Is Desperation the Mother of Innovation? Why Technology Flourishes Best in Bad Times
Authors: Pritchett Jim , Barna Bill 
Published: February 2015

Guest editorial

It might seem that technology advances the fastest during boom times, especially in capital-intensive industries such as upstream oil and gas, but actually, just the opposite is the case. Historically, widespread economic and social dislocations and uncertainty for the future drive collective determination to overcome adversity and bring about lasting change. Even in prehistoric times, the Egyptians, Chinese, Aztecs, and other early cultures created technological wonders many millennia before the word "technology" was invented.

What we call "technology" today has always been about humankind's need for greater good in overall living conditions. It is also usually desperate times that trigger the most major technological strides. A prime example of this occurred with horizontal drilling technology. Although the first horizontal wells were drilled in the US in the 1920s, it was not until the 1970s—amid the energy supply and intermittent prices shocks of that era—did serious technology development progress. Yet it was not even during this relatively high-priced market that horizontal drilling technology moved to the point of mainstream adoption. Rather, it was after oil prices collapsed in 1986 to as low as USD 6/bbl, then stayed weak and wavering in the USD 20/bbl range for years, that the E&P sector became desperate to drive down finding and lifting costs. A pioneering collaborative industry effort rallied companies to participate in a nonprofit consortium that took directional drilling technology from early development to mainstream adoption by the early 1990s.

During these same years, a number of other advanced technologies progressed in record time, including underbalanced drilling, diamond drill bits, "designer" drilling muds, automated oilfield equipment, and, by the 1990s, specialized engineering and geoscience technical software. The full-scale commercial adoption of these technologies positioned the upstream sector to handle sharp swings in oil prices and economic trends, as has happened again just within the past year.

Today's "Desperation-Driven" Innovation Trends

Never before has the world seen oil market instability as profound as during the past year. In sustained high-price/high-demand periods, such as were experienced between 2003 and mid-2008, producers have no choice but to focus on maximizing output and meeting consumer, commercial, and industrial demand. With strong capital spending budgets, the E&P sector was better able to afford applying the most advanced technologies already available, such as drilling deeper offshore wells in high-potential frontier areas, developing more challenging onshore wells in remote locations, drilling longer horizontal and multilateral wells, and expanding the use of advanced information technology systems, services, and software. However, as has happened in other high-price/tight-supply periods in the past, development of newer technologies still in their infancy, while hardly ignored, was not the overriding emphasis; keeping reliable supplies flowing was.