Op­er­a­tional ef­fi­ciency is now top driver for in­no­va­tion in­vest­ment


As the sec­tor be­comes in­creas­ingly digi­tised, new skills are needed, which are of­ten in very short sup­ply - if avail­able at all. At the same time older in­stal­la­tions, of­ten cus­tomised over the years, rely on the lo­cal knowl­edge of long- term staffers, the ma­jor­ity of which are ap­proach­ing re­tire­ment.

Fur­ther, the harsh en­vi­ron­ments to which many op­er­a­tions are sub­ject amplify the risk to life and the en­vi­ron­ment; grow­ing threats of cy­ber- at­tacks have yet to be ad­e­quately mit­i­gated within the sec­tor; the reg­u­la­tory en­vi­ron­ment is in­creas­ingly strin­gent and com­plex; and costs as­so­ci­ated with R& D and op­er­a­tions con­tinue to climb.

All of this is set against a back­drop of global cli­mate change, which de­mands ur­gent and dra­matic ac­tion to re­duce car­bon emis­sions, whilst main­tain­ing se­cure and eco­nomic en­ergy sup­plies to global com­mu­ni­ties.

There are no easy so­lu­tions to any of th­ese prob­lems, but each one stim­u­lates an im­per­a­tive for in­no­va­tion. Ac­cord­ing to Lloyd’s Reg­is­ter

En­ergy, “Op­er­a­tional ef­fi­ciency” is now the top driver for in­no­va­tion in­vest­ment, nar­rowly over­tak­ing “Safety”, which topped the list in the 2014 sur­vey. To Duco de Haan, com­mer­cial de­vel­op­ment di­rec­tor at the firm, this is un­sur­pris­ing. He said: “When the busi­ness has ex­hausted all the op­tions to take out cost, tech­nol­ogy is the only thing that can make quan­tum leaps in cost re­duc­tion.”

In ad­di­tion, to nudg­ing down the bot­tom line, com­pa­nies are also look­ing to push up the top line by ex­tract­ing max­i­mum value from re­sources with “Im­prov­ing ac­cess to po­ten­tial re­serves” and “In­creas­ing the life span of as­sets” rat­ing more highly as in­no­va­tion driv­ers in 2015 than in 2014.

From a tech­nol­ogy stand­point, re­spon­dents iden­ti­fied a num­ber of in­vest­ment pri­or­i­ties, in­clud­ing en­hanced oil re­cov­ery ( EOR), un­manned aerial ve­hi­cles ( UAVs) and stan­dard­i­s­a­tion of oil fields – all of which oc­cupy a le­git­i­mate po­si­tion on a cost- re­duc­tion agenda. That said, in­dus­try ex­ec­u­tives have not dis­re­garded the need to find new sources, ev­i­denced by the top three rank­ing “Im­prove ac­cess to po­ten­tial re­serves”.

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