints etc)
Recognition, acknowledgement, assessment, consequence
THE INDIVIDUAL
National
Close-knit consultancy
Project Teams
Solo
work
Technical
Organisational
Western European
IOC (Integrated Oil & Gas
Company)
ORGANISATION 1
National
Yemen
Russian Arctic
North Sea
Technical
Organisational
Middle Eastern
NOC (National Oil & Gas
Company)
ORGANISATION 2
National
Russian Arctic
Yemen
North Sea
Organisational
Technical
Root Causes/ Failures of Macondo Well Explosion
Ref: US Chief Counsel’s Report to President
“As a result of a cascade of deeply flawed failure and signal analysis,
decision-making, communication, and organizational - managerial
processes, safety was compromised to point the blowout occurred with
catastrophic effects.”
Perhaps there is no clear-cut “evidence” that someone the organizations in
the Macondo well project made a conscious decision to put costs before
safety; nevertheless, that misses the point.
It is the underlying “unconscious mind” that governs the actions of
an organization and its personnel.
“Cultural influences that permeate an organization and an industry
and manifest in actions that either promote and nurture a high
reliability organization OR actions reflective of complacency,
excessive risk-taking and a loss of situational awareness.”
4. Possible Solutions
National
Understand
Cultural
Intelligence
Communicate
Organisational
Engage
Technical
Ref: E. Plum et al., 1998
What can be learnt by O&G from the world of aviation?
• Recognition of the importance of Human Factors
- Integral to aviation industry training and culture
- Established as primary factor in many incidents
- Cultural factors tackled head-on with safety justification
• High Reliability Organisation (HRO) foundations:
- Standard Operating Procedures (SOP’s)
- Checklisting
- Licensing
- Crew Resource Management (CRM)
- Command, Control, Communicate (C3)
• Promotion of Quality Assurance, Safety & Excellence
- Non-negotiable barriers
- Confidential Reporting
- Pro-active RCA (root-cause analysis)
- Accident Investigation
• High levels of accredited training all the way through an organisation
- Simulation, simulation, simulation…..
- Emulation of What If’s, Consequences, ….not just Deliverables
3-Way Cross-Cultural Management Requirements:
 Strong inherent understanding of and ability to distil:
- complexity
- risk
- uncertainty
- motivations
- consequences
 Ability to enforce, engage or drive (the “stick”):
- best practice goals
- learning from past mistakes
- non-negotiable thresholds
- 3-way cross-cultural awareness
- awareness into action (RACI)
 Encourage, steer and define (“the carrot”):
- context-sensitive communication
- multi-threaded, flexible management style
- knowledge transfer, management & sharing
- team-working as inter-cultural exercise
Q&A