A More-Holistic Approach to Oilfield Technology Development

Abstract

This article, written by JPT Technology Editor Chris Carpenter, contains highlights of paper OTC 27806, “A More-Holistic Approach to Oilfield Technology Development,” by M. Sequeira, OTM Consulting; H. Elshahawi, Shell; and L. Ormerod, Ormerod Consulting, prepared for the 2017 Offshore Technology Conference, Houston, 1–4 May. The paper has not been peer reviewed. Copyright 2017 Offshore Technology Conference. Reproduced by permission. The complete paper takes a holistic view of technology maturation that addresses both technical and nontechnical risks. The definition of success is expanded to include the establishment of successful, commercially viable, and sustainable solutions that meet end-user needs and requirements. The Case for Change Across the industry, companies have seen tremendous drops in revenue and profits along with returns falling well below the cost of capital. The survivors become much more focused on capital-expenditure reductions, with investments almost entirely driven by near-term free cash-flow generation. The effect on innovation within the industry has been dramatic, yet technological innovation is needed now more than ever. This situation, while difficult, does offer opportunities. The huge reduction in overall investment and resources will lead to an accelerating production decline in an aging production base and increases the likelihood of significant supply deficits that can only be reversed by a broad-based increase in global exploration and production spend. Defining the Problem Historically, the industry has lagged behind high-tech industries in terms of research and development (R&D) expenditure relative to revenues, pace of technology maturation (greater than 10 years from discovery to deployment), and the lower fraction of new technologies reaching commerciality. With the billions of dollars of R&D investments stuck at the end of funnels and awaiting deployment years after their initial development, finding a better way of managing technology maturation is essential. Several issues must be considered: Current technology-maturation processes tend to focus on progressing through a series of stage gates. These tend to be defined on an almost entirely technical basis, with little consideration given to the commercial challenges involved in delivering the ultimate solution within the constraints of an industry with a rather complex supply chain. This results in far too many projects marching into the so-called “Valley of Death”—the virtual chasm that separates innovation from commercial demonstration (Fig. 1). Technology experts are often left to deal with the commercial aspects of their invention without the knowledge or skills necessary to manage commercial work. The investment required to deploy and commercialize an innovation is greatly in excess of the amount originally budgeted or approved. An innovation may eventually work, but it might take much longer than originally envisioned to reach truly scalable and replicable deployment. Many inventors are not integrated into the supply chain and lack what it takes to deploy technologies at scale.