Comments: Innovation and Uptake
Authors: Donnelly John 
Published: October 2018

Editor's column

Slow uptake of innovation and new technology is an oft-repeated criticism of the oil and gas industry. The charge is that, despite the vast array of complex technology developed by service companies and put into play by operators over the past 2 decades, the industry is slower to adopt breakthroughs compared with other industries—from pharmaceuticals to aerospace—and that that has hurt its ability to move forward and attract talent.

A new book examines whether that proposition is still valid today and what technology adoption in the future may look like. Extracting Innovations: Mining, Energy, and Technology Change in the Digital Age examines the nature, trends, drivers, and challenges of innovation in the extractive industries, such as oil and gas and mining, through a series of essays and vignettes.

Among the issues addressed are why the extractive sectors are historically slow to adopt and use new technology; what strategies can improve innovation and uptake; what new technologies will shape the sector going forward; how digital technologies are changing the competitive landscape and industry architecture; and how new technologies could improve social performance and environmental stewardship.

The chapter titled, “How Innovation and Research and Development Happen in the Oil and Gas Industry: Insights from a Global Survey” is based on a survey of SPE members and offers insight into where innovation is most likely to occur in oil and gas and in what types of companies. Robert K. Perrons, associate professor at Queensland University of Technology, surveyed primarily managers worldwide who play significant roles in R&D and technology deployment. The task was to see which entities in the oil and gas industry and which geographic locations are responsible for greater industry innovation and technology uptake.

The survey found that the major source of knowledge about innovation came from suppliers and clients, followed by professional conferences and industry standards such as HSE guidelines. Less emphasis is placed on government research organizations, universities, and public sector organizations. There were nuances to the above findings. For instance, international oil companies relied heavy on service companies for innovation knowledge, but service companies relied little on their suppliers. The survey found that about 80% of patents were generated by the service sector, confirming the shift of R&D from operators to service providers that began in the 1990s.

Also of note is a chapter examining a framework for a data-driven assessment of unconventional oil and gas resources. The plays in the study were the Bakken, Haynesville, Barnett, Marcellus, and Eagle Ford. Another discusses how industry can use social media to improve relations with stakeholders. Social media could allow companies to respond to concerns raised by communities or activists sooner, and improve communication among all groups.

Because of the widespread changes caused by the oil price downturn and the rate of technological and methodical changes taking place in the unconventional sector, the above topics call for follow up and should be viewed as a snapshot of conditions at the time. Perrons is concluding a followup survey on innovation that will outlined in an upcoming issue of JPT.