The Value of Research And Development (R&D)
Authors: Bennion Douglas 
Published: March 2010

Introduction

Because of restructuring and cost cutting during the past few years, most of the national and international petroleum sector companies have closed their research centers. The objective of this article is to show that there is still money to be made by performing R&D studies to reduce the cost of producing oil and gas. For the past 24 years, Hycal Energy Research Laboratories Ltd. has been involved in contract research for companies around the world. From this research, a number of papers have been published in recognized technical journals. Because of client requests, other research has not been published, indicating the value of R&D. This research has given them a competitive advantage over other companies.

There are two main types of research: one is "ivory tower," and the other is missionoriented. Ivory tower researchers are often pictured as "mad scientists" in white lab coats pouring chemicals with rising smoke and arcing electricity. They create arcane equations, theories, and laws, which no one but the researchers can understand. It is, however, these equations, theories, and laws which mission-oriented or applied researchers use to develop products, services, and techniques to increase the efficiency and profit of small, medium, and large corporations.

This article will discuss research in Canada and upstream research for the petroleum sector. The article will also give examples of how research has increased the productivity of oil and gas wells.

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Research in Canada

Canada, as a nation, is not known for the amount of money spent on R&D. This problem has been recognized for a number of years by the federal government and programs have been instituted to motivate industry to perform more R&D. Unfortunately, these programs have not resulted in increased levels of money being spent. Figure 1 shows the percentage of gross domestic research and development costs (GERD) compared to the gross national product (GNP). The figure indicates that, of the G7 countries, only Italy is lower than Canada in the amount spent on R&D. Sweden and Israel have been added to the plot because of their high percentage spent on R&D.

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A UN development report endeavored to show the social and economic aspects of R&D. Figure 2 shows the number of scientists per million population for several countries. The U.S., Japan, and Sweden have the highest numbers; Canada is about average.

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Figure 3 presents the number of patents per million population for several countries. Japan has the highest number of patents issued, while Canada and Italy are extraordinarily low. Figure 4 shows the income realized from licenses and patents in U.S. dollars per million population for a number of countries. While Canada is low, it has performed better than France, Germany, and Italy. Figure 5 shows a correlation between the percentage of GERD to GNP and the parameters plotted in Figures 2 to 4. The data show a positive correlation up until about 3% of GERD to GNP is reached for all the parameters.