Technology Innovation and Adoption in Oil & Gas Industry — Why Did It Slow?

Author

Drillinginfo, Contributor

July 15, 2015

As we’ve discussed before, the great crew change is a real concern in the oil & gas industry. Another obvious concern is the slow pace of technology adoption. The oil & gas industry has historically relied upon rudimentary paper-based technology and really had no need to think outside of the box because companies were too busy developing resources and making money.

Just a year ago, WTI was over $100 a barrel, and since the economics worked so well, there was no real push toward finding efficiencies. And in the oil and gas industry, there was no real precedent for updating products and tools when compared to other industries where the pace of technology adoption is widespread.

Faster, Better, Cheaper is the Norm

The technology industry grew up on a foundation of innovation, and even “leapfrog” products are not really that surprising. Whether it is a consumer product, network security infrastructure or semiconductors, the technology industry is well-versed in the concept of obsolescence, and there is the expectation that something new and better will always be just around the corner.

For example, after Ultra HD 4K televisions were announced, many consumers were either buying them or had a plan to buy one when prices dropped. Suddenly, early adopters began abandoning 1080p and retailers dropped prices on the current, but now “old” technology, to help move inventory and introduce televisions that still did not have content to support it. What? That’s right, 4K content is rare, so even if you have this high-end piece of gadgetry in your home entertainment system, companies are still working on delivering something you can actually watch in 4K.

In this tech-frenzy world, consumers and businesses alike will always eagerly await the latest shiny object. From smart phones & wearables to virtual meeting rooms to high performance computing platforms, new technology offerings can provide a competitive edge, enhance productivity and sometimes most importantly, amp up the cool factor.

The Contrast

Early adopters are not as common in the oil & gas industry, and the expectation of innovation does not seem to be as strong as it was in the early days of the industry. The industry is rooted in innovation, most notably in the upstream space. From the first well drilled to the Hughes drill bit to hydraulic fracturing and shale…historic inventions and revolutions have always been a part of this industry’s DNA. So, how then, does the spirit of modernization get lost?

Many geoscientists, engineers, landmen, and business leaders continue to accept the most basic of tools. They make do with out-of-date technology and do not seek the latest and greatest the market has to offer. At conferences and tradeshows, attendees are frequently excited about innovative products and tools available to the industry, but the enthusiasm seems to stop there.

There are a couple of contributing factors at work here: the economic pressures driving the industry force everyone to just “get the job done”, and sometimes, scientists are prone to the “not invented here” syndrome leading to skepticism of new technologies or methodologies.

Getting Back to What the Industry was Founded On

Understandably, the industry has been booming and millions were made with only basic tools and data. Why would a company try to implement something new when there is no compelling business reason to do so? That might be fair, but with oil prices at historic lows, it’s time to re-embrace the spirit this resilient industry was founded upon.

The new crew entering the market was not only raised on technology, they expect it. As we’ve discussed before, the workforce of the future will need technology to do their jobs effectively and bridge the vast experience gap. Getting by with dated and fragmented technology will no longer work for an industry that is experiencing massive shifts due to heightened market pressures, efficiency demands, and the ever-increasing need for new technology.

So what about these super smart geoscientists and engineers? They have been modeling and creating completion techniques for years in their own think tanks and innovating among their peers. This will no doubt continue, but with new tools and technologies at their fingertips, increased efficiencies and streamlined workflows are a mouse click away. Think about it. If an operator is spending two-thirds of its time gathering data, ensuring quality control, and importing and exporting from multiple software tools simply to create a field plan or test a single “what if” scenario, how efficient is that? What if the same amount of work took less than 10% of the operators’ time with the remaining 90% devoted to creating a next-level workflow that becomes the organization’s competitive advantage? Imagine creating all the “what if” scenarios the organization needs to be the most effective, instead of having to prioritize only a few. Just imagine the possibilities.

Understandably, most organizations still need to justify the technology investment, but that can be done. The mental shift from abandoning the old way and trying something new can be difficult. The cutover costs can seem high and there might even be the fear factor of what if it doesn’t work? Well, on the other hand, what if it does work? This could be the competitive advantage an organization has always needed yet never knew it could have.

Economics are forcing the hand, and industry needs to be inspired by the innovation that has always existed yet seems to have been lost or forgotten.

It’s time to look for opportunities that turn challenges into solutions and favorably impact the bottom line. The decline in oil prices is spurring the need for change and the new crew will be the tip of the spear in this environment. Innovation is the bedrock of the oil & gas industry and it is time to bring it back to the forefront.

This article was written by Drillinginfo from Forbes and was legally licensed through the NewsCred publisher network.


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