Integrated companies hitting on all cylinders

Dear friends,

I hope this letter finds you brimming with enthusiasm and joy about your current situation, and if not, I pray that it brings you some hope that better times are right ahead.

Between August 2017 and August 2018, U.S. crude oil production increased by 2.1 million barrels a day, the largest year-on-year increase in U.S. history. Not just volume, but also oil prices have risen and held since the recent nadir of $35-per-barrel pricing. Rig count is up. There are more refining, storage terminal, NGL and chemical plant expansion plans and grassroots projects on the books than I can ever remember.

Now, I don’t consider myself an old man, but I have been in the petroleum business since finishing school in 1991, and I know a little bit of history from both books and some of the men in my father-in-law’s generation from whom I’ve learned much. We are in an amazing season of prosperity for our industry. In the 2005 timeframe, I do recall upstream and downstream both being in an upcycle, but petrochemical manufacturing was in a downturn and losing ground fast in the U.S. Never before in our lifetime have the cycles of the exploration and production business, the transportation and storage business, the oil refining business and the chemical manufacturing business all been up at the same time.

I have attended over a dozen industrial association meetings, conferences and functions in the past six weeks, and it is tough to find someone whose business isn’t good. The biggest challenges our industries face are lack of manpower, training and capacity — big problems, yes, but consider the alternative, and you can consider these trials pure joy. There is currently no lack of market or price support for the products our industries produce, and the broad consensus by forecasters is that the picture will be rosy for several more years.

Not long before this article went to press, big oil companies reported their best financial quarter in four years. The majors have been racking up some multimillion- dollar profits and in some cases doubling them from last year. I’m delighted for them, and I say majors should be having record profits for two reasons.

First, these are integrated oil firms enjoying the fruits of the upswing in multiple industrial business cycles I described above. These integrated firms, to spread risk, have invested in an upstream exploration and production business, and downstream refining and petrochemical businesses, and perhaps some midstream pipeline, shipping and/ or terminaling businesses. Normally, one business is down and the other might be up. Profits are at record levels because all facets of the industry are hitting all cylinders. Good for them, I say.

Second, yes, we have seen amazing amounts of money being earned. What is also amazing is the size of these major corporations and the amounts of money they spend to earn a return on their investment. They risk billions of dollars on projects that, unfortunately, often come in over budget. Some projects have such a long lifecycle that the structural investment environment changes substantially mid-development, leading to loss. (Anyone remember the majors investing in LNG import terminals not so long ago?) Also, consider the average Q3 2018 return on investment for the energy industry is 7.43 percent (with a less than 6-percent average for the first nine months of 2018).* With this investment level and risk profile, that’s not an amazing number, is it? And this is on a record year, when all the stars are in alignment.

BIC is enjoying a record year as well. One reason, I think, is because we are an integrated energy publication. We reach decision makers in the upstream, midstream and downstream as well as in the power and construction industries. Most professionals in our business want and need news and information from all facets of the business, and we provide it. In the January issue of BIC, we feature interviews with American Society of Safety Professionals (ASSP) Executive Director Jennifer McNelly and President Rixio Medina, Covestro Senior Vice President and Baytown Industrial Park Site Manager Roderick Herrick, Blasch Precision Ceramics Vice President of Sales Jeff Bolebruch, Middough Inc. President and COO Carl Wendell, and USA DeBusk President Collin Leslie.

We also present a wide array of articles on topics important to your business, such as how industry can meet procurement challenges in an AWP environment, meeting increasingly stringent standards with LEFs, fuel and fleet lessons learned after a major hurricane, creating a successful turbine lube oil flushing program and using data analytics to enhance asset reliability.

Another reason BIC is doing well, I know, is because we have great people. I thank our dedicated team of professionals who bring BIC Magazine to you every issue and every day online, on schedule, without fail. I can brag that our team has a positive attitude, always upbeat and smiling; it always makes me feel good to be around them.

Our team members work hard and perform well. But beyond work product, a grander statement in life is how you make people feel. I’m proud to work with ladies and gentlemen who excel in that area also. In the long run, people won’t remember what you earned, sold, produced, processed or even what you said. We have to work hard, but people remember how you make them feel.

Yes, when you get older, the years seem to whiz right by. As good as times are now, times will change. So let us commit to enjoy the moment, but to put our hearts into things that are eternal, like love and kindness.

Thomas Brinsko

*ROI numbers from CSIMarket.com