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30 Oil and Gas Interview Questions and Answers

On this page, you will find the most common technical oil and gas interview questions.

We will skip over basic questions such as “Tell me about yourself?” or “Why should we hire you and not someone else” and instead will focus on more specific questions directly related to the oil and gas industry.

Whether you are a recent graduate or an experienced professional, by familiarizing yourself with these questions and answers, you will be able to make sure your interview goes as smoothly as possible.

In addition to questions that we will discuss today, depending on the position you are applying you may also be asked questions about specific operating systems, software, or hardware used in your role.

Questions may also focus on safety procedures and regulations, production processes, project management skills, and more.

Related: Working for Oil and Gas Operator vs Oilfield Service Company

Oil and Gas Interview Questions and Answers

1. what is the difference between upstream, midstream, and downstream oil and gas sectors.

• Upstream deals with the exploration and production of hydrocarbons
• Midstream deals with the transportation and storage
• Downstream deals with the refining of crude oil

2. What is the difference between sour and sweet crude oil?

Sour crude contains hydrogen sulfide (H2S) while sweet oil doesn’t. Usually, oil with H2S content above 0.5% is considered to be sour.

3. What are some examples of enhanced oil recovery (EOR)?

Thermal recovery – for example, steam injection in SAGD

Chemical flooding – injecting surfactants or polymers to decrease surface tension

Gas injection – using natural gas or carbon dioxide to lower the viscosity of the oil and increase its mobility

Microbial injection – using bacteria to increase production efficiency

4. What are the most popular artificial lift methods?

Sucker rod pump – downhole plunger is used to displace oil to the surface. The surface engine provides energy to the rod attached to the plunger.

Gas lift – this method involves pumping compressed gas to decrease hydrostatic pressure in the well and allow hydrocarbons to flow more easily to the surface.

An electric submersible pump (ESP) – is a downhole centrifugal pump powered by electricity from the surface and usually used on higher-rate wells.

Hydraulic pump – this method works by pumping pressurized fluid from the surface to supply energy to the pump downhole.

Progressive cavity pump (PCP) – downhole stator and rotor create a cavity that draws oil to the surface. The engine is located at the surface and the mechanical force is transferred by a rotating rod.

5. What is the composition of crude oil?

• Paraffins/Alkanes ( ~25%) –
• Naphthenes/Cycloalkanes (~45%)
• Aromatics (20%)

Related: 30 Short Examples of Oil and Gas Resume Objectives

6. What are some of the properties used to describe reservoir rock?

Porosity – the amount of void space available in the rock between the rock particles in comparison to the total volume of the rock.

Permeability – describes how easily the fluids can flow through the rock.

Rock Compressibility – describes how the rock volume is affected by changes in pressure.

Fluid Saturation – the volume of a particular fluid in comparison to the total pore volume.

Wettability – describes how the fluids behave on the surface of the rock.

7. What is the API gravity of crude oil and how it is calculated?

API stands for American Petroleum Institute and it is used to demonstrate how the density of crude oil compares to the density of water.

API Gravity = (141.5/SG) -131.5

Specific Gravity (SG) = density of oil/density of water

8. What are the casing and cementing?

Casing involves running a steel pipe into the well to prevent hole collapse, allow more well control, and isolate high and low-pressure zones.

Cementing involves filling the space between the casing pipe and the walls of the drilled hole with cement to stabilize the wellbore and prevent the formation fluids from contaminating groundwater.

9. What are the 3 types of reservoir recovery?

• Primary – conventional oil recovery driven by reservoir pressure
• Secondary – injecting water or gas to increase reservoir pressure and push hydrocarbons toward the producing well
• Tertiary (Enhanced Oil Recovery) – injecting chemicals or increasing reservoir temperature to decrease oil viscosity and increase sweeping efficiency

10. What is the difference between enhanced oil recovery and hydraulic fracturing?

Hydraulic fracturing is usually done right after the well is drilled and is used to create fractures in tight formations such as shale to create additional pathways for hydrocarbons to flow toward the wellbore.

Enhanced oil recovery on the other hand is usually performed on older wells by injecting chemicals or increasing temperature to change the oil properties and make it more mobile.

Related: What do Production Engineers do in the Oil and Gas Industry?

11. What is gas flaring and why it is performed?

Gas flaring is burning natural gas released during oil extraction or refining processes. It is performed to dispose of small volumes of unwanted natural gas that cannot be economically shipped to the refinery or used on location.

12. What are the main factors affecting oil prices?

• Production costs – how much it costs to get the oil out of the ground
• Transportation costs – the price of oil depends on where the oil is located and how easy it is to get it to the consumer
• Type of oil – sweet lighter oil will be sold at a premium in comparison to heavier sour oil
• Supply and demand – high demand and low supply will drive the price of oil up
• M arket speculation – fears and rumors can move the price of oil in both directions

13. What is pipeline pigging?

Pipeline pigging is the process of using a pig to inspect, clean or repair a pipeline. The pigs are usually pushed down the pipeline by the energy of the fluid flowing through the pipeline.

Pigs come in various shapes and sizes depending on the job requirements but in most cases, they have cylindrical shapes. They are made of soft, durable materials such as rubber, plastic, or foam.

14. How is natural gas formed?

Natural gas is formed deep underground from the decomposition of organic matter such as dead plants and animals.

It is a very slow process and it takes millions of years for natural gas to form this way because organic matter needs to be buried and slowly pushed deeper and deeper underground until the right conditions are met.

There under high temperatures and pressure, this organic matter is slowly converted into natural gas.

15. What are some examples of how natural gas is used?

• Cooking food
• Heating water
• Generating electricity
• Transportation
• Chemical synthesis
• Welding metals
• Making fertilizers
• Hydrogen generation

Related: 6 Oil and Gas Cover Letter Examples for Fresh Graduates

16. What is coal bed methane?

Coal bed methane or CBM is a natural gas trapped in underground coal deposits. Methane is either trapped as free gas, dissolved in water, or adsorbed into coal.

17. What are some examples of well logging and why it is performed?

Gamma-ray logging – used to detect natural radiation emitted by the formation. This can be used to distinguish between different reservoir rocks and determine reservoir thickness

Sonic logging – used to measure how fast the sound travels through the formation. This can be used to calculate porosity and the type of rocks in the formation.

Spontaneous potential logging – used to determine the porosity of the formation.

Caliper logging – used to measure the size of the hole.

Resistivity logging – performed to determine the resistivity of the formation rock.

Density logging – used in determining the porosity of the formation.

Neutron logging – performed by emitting neutrons from the tool and then determining how they interact with a formation.

18. What is MWD?

Measurement while drilling (MWD) is used to get real-time information about wellbore trajectory as well as other downhole data.

This data is sent via pressure pulses to the surface where it is received by surface transducers.

19. What are methane gas hydrates?

Methane gas hydrates are formed when methane is combined with water at low temperatures and high pressure. The methane molecules don’t chemically react with water to create gas hydrates but instead are bonded to the water with hydrogen bonds.

After gas hydrate is formed it can stay relatively stable even at temperatures above freezing point.

20. What is H2S and why it is so dangerous?

Hydrogen sulfide is a colorless toxic gas that smells like rotten eggs at low concentrations (0.1 ppm). It is highly toxic and can be lethal even in small quantities (>500 ppm), making it extremely dangerous. It acts by paralyzing the respiratory system.

H2S is also a very flammable gas and can damage metals by allowing hydrogen to diffuse into the metal and making it weaker and easier to break.

Read: Working In the Oilfield | Requirements, Entry Level Jobs and Work Conditions

21. What are the main ways to transport crude oil?

• Oil Tankers

22. What Is the difference between Brent and WTI crude oil?

WTI is a light sweet crude oil that comes from the oilfields in the US and is stored at Cushing, Oklahoma

Brent is a bit heavier and slightly sourer and comes from various fields in the North Sea

23. What are some examples of how oil is extracted from the oil sands?

Surface mining – is done by using large trucks that load oil sand and transport it to facilities where it undergoes processing to separate the oil from sand by heating it up with water.

Steam Assisted Gravity Drainage (SAGD) – an in-situ oil sand recovery method that involves drilling two wells just a few meters apart from each other. One of the wells is used for steam injection and the other one is for oil production.

Cold Heavy Oil Production With Sand (CHOPS) – this method is similar to conventional horizontal well drilling operations with the only difference being that sand filters are not installed and sand is allowed to flow into the wellbore along with heavy oil.

Cyclic Steam Stimulation (CSS) – steam is injected into the well for a long period of time to heat up the formation. After the steam injection is stopped, the well is put on production.

Vapor Extraction (VAPEX) – similar to SAGD but instead of steam various solvents, and liquid natural gas are injected into the upper well to dissolve bitumen and allow it to flow into the lower well.

24. What are the 3 types of permeability?

Absolute permeability – describes how a single fluid flows through the reservoir rock. This assumes that there is only one type of fluid in the reservoir.

Effective permeability – describes the flow of a particular fluid in the rock when there is another fluid present. For example, describing how oil flows through the rock when there are both oil and water in the reservoir.

Relative permeability – describes the ratio between effective permeability and absolute permeability.

25. What are some examples of chemicals used in hydraulic fracturing?

Friction reducers – used to lower the pumping pressures

Gelling agents – used to increase the viscosity of the fracturing fluid to improve its sand-carrying capacity.

Breakers – used to break down the gel and prevent formation damage

Biocides – used to get rid of the bacteria in the fracturing fluid that can potentially create unwanted by-products like H2S and damage the formation and equipment.

Non-emulsifiers – help to prevent emulsion between frac and formation fluids

Acids – pumped before the frac to prepare the perforations and formation for the frac

Don’t miss: Cover Letter Examples for Drilling, Production, Reservoir, and Completion Engineers

26. What is LNG?

LNG is a natural gas (methane) that is compressed and cooled to transform it into a liquid form. By compressing natural gas its volume can be decreased by up to 600 times.

27. What is Hydraulic Fracturing?

Fracturing basically means creating small pathways in the formation that allow hydrocarbons like oil and gas to flow more easily into the wellbore.

This is achieved by injecting large volumes of fluid and sand under pressure into the formation to break the rock and create high permeability fractures. Fracturing is often performed in tight formations such as shale that have extremely low permeability.

28. What is the purpose of an oil refinery?

Oil refineries are used to process crude oil into useful products like fuel, lubricants, and petrochemicals. The refining process includes various methods such as fractional distillation, hydro-treating, and catalytic cracking.

29. What are OPEC and OPEC+?

OPEC stands for the Organization of the Petroleum Exporting Countries, a cartel of 13 nations that control significant portions of global crude oil production. OPEC+ is a union of OPEC and non-OPEC countries such as Russia and Mexico, that work together to manage global crude oil supply and control prices.

30. What is a blowout preventer?

A blowout preventer (BOP) is a safety device used to prevent an uncontrolled release of hydrocarbons during drilling and intervention operations. Most BOPs usually have metal-type rams that either seal around the pipe in the well or cut it and hold it in place until it can be safely removed after the well is under control.

Four most common types of rams used:

Pipe Rams – seal around the pipe preventing the well fluids from coming to the surface.

Blind Rams – seal the wellbore when there is no pipe in the well.

Shear Rams – cut through the pipe and fully seal the wellbore.

Slip Rams – prevent the pipe from falling into the well or being pushed upward by the well pressure.

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McKinsey Digital / BCG Platinion: Oil & Gas Upstream Technology

This is an interviewer-led case based on a real-life project . This case could be seen across a range of consultancies and is well-suited to test candidates aiming for more operations and technology-based roles (I.e. BCG Platinion, McKinsey Digital , etc).

The case involves IT process improvements as well as an  efficient resource (employee) re-allocation/re-organization .

Do not attempt this case if you are applying for a generalist role.

====================================================

Scoring Criteria: Use the following grading system for each skill area:

a. Structured Thinking (Frameworking): 

1 = Lacked a coherent structure 

5 = Pinpointed the appropriate issue, segmented it into a complete set of non-overlapping components (e.g., MECE), presented a plan to tackle the case, and offered valuable insights.

b. Numeracy/Math:  

1 = Committed numerous errors and required assistance in setting up equations

5 = Performed calculations accurately and with confidence, identified implications, designed a clear and efficient approach, and demonstrated exceptional speed.

c. Judgement and Insights (Charts & Exhibits): 1 = Missed basic insights 5 = Connected findings to develop practical recommendations, made reasonable hypotheses, shared impressive insights, and flagged far-reaching implications. 1 = Overlooked fundamental insights

5 = Linked observations to devise actionable recommendations, formulated plausible hypotheses, conveyed strong, objective-driven insights, and highlighted impact.

d. Case Leadership (unless interviewer-led): 

1 = Frequently disoriented and dependent on guidance

5 = Advanced autonomously and maintained focus on the question and the client's objective.

e. Creativity:  

1 = Had difficulty generating original ideas

5 = Offered a variety of strong and diverse ideas, tailored to the industry and business context.

f. Presence: 

1 = Not client-ready

5 = Exhibited professionalism, charisma, enthusiasm, and self-assurance.

g. Communication:  

1 = Unclear and disorganized

5 = Demonstrated active listening, spoke precisely, and communicated concisely.

h. Synthesis (Final Recommendation): 

1 = Failed to provide a coherent and well-founded recommendation 

5 = Justified recommendation with key considerations, potential risks, and subsequent steps to address those risks.

During the Interview: As the candidate progresses through the case, take notes on their performance in each skill area. Be prepared to provide feedback at the end of the interview.

Post-Interview: After the interview, grade the candidate's performance in each skill area based on your notes and the scoring criteria. Share the scores and any specific feedback with the candidate to help them understand their level of readiness for the actual interview.

Improvement: Encourage the candidate to focus on areas where their performance was weak and provide guidance on how they can improve in those areas. 

Case Prompt

[PLEASE NOTE: This is a technically difficult case and should only be completed by those coming in as a Technology specialist, i.e. recruiting for McKinsey Digital, BCG Platinion, etc.]

Our client is a multinational oil and gas company. While they are vertically integrated and have upstream, midstream, and downstream divisions, they have recently been experiencing competitivity issues in the upstream gas division , which brings in $1B in profits annually .

Our client’s upstream division has offices in Australia and Indonesia . Their work is highly dependent on their IT systems , as they have to constantly monitor wells and pipes (pressure, hydrocarbon count, fluid makeup, etc.)

The upstream division has two large legacies of IT systems that are primarily used for downstream operations but have been modified for upstream purposes.

These systems are managed by a central team in the US which is responsible for all IT issues across the business. They triage issues/enhancements and then manage development teams in India and Finland who complete the work.

Overview of all exhibits

I. Process Improvement - Part 1: Understanding Competitivity Issues

An important part of the case is that the interviewee must understand what is meant by “competitivity issues”.

In the client’s case, unit costs are quite high and their workers are not getting things done as quickly as competitors . This means the client has to hire many employees and pay a lot of contracting hours to do twice as much as other firms. The competitivity issues do not involve loss of clients, but rather process inefficiencies.

The root cause is that our client’s processes and supporting systems, such as software and technology, are very complex and old by industry standards.

A good candidate should recognize the following:

• It’s likely problematic that a system designed and intended for one part of the business has been converted – it is likely, not fit for purpose
• There are likely significant inefficiencies from the separation of users and managers of this IT system (i.e. users in the Pacific, and managers in the US)
• There are also likely added inefficiencies from the separation of developers (India and Finland)

I. Process Improvement - Part 2: Understanding the Process

Note for interviewer.

If the candidate asks about the process for raising/resolving issues/enhancements to the IT systems , you may state the following:

Like any IT system, these two systems are supported by an IT department. Users of the system submit issues and change requests and look to the IT department to resolve them.

The current process is as follows: any office would submit change requests into a central system, which is then prioritized and organized by US-based IT business analysts. These tickets then go to India for development, then back to the US analysts for testing, then back to the office that originally submitted the ticket for acceptance testing.

• This entire process takes about 8 weeks
• All of these change requests are submitted through an IT system and handled in an excel document

The candidate should note some of the following:

• 8 weeks is far too long to resolve issues – an Agile process would take 2-3 weeks
• This process is very lengthy and clearly has too many hand-offs , increasing both delays and the likelihood of poor solutions
• The US probably does not have the best idea as to which enhancements/changes are actually the most important, as they’re not close to our client’s needs – the work is outsourced to them
• The US office is likely a chokepoint with a lot of delays as they have competing priorities from across the companies
• The client is split across three different time zones , so any communications or clarifications generally add an extra day
• Excel is a poor method for handling IT tickets – there are numerous issues in regards to change tracking, simultaneous access, reporting, and management

I. Process Improvement - Part 3: Solutions

Prompt the candidate to suggest solutions.

The candidate should recommend any of the following:

• The client could look into replacing the current IT systems (with upstream-specific ones)
• The client should invest in a ticket management/tracking system such a Jira or ServiceNow
• Processes should be streamlined so that the US as a middleman is cut
• Required resources could be brought onshore to Indonesia/Australia
• It’s odd that testing goes back to the US, it should be done in India in parallel with development or by the office that raised the issue/enhancement

II. Colocation

Provide the candidate with Exhibit 1 .

Exhibit 1 lists where our client’s employees are, and the percent of upstream business operations attributed to each office . IT resources are currently located in the US (Business analysts) as well as Finland and India (Developers). If the candidate needs clarification, you can tell them that, if IT resources were co-located, we would increase that location’s business operation profits by 10%.

The candidate should calculate the business impact of co-location in Australia and Indonesia respectively.

If they don’t opt to do this, prompt them.

Provide the candidate with Exhibit 2 .

The candidate should run with the hypothesis that all resources should be co-located in Australia , given the huge impact to the business’ bottom line. Encourage this thinking.

The candidate should note that there is an annual co-location benefit of $80 million for Australia and $20M for Indonesia. A good candidate would then want to consider the cost of re-location (in terms of paying workers potentially higher salaries, moving costs, etc.)

Exhibit 2 provides a breakdown of where the client’s IT employees are currently located as well as their salaries (we can assume these are the primary costs to consider).

The candidate should opt to calculate the existing costs of the current system, as well as the costs of the newly proposed system. (A good candidate will realize that only half of the current # of developers are needed to replace the India contingent, given they are 50% as productive.)

Current Cost Calculations

Future Cost Calculations

Net colocation benefit

The candidate should take the calculated difference of current vs. new locations (-$13.75M) and subtract it against the colocation benefits of $80M to determine that the net colocation benefit is $66.25 million.

III. Conclusion

Recommendation

The candidate should come to the conclusion that the client needs to colocate the business analysts and developers in Australia. While this will cost $13.75M more in added employee wages, there will be a colocation bonus of $80 million, resulting in a $66.25 million net benefit.

There are risks in the client’s ability to find qualified employees in Australia and to effectively conduct knowledge transfer. In particular, there are risks that the transition period would be both long and difficult.

The client should gain a better understanding of the Australian IT market to determine if the required skillsets exist. They should evaluate whether hiring locally or bringing in offshore developers is a better approach. Additionally, they should prepare a transition plan that ensures a smooth handover in both system knowledge and business processes.

Format and content scope of BCG Platinion technical case

Future profit calculation question, adkar model.

A highly coveted model for change management, it underscores the reality that changes can only prosper when employees actively engage in them.

Public Value Strategic Triangle

The Strategic Public Value Triangle is a conceptual framework developed by Prof. Mark H. Moore to guide public managers in creating public value.

The Cynefin Framework

The Cynefin Framework offers a model to make sense of different problem domains and determine approaches based on their level of complexity and uncertainty.

Herzbergs 2-Factor Theory

Herzbergs 2-factor-theory, also known as the two-factor theory or motivation-hygiene theory, was developed in the 1950s by Frederick Herzberg.

Kotter Change Management Model

The 8-Step Model serves as a roadmap to guide organizations through change initiatives. Learn about each step and how it can help to transform your business.

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From Oil & Gas Investment Banking to Energy Hedge Fund: How to Make the Leap and Dominate Your Case Studies

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So, what does it really take to dominate case studies and stock pitches in hedge fund interviews?

And how can you move from a specific industry group in investment banking (oil & gas) to a hedge fund or private equity firm with a similar focus?

The answer, as it turns out, is “Modeling out ultra-deep water contracts on a ship-by-ship basis and taking into account multiple scenarios for revenue, expenses, and utilization rates.”

And if you have no idea what that sentence means but want to move to an industry-specific fund, it’s a good thing you’ve stumbled across this article.

Here’s what we’re going to cover in this in-depth interview:

• What it’s like working in an oil & gas investment banking group , and what types of deals you’ll be working on.
• How easy or difficult it is to move into private equity firms or hedge funds afterward, coming from a specialized background .
• The real way to tackle case studies, and the top mistakes to avoid – and why you never hear other people mention this part.
• What it’s like working at an energy-focused hedge fund and how it compares to banking.

Banker Begins: The Origin Story

Q: Let’s get started with your “origin story,” since it’s an interesting one.

A: Sure. I came from more of a “mixed” background than other people, and had worked full-time at a Big 4 firm (in restructuring / distressed M&A) and had completed a few internships before that.

So I was not coming into oil & gas investment banking as a bright-eyed and eager undergraduate or MBA student.

I was a lateral hire and joined the energy team of a top bulge bracket bank, originally planning to transition over to the industrials group since I didn’t want to focus on such a specialized sector.

Q: But seeing as how you stayed in the group and then moved to the energy fund, I’m guessing that you changed your mind?

A: Yeah, pretty much. It turned out that I actually enjoyed the work and got a lot more exposure to modeling and deals than other people on my team.

Originally, they were planning to put me on oilfield services deals and work with companies there – but that was shifted around and I ended up working mostly with exploration & production (E&P) companies instead and doing a lot of M&A deals, while other people on the team focused on capital markets deals .

If you’re not familiar with the industry, E&P companies are the most “different” since you use completely different metrics and valuation methodologies (NAV) when analyzing them , whereas oilfield services companies and a few others are closer to “normal” companies.

I also got to travel a lot as a result of all these deals, and that was a great experience as well.

Q: So I just heard you say a lot of positive things about your experience in this group.

I’m disappointed that you didn’t have a crazy VP or MD who forced you out… do you really have no dramatic stories?

A: Hah, funny that you mention that. I didn’t see anything quite as dramatic as a VP punching his fist through a car door window, but the office politics got to me after a while.

In banking, you always get penalized for saying that someone sucks or isn’t good at their job – and if you piss off the wrong people, you’re in trouble regardless of how much you contribute.

They like to claim that they punish you because you’re not a “team player,” but here’s what really happens:

• They hire people who don’t know what they’re doing , in the interest of “paying back favors” or “bringing a greater perspective” to the team or things like that…
• And then, those people turn out to be horrible at doing the job.
• And then when you bring up their poor performance, you get penalized.

So that’s why I decided to start exploring “strategic alternatives” – I liked the work itself and the industry focus, but couldn’t deal with the politics.

Whither the Buy-Side?

Q: So how did you go about recruiting for buy-side roles once you decided that you were set on moving in that direction?

A: I interviewed very sparingly, for a couple reasons:

• I didn’t want to just hop somewhere else for the sake of moving somewhere else – for the same reason that you have to be careful of the “rebound” phase right after a relationship ends. Yes, it might feel good at the time, but in the long-term it’s not great for you.
• I was only interested in fairly large energy-focused PE firms and hedge funds, and only in very specific sectors within those.
• I didn’t want word to get out that I was thinking of moving elsewhere.

Several headhunters actually reached out to me, and I just focused on opportunities that they presented.

This wouldn’t work as well if you’re at a middle-market or regional boutique bank and you don’t have as much visibility with headhunters – you’d have to be more proactive.

Q: That all makes a lot of sense, but I want to circle back to one of the points you raised about energy-specific funds…

I was under the impression that there aren’t too many PE firms and hedge funds that focus on investing in E&P companies due to commodity price volatility. Is that not the case?

A: That’s not entirely true. It is true that traditional leveraged buyouts are less common in the space for the reasons you mentioned: if oil or gas prices plunge, your returns could be obliterated.

But there are energy teams at the biggest private equity firms and hedge funds , and there are even a few large firms that are dedicated to energy:

• Riverstone – $22 billion fund focused on energy and power
• First Reserve – $23 billion PE fund focused on energy and infrastructure
• EnCap – $18 billion PE fund focused on the oil & gas sector

And the list goes on. So they’re out there, but you’re right that traditional LBOs are less common.

Q: So if traditional buyouts are less common, how exactly do these types of firms invest?

A: Their strategy is basically “Acquire lots of acreage and resources, and then resell them to other companies once these resources have proven somewhat viable.”

So they might acquire a piece of land, drill enough to get energy production to the level where it’s good enough to sell, and then go and sell the asset to a diversified energy company like Exxon-Mobil or an E&P-focused company.

Asset sales and divestitures are extremely common in the energy sector because it’s very expensive and time-consuming to actually go out and find new resources yourself – so acquiring reserves that have already been proven to some extent tends to be more cost-effective.

There are several firms that have become well-known for this style of investing, including Cordillera Energy Partners (1-3).

Other examples include HK (Petrohawk and now Halcon Resources) and Oasis.

Q: Great, thanks for explaining that one.

Everything you’re describing here sounds very specialized – do you think it’s harder to move to a generalist role on the buy-side after working in an oil & gas banking group?

A: Yes, it’s harder to move to a generalist role, but it can be done. My group, for example, had guys who moved to the Carlyle tech team, the TPG generalist team, and the Fortress generalist team.

But I think it’s much harder to move from a generalist role into an energy role than to do the reverse – there’s a lot of specialized lingo and modeling and valuation are very different, so you really need to know your stuff to work in this industry.

Q: Thanks for clarifying that.

I know you’ve also been through our Oil & Gas Modeling course – after working in the field for a few years now, would you say that it’s actually accurate / helpful?

A: Definitely, it’s great if you’re new to the field and need a crash course on how energy is different.

There are some things I would do differently – for example, typically you build a Net Asset Value (NAV) model for a company first , and then create the financial statements based on that.

You might also create a NAV for each individual asset a company owns, but obviously you can’t do that if the company doesn’t disclose the information in its filings.

And, of course, in real life when working on real deals you might use more detailed / specific assumptions.

But it’s great for learning about how accounting differs, how to work with reserves and production numbers, and how financial statements, valuation, and modeling differ.

The Recruiting Process

Q: Thanks, I’m glad it was helpful.

You mentioned before how headhunters contacted you about opportunities – what was the recruiting process like?

A: Sure. At the firm I ultimately accepted an offer with, here’s what happened:

• The headhunter reached out and wouldn’t even give me the name of the fund (typical), but claimed they were “rapidly growing their energy team.”
• First Round Headhunter “Interview”: Before the headhunter would even set me up with a real interview, I had to “interview” with him/her first because of my random background – even though I had a lot of deal experience.
• Second Round Interview: I spoke with 2 PMs on the phone – this interview was quite technical and they grilled me on my knowledge of oil & gas.
• Third Round Interview:  I completed a case study on an  E&P company  that also had midstream (transportation pipeline) and downstream (distribution and refinery) assets.
• Fourth Round Interview: I met the Group Head and a few other analysts in the group. This was less technical and they focused on my “fit” with the group and whether or not I would like working on their team. They asked a few more general questions about investment ideas and how I thought about the investing process.
• Several days pass: Get used to this part.
• Yet Another Case Study: They gave me another modeling exercise, this time focused on an offshore drilling company . I didn’t have as much experience in that sector, but I was able to figure out enough to do a decent job with it.

I was also interviewing with a PE firm at the same time, but I received the hedge fund offer quickly so I didn’t continue talks with the PE firm.

Q: Thanks for describing the process in that level of detail. We’re going to jump back into what you had to complete for these case studies in a bit, but I wanted to ask a more general question first…

What were the key obstacles you faced in the recruiting process, and how did you stand out against other candidates?

A: Surprisingly, the biggest obstacle I faced was that I went to a “non-target” school and hadn’t followed the typical investment banking career path , from a private high school to the Ivy League to a bulge-bracket bank.

I wish I were joking, but this still came up repeatedly even years and years after I had finished undergraduate.

Headhunters are still a lot more hesitant to deal with you because they assume that if you didn’t go to a top school, you might be horrible or you might embarrass them in interviews.

So you have to be VERY selective in choosing who you work with, and go the extra mile to show them that your deal experience and technical / modeling skills are exceptional.

In terms of standing out, it’s what I just mentioned: proving that you can hit the ground running and immediately add value and contribute to getting deals and investments done by pointing to what you’ve done in the past.

You also must be extremely specific with what you want – pick an industry, geography, and firm type and size, and stick with those criteria.

You might think that my own criteria were too specific – “Large-cap E&P-focused energy hedge funds or PE firms” (I also added geography to that mix).

But that specificity actually helped because headhunters were much more likely to respond and introduce me to the right opportunities. If I had walked in there and said, “I want to work in PE!” they would have just tossed aside my resume and put it in a stack with everyone else’s.

Q: That’s a great point. You can never be too specific in the recruiting process.

What else were they looking for in interviews?

A: The will grill you on industry-specific concepts and see if you understand the nuances and are actually enthusiastic about learning more and reading up on it every day.

• They asked me how I’d look up and verify information on individual well reserves .
• They asked if I understood how intangible drilling costs would affect DD&A and the financial statements.
• They asked how you could verify management estimates / sanity-check projections with limited information.

Q: OK, so it sounds like you really need to know the specific industry in these interviews…

But what about the more generic questions? Did they ask you to pitch a stock or explain how you think about investing?

A: Yes – and with that type of discussion, it is super-helpful to have a personal account that you trade and have traded for a long-time to show evidence that you’re passionate about investing.

No, you can’t really do much investing when working at a bank because lots of securities will be restricted – but you can come up with ideas and act on them before you start working. And you need to do that to prove your interest and commitment.

Having proof of what you’ve done is also good – if you claim to have earned impressive returns, some places will actually ask you for a screenshot or account statement or something like that to verify. Anyone can walk in and claim 200% returns, but few people can back it up with evidence and explain how they did it.

In interviews, it’s also common to get questions on companies that you know nothing about and have never worked with before.

So they might say, “General Electric vs. Honeywell – which one would you invest in and why?”

Do not give an actual answer right away. Instead, you want to talk about the criteria that you’d need to make a decision and how you’d go about gathering the data.

So you might ask, for example:

• What markets are the companies in, and what’s their position in them? Are the markets growing or shrinking?  How is the competition doing?
• What drives the company’s revenue and expenses? What do their historical and projected growth and margins look like?
• How are they valued vs. the peer companies? Could anything drive their valuation higher or lower?

Case Studies 101

Q: And I’m guessing that all of those questions are also important to address in case studies as well.

You mentioned receiving two case studies, one on an E&P-focused company and one on an offshore drilling company.

What exactly did you have to do for both these case studies and what was the format?

A: Sure… the basic format was:

“Here’s Company X, currently trading at such and such per share. Should we invest in it? And if so, why, and at what price? And if not, why not, and at what price would it be a good investment?”

The most common mistakes:

• Failing to properly explain your assumptions – for oil & gas, for example, you need a very strong view on where commodity prices are heading and you need to be able to back that up in your discussion.
• Not being granular enough – if you’re projecting revenue as a percentage growth rate, for example, that won’t be enough detail to satisfy them unless it is a very quick, time-pressured case study where they tell you to do that.
• Not making a decision one way or the other – you can’t say, “Well, maybe…” in investing. You have to reach a firm Yes / No decision.

So let me start with how I approached the first case study, on the E&P company.

Step 1 was breaking it down into the different regions they operated in, and projecting how many wells they would construct in each region.

Then, I created a type curve / single well model for an “average” well in each region, and then I applied different risking to each of the specific areas – so if one area was more proven, maybe it would get an 80% reserve credit vs. another area that was less proven that would have received a 60% reserve credit.

Next, I split the production into different categories based on the Proved vs. Probable vs. Possible categories in each of those regions.

Once all that is in place, you estimate the annual production each year, project how much it declines by as the reserves run out, calculate the expenses associated with each well, and sum up everything over the entire region.

Then, you discount all the after-tax cash flows to find the net present value of the reserves in each region, add those up, and then add in other assets such as midstream (transportation) and downstream (refining) and make the normal balance sheet adjustments to calculate NAV and NAV per Share.

So at the end of this analysis, you’ve calculated a range of values for NAV per Share and you can compare that range to the company’s current share price to determine whether it’s overvalued, undervalued, or valued appropriately.

That range is based on different cases for commodity prices and perhaps different assumptions for long-term production decline rates, among other factors.

Q: OK, so you just mentioned what sounded like a very complex exercise here.

And you actually sent me the Excel model you used, so I see how complex it is.

How can you possibly build something this granular in the span of only a few hours? It would take days to replicate the model you used.

A: That’s true, and it really depends on the nature of the case study and how much time they give you.

If you don’t have that much time, simplify and focus on the key drivers rather than going into a ton of granular detail.

So maybe instead of splitting out all the wells by region or reserve type, you just model 1 or 2 separate locations in your NAV and combine that with production multiples for some areas, acreage multiples for other areas, and something as simple as an EBITDA multiple for the other segments like midstream.

The most important thing with these case studies is to show them that you understand how to break down and analyze a company’s operations, even if you don’t have enough time to do it in extreme detail.

It’s also very important to include scenarios in a case study like this – whenever you’re dealing with commodity prices (oil, gas, mining, etc.) – because they make a huge impact on the implied valuation and your investment recommendations may be completely different depending on commodity prices.

But you don’t need the extreme amount of detail I went through – if you’re under time pressure, simplify, don’t create as many granular projections, and show them that you’ve at least thought about different scenarios.

Q: I think a second major problem, though, is where to find all this information.

Companies don’t exactly break out everything you’ve described in their annual filings .

A: Sometimes yes, sometimes no.

It’s true that you may have to go beyond the filings at times and look at investor presentations, equity research, and so on – and it’s actually a good idea to review all of those just to check your own numbers and see if you’re coming up with ranges that make sense.

Many oil & gas companies do actually disclose reserves, wells drilled, and production by location, but you’re right that they may not include 100% of what you need.

So a lot of it does depend on the company and how much they’ve chosen to disclose – the company I valued gave a lot of information in their filings and I found more via a recent investor presentation and equity research.

Q: OK, I see. So do the best you can with the information you have available, but if it’s not there, don’t kill yourself trying to get the numbers.

What about the second case study on the offshore drilling company?

A: Sure… that one was a little more straightforward and it’s also easier to explain.

The format was similar: “Here’s an offshore drilling company, currently trading at $X Per Share. Should we invest?” So once again, you need to determine whether it’s overvalued, undervalued, or valued appropriately.

I split it into the ultra-deep water (UDW) , deep water (DW) , and jack-up segments, and determined a “day rate” (i.e. how much money each type of ship makes per day), a utilization rate, and daily expenses for each category, all based on what was in the company’s most recent filings.

Then I used the company’s “fleet status report,” a supplementary document that lists all the rigs and the categories for each one, to calculate yearly revenue and expenses on a per-rig basis.

It was not terribly complicated: you simply take the daily revenue and expenses and multiply by the days in the year, maybe factoring in inflation over time as well.

I also used scenarios for this one and included Base, Downside, and Upside cases. The expense profile was the same in each case (reflecting reality), but the daily revenue and utilization rates were slightly higher in the Upside case and lower in the Base and Downside cases.

Then, I created a DCF analysis that pulled in revenue and expenses from this buildup and went through the normal steps of projecting and discounting the cash flows and the Terminal Value at the end.

Q: That sounds too easy. Are you sure this was a real case study, or are you just making stuff up now?

A: Hah, good one…

It was definitely more straightforward. But there were a few tricky parts:

• Getting the CapEx correct and splitting it into Maintenance vs. Growth CapEx – since some of the rigs had yet to be completed. So the earlier years were more CapEx-heavy, and in the later years the spending moved more toward Maintenance CapEx.
• Factoring in planned asset sales – yes, you need to include these in a DCF. They only existed in a few early years, but if a company mentions that it plans to sell a specific asset in its filings, you need to include it and reflect the cash inflow.
• Properly constructing and defending my assumptions – a few other candidates attempted to complete this case study, but made much simpler assumptions for revenue growth or did not take into account factors like the completion of new rigs, the higher upfront CapEx, and so on.

Q: So let me stop you right there – how would you defend something like the numbers you used for your different cases here?

A: I mostly based them on the company’s historical numbers. So for the Base Case, I looked at the Daily Rate over the most recent quarter.

And then for the Downside and Upside cases, I looked at historical data further back and used the general range that the rate was in over time to get those.

You don’t want a super-wide range for these or the analysis doesn’t mean much; my numbers were about 10-15% different in each case.

On the Job and the Future

Q: Great, thanks for describing these case studies in such detail. I think everyone but the hardcore oil & gas geeks has had enough by now, so let’s move on…

Any thoughts on your new job at the hedge fund so far?

A: Admittedly, I haven’t been here that long yet, so don’t take my views as “the inside scoop from a seasoned industry veteran.”

But my main impression is that it’s far less structured than banking.

That’s quite challenging because it’s easy to find yourself sitting around and doing nothing but surfing the web… when in reality, you need to be generating investment ideas .

If you’re not constantly thinking of new ideas, looking into opportunities, and doing research and due diligence yourself, you’ll never make it here.

It’s not like banking where they just give you tasks and you have to execute everything.

For more on this topic, see the article on the hedge fund career path .

Q: But it sounds like you like it more, despite the added challenges?

A:  I like getting to dig into companies and understand what makes them tick.

Let’s say you come up with a long / short equity idea… you could go and call up investor relations for that company, meet with management, or even fly out to their headquarters and do a deep dive on everything you want to know about.

So it’s different from banking where you often just go with what the client wants to see and don’t do as much critical thinking.

Q: Any downsides so far?

A: Not really, though I do miss the team environment you get in banking .

You don’t really see that as much here – you’re flying solo a lot of the time and don’t necessarily collaborate with others as much.

On the other hand, that also means that I get to avoid the office politics that were driving me crazy as well.

I have no plans to leave anytime soon, as I really like the industry and enjoy working with these types of companies.

Q: Awesome! Thanks for such an in-depth interview.

A: My pleasure.

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street . In his spare time, he enjoys lifting weights, running, traveling, obsessively watching TV shows, and defeating Sauron.

Free Exclusive Report: 57-page guide with the action plan you need to break into investment banking - how to tell your story, network, craft a winning resume, and dominate your interviews

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49 thoughts on “ From Oil & Gas Investment Banking to Energy Hedge Fund: How to Make the Leap and Dominate Your Case Studies ”

What is the likelihood of someone in oil and gas IB going to a non energy fund like a typical long/short equity HF?

Not very likely because energy is very specialized (perception more than reality sometimes, but recruiters only care about perception).

Would going back to school for an MBA help at all?

Not unless you somehow get non-energy work experience via the MBA such as from a pre-MBA internship

Great article – I would be interested in getting in touch with the interviewee to have a brief chat about the discussed opportunities.

Please let me know if there is any option to do that.

Thanks and best,

I can ask, but this interview was conducted years ago, so he may or may not be responsive.

Nice! Quick question though, if i want to get into oil and gas investment banking post MBA, is geography an issue? i.e should my search for jobs be in Houston or I can get into the field from DC..this will have a tremendous effect on the business school i choose to attend as I am considering schools based on areas I think i can get a job afterwards. Thanks

Geography matters, yes. You can still get in coming from DC, but your chances will be better if you’re in Houston or closer to Houston.

Hi Brian: I am looking for opportunities in municipal finance, investment banking and equity capital markets to create and deliver long-term value to clients involved in the shale play. What investment banking firms in the northeast are active in this area. Thanks, Mike

I am not 100% sure and I’ll leave readers to answer your query.

Do you think that the energy industry (specifically oil & gas) is slowly dying out? I have read that the resource extraction will top by 2017 and will be declining afterwards. Moreover, new energy sources, such as solar, are rising. So, would not it be a bit shortsighted to get into such an industry for a 20-year old graduate like me.

No. People always say energy is “dying,” and then it always comes back. Commodity prices fluctuate, but conventional energy will be around for a *very* long time to come.

Solar energy is not going to power an airplane (or most other methods of transportation ) anytime soon…

Hi Brian/Nicole,

How about mining hedge fund/private equity? Can anyone here give some names?

These links maybe useful: http://www.resourcecapitalfunds.com/about.asp http://www.greenstoneresources.com/ http://www.arc-fund.com/ http://www.miningprivateequity.com/

I am really interested in Oil & Gas investment banking. But as I understand, the deals in the sector mainly go through the Houston offices. Is it equally beneficial in the long run if I want to start in an NYC Oil & Gas BB office? I feel the NYC networking experience is critical in the first two years of your career. Will that have a negative impact on my experience in terms of how much I learn and how good my exit opportunities are? Thanks a lot for your help.

It depends on where you want to end up. If you want to end up in NY, I’d probably start out in NY. In regards to how much you can learn, it depends on the team and your firm. By starting out in a particular city, you’re more likely to stay in that region unless you can pull off in-person trips or interview entirely via video conference (unlikely for the traditional exit opportunities). Plenty of analysts elsewhere get into mega-funds – it’s just that they go to the offices in their region rather than NY. One legitimate difference is that there are more exit opportunities in New York just because it’s the biggest financial center – but then there’s also more competition. https://mergersandinquisitions.com/investment-banking-new-york-california/

Thanks a lot Nicole. I think I am just a little worried that the deal flow in the NYC offices might not be as great as Houston. But at the same time, the amount you learn as an analyst also depends on how practive you are on the job and the kind of attitude you have. Perhaps I can start in NYC hopefully and see where it takes me.

Thank you so much for your help. I really appreciate it.

Yes. In terms of the deal flow, I can’t comment though I’d imagine it depends on the firm you’ll be working for too.

Hi, great article! Is it possible to get into these energy funds with experience as a financial analyst from a large oil&gas company (eg. Exxon, Shell, BP etc)? Thanks.

I believe so, you’ll just have to have a great pitch and articulate why you want to move and how you can add value.

Thanks for the interview Brian. As an energy professional looking to shift my career towards the corporate development/M&A areas this was really informative. It’s interesting to see how energy is viewed from a PE/Banking perspective. Cheers and thanks for the site!

Thanks for your comment!

Does anyone have any insight on moving from energy specific pe to more general/different industry pe? How conceivable is energy pe then b school then pe in a different industry?

I think you can still move to other industries even though your industry knowledge is different because the basic modeling/analytical skills are transferable. I’d suggest you to start networking a lot within the PE community by attending industry events if you haven’t already been doing so. Readers may have more insights on this front. Getting an MBA is useful in PE, regardless of whether you want to switch industries or not, because pedigree is valued https://mergersandinquisitions.com/private-equity-recruiting/

GREAT POST!

I am an analyst in energy equity research…so the valuation process described here actually resonates with me:)

If possible, I would like to know the guest’s view on moving from energy equity research to an energy hedge fund, as opposed to moving from banking. Is it a similar process? Would it be more difficult just because you get more prestige coming from banking?

Thanks! It is a similar process, but probably easier from banking since the perception is that it’s more demanding / prestigious, even if that’s not really true. But plenty of ER associates do move from ER to HFs, and the process is similar.

Thanks for the writeup! I come from an oilfield services group myself and was surprised that they lumped E&P opportunities together with the oilfield services. Always thought there was a distinct breakdown between up mid and down stream.

Thanks! Yeah, usually there is more of a distinction between the two. But some funds will focus on opportunities from upstream to downstream within energy.

Great article.

Where does the coverage/execution divide lie in a specialized group like O&G? Have heard many different answers to the topic in general. Would be grateful for your input (or even the interviewee’s…).

Many thanks.

I don’t think there’s a universal split and a lot of it depends on the bank/location, but in general the roles are probably blended together more because it’s so specialized. This article didn’t really cover O&G groups at banks in detail, but that one will be coming up later this year in a separate interview on natural resources groups.

OK, thanks. Look forward to it.

But most of energy / natural resources PEs and HFs are located in Houston…

Most, but not all. Some are in NY, London, and other places.

Thanks Brian for sharing yet another interesting and exciting post. Thoroughly enjoyed reading the interview. I have had some investment banking background and have recently joined a physical soft commodities firm as a trader. The nature of the role requires one to be able to negotiate purchase contracts, plan for shipments and understanding the futures market for hedging. The skills required are not nearly as technical compared to what you will encounter in investment banking so my question is how do I position myself for a role in the hedge funds? Is investment banking the main route to secure roles in hedge funds?

Thanks! If you’re at a commodities trading firm, it will be tough to move into a traditional long/short equity HF because they usually want people with corporate finance backgrounds. However, you could have a good shot at a global macro fund because they want people who know commodities really well, so I would probably aim for those types of funds with your background.

Thanks for this article.

Is it possible to move from Oil & Gas/Natural resources (London) to commodities trading firm (paper or physical)? What is your opinion about such opportunities (Energy PE/HF) in London, are there much opportunities? Anything you think I should look out for?

I’m going to start my 2024 summer in a BB (BofA), hopefully in their NR group.

We covered some of those points in the article on commodity hedge funds: https://mergersandinquisitions.com/commodity-hedge-funds/

In theory, you can move from a NR group to a trading firm, but you’re better off starting in S&T. I can’t comment on energy PE firms or hedge funds in London, as I haven’t looked at the space in a long time.

Great article Brian! I have a quick question though, do you think energy corporate banking would be a good career? And what would the comps like for energy corporate banking?

In addition, is it always the case that corporate bankers switch to leveraged finance after a few years?

Thanks! Yes, energy corporate finance or banking could be good… some of those companies are huge and massively profitable and pay a lot. Not sure about what’s really comparable to it.

I don’t think corporate bankers “always” switch to LevFin, but it is one possible path.

Thank you for the post! Definitely informative, and for an energy nerd like me, I always enjoy a healthy discussion of drilling, NAVs, well production decline curves, etc.

With regard to the offshore drilling company case, when projecting revenues, how do you go about forecasting Base, Upside, and Downside cases when it comes to dayrates as these can change fairly significantly over time (previous contract dayrate vs. new contract dayrate, as seen on the fleet status reports) — more specifically, do you try to figure “demand” in as well, or solely look at historical data to get a range? Apologies for the long-winded question — just trying to get a better idea of how to model this sort of stuff!

Thanks! Not 100% certain of that one, but basically I think he focused on historical data and used that range, which was easier in this case because it wasn’t a very wide range. And then I think he looked at some estimates in the fleet status report and an investor presentation, and adjusted them up or down for the next 1-2 years based on how close the historical forecasts were to actuals.

Got it — gotta love those investor presentations! Appreciate the message, thanks again!

Great Interview. Would it be possible to share the model he sent you so we can see how complex it it?

Thanks! I asked, but he said no because it’s too personally identifying – I would have to remove names, change around all the numbers, formatting, etc. If I have time to do so in the future I may go back and do that.

Amazing article. I have a 3rd round case interview with a top E&P focused hedge fund coming up, so I’ve been researching all over. This article was particularly helpful and the first one to explain in great detail certain of the complex considerations required to impress the PMs. I’m curious if you were ever able to clean the model to share, or if you know of anyone or any service that could offer a couple hours of paid consulting services to answer questions about the nuances of E&P modeling. Thanks, again for the interview. Look forward to hearing from you soon.

Regards, Adam

I see you already signed up, but the entire NAV Model is in the Oil & Gas course as the second case study on Ultra Petroleum. We don’t offer consulting services, but you’re free to ask any questions about your model or stock pitch for the hedge fund interview on the site, either in the comments or via email.

thanks for the interview. great details and insights.

Thanks for reading!

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Top 20 Oil & Gas Interview Questions & Answers (2024 Update)

Here are Oil and Gas interview questions and answers for freshers as well as experienced candidates to get their dream job.

1) What are the different categories of Oil found worldwide?

There are about 161 different types of Oil found worldwide. The different categories of Oil found worldwide is classified into different types of crude oil like Brent, Dubai Crude, West Texas, Intermediate, etc. Classification is done according to their sulphur content.

Free PDF Download: Oil and Gas Interview Questions and Answers

2) Explain what is OPEC?

Organization of Petroleum Exporting Countries is also known as OPEC.

3) What is the purpose of forming OPEC?

4) who are the members of opec currently.

• Saudi Arabia

5) On what basis Crude Oil prices are determined?

Crude oil is a commodity, and the prices depend on the demand and supply.

6) Who controls or decides the Oil prices?

OPEC does not decide the crude oil prices, though it influence the market prices. It is following exchange market that decides global crude oil prices

• New York Mercantile Exchange ( NYMEX)
• International Petroleum Exchange in London (IPE)
• Singapore International Monetary Exchange (SIMEX)

7) How U.S dollar contribute to the rising Oil prices?

On the world market, oil is priced in U.S dollars. So, when dollar becomes weaker, foreign currency becomes stronger, which means foreign countries can buy more oil at same amount of money. As people in other countries start buying more, demand rises, and it drives up the price in dollars, which again influence the price of oil in the global market.

8) Explain how much do you pay for a gallon of regular gasoline?

On a regular gallon of gasoline, you will pay about

• Crude Oil: About 67% of what you pay goes to the cost of crude oil
• Refining costs and profits: About 14%
• Distribution, Marketing and Retail costs and profits: 8%

9) Mention what is the amount of ethanol present in gasoline?

Approximately about 10% -15 % of ethanol is present per gallon of gasoline, and it is denoted by E10.

10) Explain what is PowerShares DB Energy Fund?

In the energy commodities, this fund is the most rounded investment in the energy commodities. This fund is invested in the energy futures contract like heating oil, Brent crude oil, RBOB gasoline and natural gas.

11) What are the factors that decide the retail price of Gasoline?

The gasoline retail price is determined by following factors

• Transportation costs
• Location (Urban/ Rural)
• Average volume pumped
• Competitive mix ( Concentration of major oil companies and independent marketers)

12) What are the taxes you have to pay on your gasoline?

There are State taxes and Federal taxes that is levied on your gasoline, though taxes changes from one state to another. You are paying approx. 23% of state taxes per gallon of your gasoline that may vary to 40% depending upon the state. While, federal government excise tax is about 18 percent per gallon.

13) Mention what are the factors that can fluctuate in gasoline price?

The factors that can fluctuate the gasoline price are

• Changes to the price of crude oil
• Major supply disruption in any area of the country
• Increased consumer demand
• Expected or unexpected outages of any refinery
• Activity on the commodities market

14) Who analyse and does research of the Oil and Natural gas supply in U.S?

EIA (Energy Information Administration) is an independent agency of the United States Department of Energy, which gives all the weekly detail or data of the supply of oil and natural gas in U.S. It schedules weekly publications known as WEEKLY PETROLEUM STATUS REPORT and THE WEEK IN PETROLEUM.

15) Explain how many gallons of gasoline does one barrel of oil can be made?

From one barrel (42 gallons) U. S refineries make about 19 gallons of motor gasoline. The residue yields other refined products such as distillate and residual fuel oil.

16) Which states are among the high paying price for gasoline?

Some of the states that are paying more price for gasoline other than other states are

• California • New York • Alaska • Connecticut • Michigan • Pennsylvania • Indiana • Maine

17) Explain how much do oil companies make on each dollar you spend on gas?

Oil and natural gas industry make 8.6% for every dollar of sales.

18) Mention what are the requirements for importing natural gas, oil and petroleum into the U.S?

For importing petroleum or petroleum products to U.S, you don’t need a license to import these items, but you need to file a form called EIA814 with the EIA (Energy Information Administration).

19) What is API gravity?

API means American Petroleum Institute; it is the main association for the oil and natural gas industry in U.S. The API denotes about 400 corporations in the petroleum industry and helps to set the standard for production, refinement and distribution of petroleum product.

20) How API is calculated?

API is nothing but the ratio of its density compare to other substance like water to check the standard of the oil. The formula to check API is

API gravity = (141.5/ Specific Gravity) – 131.5

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34 Comments

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If the above is true, this increase represents an increase of about 1.85% – true or false

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I benefit lot with this thanks.

I’d need more of this questions and answers as a fresh graduate, I’ve dreamed to work in the oil and gas sector…

Useful information, thanks

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Drilling Rig Digital Twin and Well Construction Optimization

Transocean is a Swiss offshore drilling company that provides rig-based well construction services worldwide. The company is one of the largest contractors in its sector and has offices in 20 countries. It operates a fleet of versatile, mobile, offshore units comprised of midwater, deep water, ultra-deep water, and harsh environment floaters. The company decided to build a digital twin of its well construction processes to enable prediction and advanced planning capabilities with the aim of optimizing operations across its fleet.

Resource Optimization in the Oil and Gas Industry Project Management

YPF is the largest oil and gas company in Argentina. YPF was aiming to reduce its costs associated with oil wells’ maintenance downtime and equipment breakdown. The analysis showed that the root cause of inefficiencies was the lack of a robust maintenance scheduling process. YPF approached Simcastia to develop a scheduling tool to streamline asset management at all YPF facilities.

Oil Well Modeling and Optimization Using AnyLogic Fluid Library

Canada is the third largest country to have oil reserves. However, most of the oil is in oil sand – the mixture of sand, oil, and water – which has to be heated up with steam to emit the oil. It is costly to maintain such a distribution system, and outages may lead to disruptions in steam injection and oil production. Stream Systems company applied AnyLogic simulation modeling to optimize expenditures and capture production lags.

Simulation and Optimization of Sand Transportation for Fracking Operations

Fracking is the process of cracking rocks using a combination of sand and water at high pressure to release trapped gas. Tecpetrol needed to optimize sand transportation for their fracking operations from various warehouses. They could do this best using a simulation model with a parameter variation experiment and then a simulation experiment. In the first 8 months of implementing this model, Eurystic saved an estimated $500,000.

Simulation Based Digital Twin for Well Construction Process Optimization

Transocean is one of the largest offshore drilling companies that provides rig-based well construction services worldwide. Offshore oil and gas well construction is a complex process that takes a considerable amount of time. It demands certain sequences of both manual and semi-automated operations carried out in unison, as safely and efficiently as possible. Different kinds of equipment are usually created and operated independently. However, at the rig, all technical units are integrated. Any kind of delay in machinery increases the critical time path, which reduces the efficiency of the...

Oil Pipeline Network Design: Finding Bottlenecks and Choosing the Right Policies

One of the largest oil and gas pipeline operators in North America was delivering oil to a client that was not always able to accept the incoming batches. The operator was challenged to quantify the system impacts of deferred downstream deliveries. They also needed to determine whether the existing tankage at upstream oil terminals would be adequate to store the deferred batches.

Identifying Inefficient Oil Wells through Oil Extraction Process Simulation

One of the largest oil and gas companies faced financial inefficiency from depleting deposits: approximately 20% of the deposits yielded little if any profit. In order to maintain a strong performance in a context of high uncertainty, the company had to make operational decisions about whether they should shut down or retain their marginally profitable wells, and whether it made sense to repair breakages.

Simulation Modeling of an Offshore Offloading System for an Arctic Oil and Gas Condensate Field

The Novoportovskoye oil and gas condensate field is located in the Yamal peninsula and owned by the fourth-largest oil production company in Russia. Oil from the field is transferred via 100km pipeline to the sea terminal at Cape Kamenny, where it is loaded into arctic cargo tanks for further transportation. The main issues in planning tanker transportation in an arctic region are the harsh ice environment and difficult sea conditions.

Modeling and Optimization of a Maritime Transport System for an Offshore Oil Platform

The offshore oilfield in the Pechora Sea is a project of a major Russian company for oil extraction on the Arctic shelf. Since it was designed for the Arctic region, the platform can be used in extreme weather conditions and withstand maximum ice loads, which makes it a unique and technically complex project. The first loading of oil from the platform to an arctic tanker was carried out in April 2014, while by 2021 the platform operator is planning to increase the rate of oil production up to five million tons. However, gained experience revealed that a marine transport system for oil...

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Untangling a $500 Million Oil and Gas Dispute for a Joint Venture Client

May 20, 2024

A global FTI Consulting team provided expert causation data, forensic delay analysis and quantification of damages and loss of profits in a contract dispute.

• FTI Consulting allowed the client to reconstruct and present a legible understanding of the delays and prejudice incurred in the dispute and its causation.
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Sustainable Abandonment of Offshore Oil and Gas: Case Studies

• 1400-1418 35162 Enhancing Sustainability Using Multi-Criteria Decision Making in Subsea Decommissioning M.I. Lourenço, J. Caprace, L. Palhano, J. Sant'Ana, Universidade Federal do Rio de Janeiro; A.M. Angelo, Universidade Federal Fluminense; E.R. Nicolosi, C.V. Ferreira, L.R. de Freitas, Petrobras Add to Calendar
• 1420-1438 35474 Repurposing Offshore Infrastructure for Clean Energy (ROICE) Vs. Decommissioning - Regulatory Considerations E. Keen, Elena Keen Consulting LLC; B. Gibbs, Endeavor Management; T. Matthews, WSP; L.P. Feijo, ABS; G. Legge, Endeavor Management; S. Tallavajhula, Technip Energies; R. Seetharam, University of Houston Add to Calendar
• 1440-1458 35289 Alternative Method to Achieving Rock-to-Rock Barrier for Plug and Abandonment Using Hydro-Mechanical Perforating Tool S. Rahman, Chevron North America E&P; D. Beazer, S. Butcher, O. Baiej, Lee Energy Systems Add to Calendar
• 1500-1518 35393 Challenges and Approaches to Solutions for Green Decommissioning and Recycling of Offshore Facilities C.A. Machado, L.P. Feijo, J.E. Igbadumhe, T. Carreira, American Bureau of Shipping Add to Calendar
• 1520-1538 35108 AI-based Cement Bond Quality Assessment: a First Step for Optimizing P&A Design T. Correira, I. Camerini, J.A. Santisteban Hidalgo, G.R. Ferreira, L. De Souza, A. Rodrigues, J. Penatti, Ouronova; A. Braga, Pontificia Universidade Catolica do Rio de Janeiro; R.V. de Almeida, Repsol Sinopec Brasil Add to Calendar
• 1540-1558 35152 Environmental Assessment of Brent North Sea Decommissioning: A Detailed Case Study S. Maitra, P. Pachbiye, G. Chauhan, Indian Institute of Petroleum and Energy Add to Calendar
• 1600-1618 35403 A Geotechnical Acoustic Survey to Address Well Abandonment Options for a Toppled Offshore Platform D.R. Hoffmann, Couvillion Group; J. Guigne, R. Laidley, Kraken Robotics; K.J. Kennelley, Kennelley & Associates, LLC Add to Calendar

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Oil and Gas Industry: Case Studies on iPad Atex Cases

As the world continues to evolve technologically, industries such as oil and gas are not left behind. One company at the forefront of this technological revolution is the Intrinsically Safe Store . We provide a range of products designed to enhance safety and efficiency in hazardous environments, including the iPad Atex Cases. This article explores the successful deployments of these cases in the oil and gas industry. We invite you to visit our website to learn more about our innovative solutions.

Understanding iPad Atex Cases

iPad Atex Cases are designed to protect iPads in hazardous environments, such as those found in the oil and gas industry. These cases are explosion-proof, meaning they can withstand high-pressure environments without compromising the safety of the device or the user. They are also dust and water-resistant, making them ideal for use in harsh conditions.

Case Study 1: Enhancing Field Operations

One of the most significant deployments of iPad Atex Cases in the oil and gas industry was in field operations. A leading oil and gas company was struggling with data collection and communication in the field due to the harsh conditions. The introduction of iPad Atex Cases allowed field workers to use their iPads safely, improving data collection and communication.

Case Study 2: Improving Safety in Refineries

Another successful deployment was in a refinery where safety was a major concern. The iPad Atex Cases were used to protect iPads used for monitoring and controlling operations. This not only improved efficiency but also significantly enhanced safety in the refinery.

Case Study 3: Streamlining Offshore Operations

Offshore operations present unique challenges due to the harsh and unpredictable conditions. An offshore drilling company successfully deployed iPad Atex Cases to protect their devices, enabling them to streamline operations and improve communication.

Benefits of iPad Atex Cases in the Oil and Gas Industry

Enhanced Safety: The cases are explosion-proof, providing an extra layer of safety in hazardous environments.

Improved Efficiency: With the ability to safely use iPads, companies can streamline operations and improve communication.

Cost Savings: The cases protect iPads from damage, reducing the need for frequent replacements and saving costs in the long run.

The successful deployments of iPad Atex Cases in the oil and gas industry demonstrate the significant role technology plays in enhancing safety and efficiency. These cases, provided by the Intrinsically Safe Store , have proven to be a game-changer in this industry. They not only protect valuable devices but also contribute to improved operations and cost savings. If you’re in the oil and gas industry and looking for ways to enhance safety and efficiency, contact us today to learn more about our innovative solutions.

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Stimulating for maximum recovery

Emerging out of the necessity to find alternative, less complex, and more precise stimulation methods, Fishbones was founded in 2004 by a Norwegian serial entrepreneur. The mission was to create a cost-effective, high-return stimulation method, with a lower CO 2 footprint than traditional methods. This, in turn, would also open new markets for wells where other stimulation methods were not suitable, but where the wells had a potential for significantly improved production. Twenty years later, the firm finds that its technologies have become a logical choice in these markets.  

GAINING GROUND  

Based on operators’ diagnostics of the well, Fishbones’ technique allows oil and gas operators to target specific zones within the formation with pinpoint accuracy, removing reliance on formation stresses and strains. By mounting the Fishbones subs on the liner string to correspond to the zones where stimulation is to be carried out, the needles can extend laterally at the exact points where stimulation is most needed and most likely to succeed, Fig. 1. The lateral branches—resembling the skeletal structure of a fish—penetrate deep into the formation, effectively enhancing permeability and enabling the extraction of previously inaccessible hydrocarbons.  

Fishbones’ technologies were developed intensively by joint industry projects (JIPs), in collaboration with major E&P companies, since 2008, and they have gradually gained ground through a series of successful installations over the past 10 years. They have emerged as an attractive choice for operators seeking to optimize their production capabilities and to extend and improve oil recovery.  

The efficacy of Fishbones’ technology has been proven in numerous real-world applications across the globe. From the icy waters of the North Sea to the arid landscapes of the Middle East, Fishbones’ techniques have consistently delivered impressive results, developing a new approach to oil well stimulation practices and unlocking untapped reservoir potential.  

Three recent case studies are highlighted below, to show how the Fishbones needles have increased production many-fold. All of these case studies have been published previously in industry papers.  

DIGGING INTO LOWER LAYERS IN THE MIDDLE EAST  

Middle Eastern geologies are typically multilayered, with varying permeability. Reservoir quality can vary enormously in a single well, from productive high-yield layers to tight layers preventing vertical flow. Fishbones needles come in both drilling ( Fig. 2 ) and acid jetting ( Fig. 3 ) variants, and for the Middle East, the jetting needles are the most efficient in the prevalent carbonate fields.  

In a Middle Eastern offshore horizontal well, dipping to sub-horizontal to sample lower layers, the prominent well characteristic was the difference in performance from upper to lower layers, where naturally producing fractures were present, and permeability was extremely low, Fig. 4 . The operator was considering several options to boost production from the lower layers and to improve well performance.   

Possible solutions included matrix acid stimulation, drilling additional wells (stair-step horizontal or dual lateral) or utilizing Fishbones lateral needles. Before the final decision, successful lab-testing was done on core samples from the well, to assess whether the Fishbones jetting needles would be able to penetrate the samples, Fig. 5 .  

Fishbones was chosen over traditional stimulation methods, due to its capability for pinpoint stimulation to the lower layers. In the 4,085-ft (1,245-m) open hole, 20 Fishbones subs, with a total of 80 jetting needles, were deployed on a 4 ½-in liner across the two lower layers of the well. A successful deployment of the jetting needles, upon bullheading 3,000 bbls of 15% HCl acid, was accomplished, with needles achieving a deployed length of 1,684 ft in total.  

The result of the operations saw production from the lower levels boosted to 2,600 boed from the Fishbones-stimulated lower levels. The production increase was an astonishing 10 times the expected production increase of 250 boed. The well test productivity was increased by eight times, compared to the initial estimate of 1.5, while production uplift was increased by 10 times from 250 to 2,600 boed. The well continued to produce steadily at its new, increased rate. This well, alone, reached the production target of three planned wells in the area.  

SIX-FOLD INCREASES  

In another case study from the Middle East, a number of wells in an onshore, naturally fractured carbonate formation field were showing production rates well below expectations, due to low vertical communication between layers and low permeability. Additionally, low wellhead pressure was a concern. Average production was 200 boed to 400 boed, with 200 psi at the wellhead.  

The field, with several identical horizontal wells of 4,920 ft (1,500 m), was part of a series of field development projects in onshore fields to break boundaries and exceed expectations of production targets. Several wells were used for a comparison test by the operator. One well was selected for standard acid matrix stimulation, while another well was to receive Fishbones’ targeted stimulation with jetting needles. The wells were drilled in a multi-layered limestone reservoir with poor vertical permeability of 0.2 to 0.9 millidarcies.  

The Fishbones test well required 40 subs, with a total of 160 jetting needles, evenly spaced along the entire liner. The jetting operation achieved significant stimulation of the formation across the 1,500-m open-hole borehole. The initial five-day production testing period showed a 300% increase in uplift, with wellhead pressures stabilized at 400 psi, and the four-year period following the stimulation showed a sustained, six-fold increase in rates, confirmed by the production logging tool.  

Compared to the reference well treated with conventional stimulation, well productivity in the Fishbones test well increased 2.5 times, and the production rate was improved three times to 1,600 bopd, Fig. 6 . The test well was the basis for a contract award of multiple additional Fishbones installations.  

DRILLING THROUGH HARD CONGLOMERATES  

For two offshore wells on the Edvard Grieg field, on the Utsira High in the Central North Sea ( Fig. 7 ), a different approach was needed. The challenge was increasing productivity in conglomerate formation wells for Swedish operator Lundin Energy, now acquired by Aker BP.  

Drill stem tests in the wells showed oil rates of less than 10 Sm3/d, and studies were initiated to evaluate various applicable stimulation methods. Hydraulic fracturing was ruled out, due to the geology not being beneficial for this method. Fishbones’ drilling needles were eventually chosen for their ability to provide controlled stimulation, with minimized environmental impact, during completion operations.  

The system was run as part of the lower completion with standard rig equipment, saving installation time and specialized vessel assistance. To penetrate the base conglomerate, 53 5 ½-in. drilling subs were deployed, generating 159 laterals. The drilling needles differ from the jetting variety, equipped with a compact ½-in. drill bit on each titanium needle. The specially hardened drill bits were developed in a JIP to handle the base rock, varying from hard granite to softer, unconsolidated textures. The drill bits were tested onshore in concrete blocks of varying hardness, containing 30% gravel of gneiss and granite, Fig. 8 . The drill bits also had to be optimized for the especially abrasive drilling fluid.  

Upon deployment of the Fishbones system and completion of the lateral connections and production start, excellent results were recorded. Productivity was up multi-fold, compared to the original prognosis. The second well on the field, with 61 drilling subs, started production in January 2022, with a third well utilizing Fishbones drilling that was completed in August 2023 with 60 subs (180 laterals).  

IMPROVING AND EXPANDING  

Learnings from many years of development, testing and production have been unambiguous: using these lateral stimulation techniques gives operators enormous control over where, and to what extent, they wish to stimulate a well. While traditional fracing may achieve good results, control and predictability suffer, the effects may be adverse, and costs are often considerably higher than using Fishbones’ techniques.  

As a measure to improve oil recovery from unproductive or flagging wells, Fishbones excels as a stimulation measure. However, as we have matured our technology over the past 12 years since the first deployment, we have seen again and again why this technology should be an integral part of early-stage field planning and development. Integrating lateral drilling into the drilling or completions phase in wells with challenging or tight reservoirs from the start will ensure a better ROI over well lifetime, reducing emissions and increasing savings on platform time.  

In line with the ongoing energy transition, Fishbones is actively exploring opportunities in the conventional hydrothermal markets, particularly in Europe, where geothermal energy plays an increasingly significant role in helping to decarbonize the heating sector. We are also exploring applications in enhanced geothermal systems, e.g. in the U.S., further demonstrating the adaptability of our technology.  

Our expertise and proven track record in drilling and stimulation technologies has provided us with a strong basis for adapting to geothermal applications. Our technology and skills from oil and gas drilling and stimulation are transferable to geothermal. This adaptability makes it easier to explore and exploit sedimentary basins and reservoir sequences that are common in both oil and gas and geothermal fields.  

EXTENDING REACH  

While we can regard our technology base as sound and proven, we recognize that further enhancements can be made. In an ongoing collaboration with Aker BP, we are developing a new generation of needles. The goal is to extend needle length by 50%, moving from 12-m to 18-m needles, thus penetrating even further into the hydrocarbon-bearing formations to tap a reservoir’s recoverable reserves. This research on extended needles is also bolstered by a NOK 1.25 million ($117,100) grant from The Norwegian Research Council. We are, of course, proud of Fishbones being recognized in this context, as a company focused on reducing emissions by improving efficiency in the oil and gas industry.  

Proving the adaptability of our technology even further, we have developed a version of our needles with slotted apertures for use on the North Sea’s Valhall field. The slots will help in controlling loose chalk substrates on this field and prevent them from migrating into the well stream and to topside installations.  

We also have an ambition to provide even greater control of our needles in the future. A directionally controlled version is in development. This would allow even more accurate stimulation, if necessary.  

67 DELIVERIES TO DATE  

With 67 deliveries of Fishbones’ technologies, our approach offers a myriad of advantages over traditional well stimulation techniques, making it a compelling choice for oil and gas operators seeking to optimize their production capabilities and increase recovery.  

Additionally, operators can find compelling cost benefits by reducing the need for dedicated stimulation vessels, to perform the stimulation operation. The enhanced production rates facilitated by Fishbones' techniques translate into faster returns on investment, further bolstering its economic appeal. Combined with its minimal surface footprint, reduced chemical usage and reduced flowback volumes, we also see our techniques representing a progressive step towards a more sustainable resource development.  

Ørsted’s renewable-energy transformation

To stop climate change, companies in every industry must rapidly reduce their carbon emissions. That is no easy task, but a few businesses show it can be done. Ørsted, an energy company based in Denmark, stands out as an example. Twelve years ago, when it was called DONG Energy, the company earned most of its revenues by selling heat and power, 85 percent of which came from coal. Then, in 2009, management announced a major strategic shift: the company would seek to generate 85 percent of heat and power from renewable sources by 2040.

Ørsted invested aggressively in offshore wind and phased out coal. By 2019, it had become the world’s largest producer of offshore-wind energy. The company also raised its renewable-generation share to 86 percent—hitting its target 21 years ahead of schedule. In an interview with McKinsey, the CEO of Ørsted’s offshore-wind business, Martin Neubert, tells the story of the company’s transformation: the strategic decision that started it all, the changes it went through, and the outlook for the future. (The remarks below have been condensed and edited for clarity.)

McKinsey: Back in 2008, DONG Energy was a profitable and stable conventional-energy company. How did the idea of pivoting to renewables come up?

Martin Neubert: At that time, DONG Energy was largely a domestic Danish energy company. Eighty-five percent of our power and heat production was powered by coal, and 15 percent by renewables. For us, one key factor supporting the decision to rethink our strategy in favor of renewables was the failed attempt to develop a 1,600-megawatt coal-fired power plant project, called Lubmin, in Northeast Germany.

We had made substantial investments in this greenfield project during the more than six years we spent trying to develop it. And while the project was supported by the German federal government, we experienced strong local opposition against the idea of building a coal-fired power plant on the Mecklenburg-Vorpommern coastline. This was the first clear sign telling us that the world was beginning to move in a different direction, and we concluded that there was no sustainable way of realizing the project. Also, in 2009, the global renewable-energy agenda was positioned strongly at the United Nations COP15 [15th Conference of the Parties] climate summit in Copenhagen, supported both by the Danish government and by our board of directors.

McKinsey: How did management assess the company’s position and its ability to shift toward renewables?

Martin Neubert: In 2008–09, we formulated a new strategy and vision called 85/15, stating that we wanted to change our generation mix from 85 percent conventional, 15 percent renewable to 85 percent renewable, 15 percent conventional. The 85/15 split, which was decided on by executive management, reflected the ambition to conduct a complete turnaround of our generation mix. It also took into account that DONG Energy had spent three decades establishing itself as a company focused on the generation of conventional fuels. So the expectation was that such a turnaround would have to be completed within one generation, or the equivalent of 30 years.

At the time, I don’t think anyone thought we would turn our generation mix upside down within only ten years. But that was not the discussion then. Instead, we discussed what our future growth areas should be: areas where we had critical mass, where we had the right competences, and where we could differentiate ourselves. It became clear that one was wind power, which three of the six companies that merged to become DONG Energy in 2006 had already pursued.

Onshore wind was well established. We had a sizeable portfolio of projects in Poland and Sweden, and we had been involved in projects in Spain and Greece. As for offshore wind, we had early-stage operating projects in Denmark and the United Kingdom and large-scale development projects. That gave us critical mass in wind when we formulated our vision.

We also had a team of 50 or 60 people working on renewable-energy projects. Some had spent their careers on these technologies, particularly onshore wind. That gave us substantial in-house expertise, backed by a clear understanding of what it would take to develop wind power, technology-wise.

The 85/15 split, which was decided on by executive management, reflected the ambition to conduct a complete turnaround of our generation mix. It also took into account that DONG Energy had spent three decades establishing itself as a company focused on the generation of conventional fuels. So the expectation was that such a turnaround would have to be completed within one generation, or the equivalent of 30 years.

McKinsey: Back then, the technology landscape for offshore wind looked very different from what it looks like now. How did that factor into your thinking?

Martin Neubert:  At the time, no offshore-wind projects bigger than 160 megawatts had been built. So we had to ask how we could build large-scale offshore-wind projects in a different way. Could we move from building one highly customized offshore-wind project every two or three years to building one or two more standardized projects every year? What would it take to go from handcrafting to serial production?

Answering that question involved a 360-degree review: the supply chain, our competencies, the financing models. We concluded that we could not do it alone. One challenge was installation. The installation companies in the market were small. We found a considerable risk that they could go bankrupt during a project. That led us to acquire A2SEA as an installation supplier.

We would also need strong partnerships with suppliers of turbines, foundations, and cables. Turbines were a particular issue. Since no purpose-built installation vessels existed, we reasoned that we would benefit from working with a manufacturer on the design, layout, and funding of second-generation installation vessels. Siemens quickly realized that offshore wind could develop into a large industry. We entered a partnership with them, which included the delivery of 500 3.6-megawatt turbines. At the time, it was one of the largest energy agreements Siemens had ever made.

McKinsey: How did executives and staff react to the decision to take the company in a new direction?

Martin Neubert: There was internal pressure to keep DONG Energy the same. It wasn’t unexpected, because we had spent three decades turning the company into a traditional fossil-fuel company. Fossil fuels were our core competence and the focus of our growth strategy. Our employees also perceived that we were the world’s best at running coal-fired power plants, and a benchmark for the industry. The skepticism was broad and profound.

Ultimately, though, internal skepticism receded. In 2012, when Henrik Poulsen had just joined as CEO, our portfolio of assets and activities had high exposure to gas and gas-fired power plants. As gas prices dropped in the United States, vast amounts of surplus American coal ended up in Europe, where it replaced gas as the preferred fuel for power generation. That caused us financial difficulties, which made it easier for people to accept the new focus on offshore wind and on the exploration and production of oil and gas, and the moves to divest noncore businesses.

We began implementing the new strategy by establishing a wind-power business unit. I think those of us who were asked to join this business unit saw it as the beginning of an interesting journey. A group of strong European utilities was active in UK offshore wind at the time. We all thought that something big was going on and that the UK would be the right place to pursue offshore-wind projects at industrial scale.

That proved to be the case when the UK government strengthened its support for offshore wind to help make these projects financially viable. If that hadn’t happened, I’m not sure that we would have progressed as fast as we did.

McKinsey: Getting into offshore wind required a multiyear effort to sell holdings and build up new assets. How did management secure the necessary capital even as the company was exiting businesses that were reliable sources of cash?

Martin Neubert: We had multiple new projects in the UK that needed funding. One model would have involved financing them with external debt and then divesting once the projects were operational. But raising debt for each project would not have worked well with our group-level funding strategy. Another approach, partnering with electric utilities, would have been too complicated, because these companies had their own asset portfolios and strategies.

We needed financial partners that could deliver capital and manage their investments while relying upon our experience constructing and operating offshore-wind projects. One structural issue, however, was that we did not want to use project financing, whereas many of our financial investors preferred or were even required to leverage their investment via project financing.

This led us to develop the “farm down” model, in which we could fund our half of a project on our balance sheet and partners could use project financing to fund the rest. With farm-downs happening before commissioning, we provided investors with turnkey project offerings, which would protect them from risks we can manage best, including development, construction, and operating risks. That model resonated with the Danish pension funds, and later with Dutch and Canadian pension funds and other investors.

Had we not developed the farm-down model, we couldn’t have funded all these projects in Europe. And the structure that we innovated became widely used in the industry.

Powering up sustainable energy

McKinsey: What organizational changes took place as Ørsted’s portfolio shifted toward renewables?

Martin Neubert: By 2012, our wind-power business unit had grown to hundreds of employees. But it was still working like a start-up. To support new projects, we added whatever resources were needed, which led to inefficiencies. We lacked a proper organizational structure and operating model.

Correcting that was one of the key accomplishments of my predecessor, Samuel Leupold. He introduced our first real operating model, establishing global functions, clear project governance, and a product-line organization that systematically reduced the cost of offshore-wind electricity by eliminating ad hoc or project-specific sourcing and procurement.

During the past three years, Ørsted has also cultivated a “one company” approach spanning our business units. For example, we have established a management-team forum, consisting of all EVPs and SVPs, who meet four times a year to talk about our strategy and strategic enablers such as talent and digital. That forum facilitates open discussions to break silos, align our approach, and build a strong network among senior leaders. In addition, we have reestablished our leadership-forum meetings for our top 400 leaders.

McKinsey: Ørsted has made significant moves in recent years. Can you talk about those, and the rationale for them?

Martin Neubert: The strategic steps we’ve taken during the past three to five years have focused on turning Ørsted into a global renewable-energy major. The first step was divesting our oil and gas business, which concentrated our business almost entirely on renewables. We also invested in the conversion of our domestic heat and power plants, enabling them to move away from coal toward biomass. As a result, we will exit coal in 2023, and our power generation will be carbon neutral in 2025.

In 2016, we completed our IPO, and DONG Energy, which we were still called at the time, became a publicly listed company. The IPO provided us with the flexibility and access to equity that we need to fund growth. The IPO also gave institutional and retail investors an opportunity to take part in our green transition, while sharpening our profile as a renewable pure-play.

Within the past couple of years, we have reentered the onshore-wind market and moved into solar PV [photovoltaic] and storage solutions. These moves will help diversify our technology mix so we can better meet the demands of our customers. What’s important to note is that we are moving into these technologies at scale. North America, for example, is a large market for onshore wind and storage solutions, and we are investing there. Everything we do reflects our vision to create a world that runs entirely on green energy. And while offshore wind has the potential to power the world, we’re convinced that a broader technology mix will support the growth of our company even better.

Within the past couple of years, we have reentered the onshore-wind market and moved into solar PV and storage solutions. These moves will help diversify our technology mix so we can better meet the demands of our customers. Everything we do reflects our vision to create a world that runs entirely on green energy.

McKinsey: Ørsted’s transformation into an offshore-wind leader has been complete for some time. What opportunities do you see for growth in that market?

Martin Neubert:  Our ambition is to remain the global leader in offshore wind. In the past two to three years, offshore wind has expanded from a predominantly European market to a global market. We’ve been a first mover as that shift has occurred. We were the first European developer that went into large-scale offshore wind in the US. We were also the first foreign offshore-wind developer to enter Taiwan. Within a few years, we have developed sizable project portfolios in both markets.

To support our growth, we recently reorganized our offshore-wind business and established four new regions. Moving closer to different markets is important for navigating their development. It also helps with commercial matters like owning wind farms. At the same time, we want to keep the scale advantages, leverage, and standards that our global operations and EPC [engineering, procurement, construction] functions deliver, and so they work closely with our regions.

McKinsey: New horizons for change in the energy sector are coming into view. How does management keep working hard to ensure that Ørsted remains a leader in offshore wind, while challenging itself to gain a strong position in the energy industry’s next evolutionary phase?

Martin Neubert: We ask ourselves that regularly. And I have been asked many times, by investors, by the media, and by people within our organization, if we are at risk, considering that bottom-fixed offshore wind is our bread and butter. We value our global leadership position in offshore wind, and we want to retain that. Obviously, we don’t want to miss out on major developments—for example, in floating offshore wind. But we must respond as the needs of our customers change.

The ability to reinvent ourselves has proven to be key. In 2006, DONG Energy consisted of some oil and gas licenses. Then it reinvented itself through the merger of six domestic energy companies. A few years later, the company reinvented itself again by establishing a wind-power business unit that became a global leader within a few years. Scanning new horizons and spotting new business areas are essential to Ørsted’s strategy and our ambition to become a global renewable-energy major.

Martin Neubert is executive vice president and CEO of offshore wind at Ørsted. This interview was conducted by Christer Tryggestad , a senior partner in McKinsey’s Oslo office.

This article was edited by Josh Rosenfield, an executive editor in the New York office.

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General election latest: Starmer gives blunt response on potentially rejoining EU - as police drop investigation into his deputy

Greater Manchester Police will take no further action after an investigation into Labour's Angela Rayner. Meanwhile, Rishi Sunak continues to sing the virtues of his national service policy proposal.

Wednesday 29 May 2024 00:47, UK

• General Election 2024

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Election news

• Abbott given back Labour whip
• Police drop Rayner investigation | Labour deputy hits out at Tories
• Explained: What Starmer's deputy was being investigated for
• Starmer: 'No case' for rejoining EU | Reeves won't rule out tax rises
• Daily Podcast: How long will Labour's promise on taxes last?
• Live reporting by Faith Ridler  and (earlier)  Ben Bloch

Expert analysis

• Gurpreet Narwan: Farage already has eyes on elections to come
• Adam Boulton: What makes this election particularly exciting
• Sam Coates: Labour could have difficult decisions to make

Election essentials

• Trackers: Who's leading polls? | Is PM keeping promises?
• Campaign Heritage: Memorable moments from elections gone by
• Follow Sky's politics podcasts: Electoral Dysfunction | Politics At Jack And Sam's
• Read more: What happens next? | Which MPs are standing down? | Key seats to watch | How to register to vote | What counts as voter ID? | Check if your constituency's changing | Sky's coverage plans

Thanks for joining us as the general election campaign kicked into full swing - with just over a month to go until Britons head to the polls on 4 July.

You can catch up with the latest in our 10pm bulletin - or click here .

We'll be back in the morning with live updates.

Iain Dale, the LBC radio presenter, has announced he is quitting to run as a candidate in the general election on 4 July.

Sky News understands Dale will be trying to become the Tory candidate in Tunbridge Wells

Dale, 61, previously tried to enter parliament at the 2005 election but lost in Norfolk North.

He announced his decision live on LBC on Tuesday evening, saying: "I am putting my hat in the ring again to be a candidate at the general election.

"Whatever the result, I feel I can play a role in restoring trust and honesty in politics.

"There are no guarantees I will be selected, let alone elected, but I know that I would forever kick myself if I didn't at least have a go."

With the general election campaign officially under way, what better time to keep a close eye on the latest polling?

The Sky News live poll tracker - collated and updated by our Data and Forensics team - aggregates various surveys to indicate how voters feel about the different political parties.

See the latest update below - and you can read more about the methodology behind the tracker  here .

In her first major campaign speech, Rachel Reeves has pitched herself as the UK's next chancellor to an audience of company bosses, promising the "most pro-growth Treasury in our country's history" if Labour wins the election. 

 But after pledging not to announce any new tax hikes and that Labour policies would be fully funded and costed, how she intends to pay for Labour's plan for the UK remains unclear. 

Today on the Sky News Daily, Sophy Ridge speaks with our deputy political editor Sam Coates to discuss the woman hoping to be in charge of the public finances, and whether Labour will be able to please workers and businesses while delivering on a promise of "economic stability" at the same time.  

It's 10pm - here's your late night run-down.

We're still in the early days of the election campaign, but there has been plenty of divisive policy announcements, clashes and political stunts making a splash here in the Politics Hub.

Let us get you up to speed on everything you may have missed...

• Diane Abbott, the MP for Hackney North and Stoke Newington, has been handed back the Labour whip today, Sky News understands;
• She was suspended by the party more than a year ago after suggesting Jewish people did not experience racism, but rather prejudice similar to red heads. The MP swiftly apologised and withdrew her remarks;
• The Tories have lost a key attack line after news that Labour's deputy leader  Angela Rayner  will face no further action in an investigation over her living arrangements;
• The Labour frontbencher criticised the Tories for "reporting political opponents to the police during election campaigns to distract from their dire record". As a reminder, the investigation was launched after Tory MP James Daly complained about her to police;
• Rishi Sunak  was in the East Midlands, where he defended a Conservative plan to introduce the "triple lock plus". This will essentially result in a tax cut for pensioners by raising their tax-free allowance by either average earnings, inflation or by 2.5% - whichever is higher;
• However, it should be noted it was the decision of a previous Tory government to freeze income tax thresholds, bringing more people into paying the tax, including on income from pensions;
• Labour have been busy outlining their economic plans, but challenged by our deputy political editor Sam Coates , would-be chancellor Rachel Reeves refused to rule out further tax rises if Labour finds a black hole in the public finances;
• Meanwhile, over in the Liberal Democrat camp, the party's leader Sir Ed Davey fell off a paddleboard numerous times in Windermere today - but has admitted one of the plunges was intentional.

If you've got a bit more time on your hands, you can read more of some of the stories above in greater detail:

Stick with us for all the latest throughout the evening.

Sir Keir Starmer has pledged cut NHS waiting lists from day one, telling hospitals to immediately establish new clinics on evenings and weekends.

The Labour leader has pledged that 40,000 appointments per week will be rapidly rolled out, by sending staff from Guy's and St Thomas's NHS Foundation Trust to help set up high intensity schemes.

These teams have already "proven they can get their high intensity theatre lists on weekends up and running within six weeks", Labour said.

Sir Keir added: "It was NHS staff working in the hospital I can see from my office in parliament who led the way on this new model.

"Labour will take the best of the NHS to the rest of the NHS, so patients in every part of the country can be treated on time. 

"The NHS is personal to me. It runs through my family. 

"That's why I'm utterly committed to reforming this service, getting the NHS back on its feet, and making it fit for the future."

After a bumpy start to the Tory election campaign, day six has been somewhat smoother for Rishi Sunak.

That's not to say the Conservative election machine isn't on the lookout for potential missteps though.

During a TV interview in the changing room of a bowls club in Leicestershire, a hat was strategically placed to cover a name tag adorned with the blush-worthy surname "Glasscock".

While at a homeware factory in Staffordshire, a Tory aide spotted and swiftly removed a can of Monster energy drink from a worktop where the prime minister was about to inspect some ceramics.

Amid a slanging match over leaders taking 'duvet days' early in the campaign, a photo of the Tory leader next to a giant caffeine-stuffed beverage is probably not the message the party wants to send out.

You can read more from Sky News below:

What are the rules on voter ID?  How does tactical voting work? In what different ways can you cast your ballot?

The countdown to the election is on - and already the amount of information can seem overwhelming. 

We cut through the noise to bring you what you need to know, from registering to vote, to election day and what happens next.

Read on here...

We're still very much in the early days of the election campaign - but policy announcements are coming in thick and fast from the main two parties.

Here's a breakdown of what we've heard so far...

The Conservative Party

National service - The Conservatives have vowed to bring back a "modern" form of national service for 18-year-olds in the UK, which could involve military service of volunteer work.

'Triple lock plus' -   The party has promised to cut taxes for pensioners by creating a new "age-related" tax-free allowance - dubbed "triple lock plus". In short, a pensioner's allowance would rise in line with either average earnings, inflation or by 2.5% - whichever is higher - from next April.

Education - The Tories have promised to create a new qualification framework called the Advanced British Standard for those aged 16 to 18. The party also proposed making "some form" of maths and English compulsory up to the end of school.

Environment - Rishi Sunak has said he remains committed to plans to reach net zero by 2050, a goal adopted under Theresa May in 2019.

The Labour Party

Taxation - Labour has pledged not to reverse the two recent cuts to national insurance - and not to increase income tax. 

Economy - Two flagship economic pledges from Labour are the abolition of the non-dom tax status held by some wealthy foreign nationals, and the introduction of VAT to private school fees.

Waiting lists - The party has said it will get the NHS "back on its feet" by delivering 40,000 more evening and weekend appointments per week.

Environment - A major policy pushed by Labour is the formation of Great British Energy, which would be publicly owned. The party claims this would reduce household energy bills and create jobs.

Education - Also a headline policy from Labour is a plan to recruit around 6,500 new teachers in key subjects - and create a "national excellence programme" to support professional development.

Until voters go to the polls on 4 July, the Politics Hub will be looking back at some memorable moments from previous general election campaigns.

The big winner from the UK's first ever TV prime ministerial debate in 2010 wasn't primary contenders David Cameron and Gordon Brown.

No, it was Nick Clegg.

As the Tory and Labour leaders looked to take chunks out of one another, they saved their more conciliatory side for the insurgent Lib Dem.

He could do no wrong that night, with Messrs Cameron and Brown both finding it completely irresistible not to simply "agree with Nick".

Cleggmania took him all the way into Number 10 as part of the coalition, where he stayed until his party was turfed out by voters in 2015.

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