The oil and gas industry has always been highly competitive, but it’s also been quite collaborative, with competitors coming together to work on major projects and fund research. Then there are the more formal collaborations, some industry-led, others government-funded. E&P visited with Keith Mackie, director of strategic projects and international development for ITF, to judge the efficacy of some of these initiatives.

E&P: Can you give some longer term perspective from your own industry/project experience of how industry or government-backed technology collaboration initiatives have worked in terms of benefiting the upstream industry overall?

Mackie: Many private company and government-backed innovation initiatives have been started over the last 20 years or so, achieving varying degrees of impact and effectiveness. Government-backed initiatives were created to benefit a specific country or region, and through their efforts many technologies have been developed and commercialized that may otherwise not have seen the light of day or may have taken longer to reach the market.

However, one limitation of a model where there are many organizations working in similar spaces in different geographical areas is that the impact experienced by the global industry overall may not be as powerful as desired, with the potential existing for inefficient duplication of effort and overlap of focus. Forming strategic partnerships across a number of these initiatives could be one solution, and companies like ITF work extensively across geographical boundaries, often in collaboration with other industry partners, specifically to encourage the global development and delivery of technology.

E&P: How have these various programs/initiatives evolved in terms of their effectiveness in delivering actual workable solutions (i.e., commercially viable)?

Mackie: The current industry position of placing a greater scrutiny on costs means there is now a much stronger emphasis on stimulating, sourcing and delivering technology that has a quicker industry impact and return on investment. There is still a clear need for the type of longer term research and development work that has traditionally brought game-changing technology solutions to market over a longer timescale. However, most technology programs/initiatives currently face the same challenges of delivering solutions quickly, at low cost and, where possible, with global rather than basin-specific application.

E&P: How would you say technology collaboration ventures, joint industry projects (JIPs) and R&D programs have fared in the industry downturn? Have they been damaged? Paradoxically, has the downturn perhaps been a driver toward fostering more collaboration and joint industry efforts?

Mackie: This challenging period is driving an upsurge of interest in developing new and enhancing or adapting existing technology. This has created fresh opportunities for technology developers as the pursuit to cut costs and increase efficiency is pushing an often risk-averse industry out of its traditional comfort zone.

We need to do something radically different, and in this respect it’s an exciting time for technology development. There’s a realization that demand-led innovation can transform our industry and safely cut costs in the same way as the automotive and aerospace industries have done in recent years. For example, ITF has had excellent speakers representing these industries at our annual Technology Showcase, and it is clear from listening to them that new technology opportunities need to be shared more openly by end users for us to increase the speed of technology deployment in the industry.

E&P: What does ITF see its partnership with the Society of Petroleum Engineers (SPE) achieving in terms of facilitating the eventual introduction of new or improved commercial technologies? What’s the goal?

Mackie: The memorandum of understanding [MOU] between our two organizations aims to strengthen our already close relationship by jointly sharing and supporting global technology development opportunities. This in turn will give more impetus to our Technology Program and demonstrate clear action being taken to satisfy our members’ technology demands.

The MOU will allow ITF to potentially leverage SPE’s strong network of industry experts and, where agreed and appropriate, to take action to progress technology challenges. Other specific opportunities to work together could include running combined events or calls for proposals, mutual sharing of information with our respective member communities and joint promotion of each organization’s events.

E&P: Is the competitive edge that sometimes exists between certain JIP partners or joint venture (JV) participants something that technology development ventures always overcome? Can such concerns seriously hold back a program’s progress for fear of “giving too much away?”

Mackie: Not all technology challenges are appropriate for collaborative development. Companies may be working on their own technology solutions that they believe will give them a competitive edge. The space in which ITF operates is where collaboration is seen as the preferred and most effective way forward, where benefit is derived for multiple parties and potentially for the entire industry through eventual commercialization. However, it is also true that over the years ITF has launched a number of sole-funded projects (i.e., not traditional JIPs) directly between small developers and Tier 1 operators. Though it’s not ITF’s traditional route, if it ultimately leads to the development of required technology, then it’s an option we would always consider.

E&P: What are the biggest obstacles to the success of JIPs or collaborative technology R&D facilitation efforts?

Mackie: The biggest current technology development obstacle to overcome is reduced budgets for R&D investment. This can significantly hamper the launch of new projects and continuing support of existing JIPs/JVs.

The success of creating new opportunities and seeing ongoing projects progress is contingent on many factors. For example, it is essential to secure internal champions at an early stage who are empowered to provide technical and commercial stewardship. We have seen great examples of this approach in some of our most successful projects, such as in subsea engineering and subsurface imaging areas.

Active engagement by participants through regular information sharing and dialogue during the course of the project is also essential. Paying fees to join but not participating actively more often than not leads to suboptimal outcomes being achieved. Before committing to join a JIP, it is essential for each participant company to be clear on its internal strategy on how and where to use and take advantage of the subsequent JIP deliverables.

E&P: What is the selection procedure for choosing the most pressing technology areas for industry attention? What’s the deciding requirement?

Mackie: ITF targets the priority technology challenge areas highlighted to us by our membership, which includes national oil companies, international operators and service companies. Through regular dialogue with our members, an overall challenge area such as well abandonment is identified and then developed into a thematic activity. The key for ITF is to initially understand the landscape around the challenge area and then to identify the specific areas where a collaborative technology solution could create a positive impact. To do this, we look for support and validation from subject matter experts within our membership when shaping a concise call for proposals document to send out to our global network of developers.

As an example, the ITF call for proposals on Hybrid EOR was specifically developed through working with the Gulf Cooperation Council [GCC] ITF members at that time [Kuwait Oil Co., Petroleum Development Oman and Abu Dhabi National Oil Co.]. A comprehensive hybrid solution (e.g., chemical co-injection, use of nonsteam technologies, smart surface facilities with low power consumption) was deemed to be of high added value to the GCC region. ITF procured solutions from the global technology development community across universities, subject matter experts, and Tier 1 and 2 service companies.

E&P: More companies are joining for technology partnerships throughout the upstream sector—GE with Statoil, GE with Technip, FMC with its 20K partners, etc. Is this the way the industry is naturally going to go?

Mackie: Historically, the burden on R&D spend was always on operators to develop and implement technology as an enabler for programs they have. Over the last 15 years or so there has been some swing toward supply chain companies being looked upon to lead R&D projects. During the current downturn, it appears that collaboration on technology for large projects has enabled these projects to go ahead with shared knowledge, risk and costs.

Comments