Throughout the world, advances in new technology have always remained important for the oil, gas and energy sector. But when the going gets tough, do the innovators keep going? With the current challenges facing the sector and the outlook for the future uncertain, there’s never been a better time to find out.
The 2015 Lloyd’s Register Energy Report, “Innovating in a New Environment,” gives great insight into what’s going on in the minds of upstream oil and gas senior management professionals. We read the report and have brought you some of the key findings below.
The oil price decline is having a negative impact on innovation in upstream oil and gas, but not all projects are the same. As you might expect, larger long-term projects are being put on hold, but those with a shorter lead time to maturity may be more likely to be fast-tracked. At the moment, projects with a focus on cost saving and improved efficiencies are the most likely drivers of innovation.
Deployment of new technologies presents the biggest innovation challenges for upstream companies. The issue holding many companies back here is not so much the creation and development of new technologies; most firms rate themselves as better than their peers in this area. The biggest problems lie with implementation and with company “culture.” More than half of those surveyed rated themselves as no better or below average than their peers at deploying new technologies, and more than 42 percent admitted they need to create a “culture of innovation.”
Cultural barriers must be overcome for much-needed, wider, external collaboration to succeed. More than 40 percent of firms surveyed think the ability to collaborate with third parties is the key to improving innovation performance. A majority also feel under pressure to collaborate with companies both outside and within the oil and gas sector. The bad news is a thorough and continued shift is needed to make innovation the norm in the oil and gas sector. Reasons given for the “wariness” in working with others include concerns about sharing intellectual property and competition issues.
There are high hopes for crossover technologies as upstream companies become more open to learning from other sectors. Aerospace is often cited as the main area for crossover technologies that can be applied to the oil and gas sector, but this stance is now widening to include other sectors such as information communication technologies, biotechnologies and data analytics. Some technologies seen by executives as having strong existing or potential application for the oil and gas sector include: drones, additive manufacturing (3-D printers), super insulation, data mapping and nanotechnologies.
Mastering advanced data technologies offers countless efficiencies in a cost-conscious environment, but upstream companies have only scratched the surface. Many industries are being transformed by advanced data collection and analytics, and some upstream companies are beginning to put this to good use. Improved use of data is seen as a driver of improved business performance but less so for innovation projects. Executives admit the way they use data is not outstanding, with the hindering factors being “silos” and a lack of data integrity across different parts of the business.
In conclusion, collaboration is needed to innovate, but many companies are still very cautious on this. In response to low oil prices, unsurprisingly, many companies are shelving major development projects, especially those involving advanced technologies and “big data.”
On the positive side, many are looking at innovation from the perspective of increased efficiencies. The closing paragraph of the 2015 Lloyd’s Register Energy Report sums it up nicely: “A sustained period of low oil prices, then, can help to erode the conservative attitudes toward innovation that have long been evident in the upstream oil and gas industry. Staying afloat in tough times, after all, requires inventiveness and an openness to ideas that have helped others.”
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