Advancing Industry Technology: A New Ecosystem for Innovation

Abstract

Management Over the past several decades, the upstream oil and gas industry has developed into a three-way structure consisting of operating companies, national oil companies, and service companies. In the absence of a major market need, such a triangular structure worked well enough to keep the industry functioning. As developing economies in countries such as China, India, and Brazil started to become major petroleum consumers in the early 2000s, crude oil prices began to skyrocket. The global oil supply and demand situation remains relatively tight (Fig. 1). Even today, the industry can barely meet peak demand of 90 million BOPD. The triangular structure now falls short of meeting market needs. A large part of the problem is that all the easily available oil has been found and much has been depleted. Growth potential now is in unconventional oil, Arctic resources, and improved recovery factors in mature areas. Development of these petroleum resources requires innovative and cost-effective technologies. These technologies must also be safe and environmentally benign. While many of them are being, and will be, developed by the upstream industry, many more can, and should, leverage technological advances taking place in other industries. Technology transfer from other industries is not a new phenomenon. From time to time, the upstream industry has benefited from innovations in adjacent markets such as the military, medical, optics, and information technology sectors. For example, military technology developed during World War II played a large part in modernizing the upstream industry in the 1950s and later years. Some of the innovations that migrated from military technology include shaped charges, gravity-based structures, and reeled pipelines and umbilicals. Shaped charges were adopted by the industry for use in tubular perforation and separation. Towed by the Allied forces from Britain, concrete gravity-based structures were flooded in place off the coast of France to serve as breakwaters during the Invasion of Normandy. Later, similar structures were used in the design of offshore oil production facilities. Reeled pipelines and umbilicals, used to supply fuel across the English Channel to Allied troops landing in Normandy, became the basis for the coiled tubing and umbilical techniques now used in oil-field operations. More recently, nuclear magnetic resonance and digital core analysis developed in the medical and chemical fields respectively, have fostered technological advances in exploration and production. However, as significant as past technology transfer has been, it has occurred haphazardly. What is now needed is a more aggressive, organized system for the transfer of external technology into our industry. To create the ecosystem necessary to accomplish this, we first must honestly address a number of issues that impede technology transfer.