Innovation Follows Price
Higher than normal oil prices during the past few years have led to a sharp rise in spending on upstream technology and innovation. The investment drivers are the need to extend the life of producing assets, improve operational efficiency, access new resources, and improve safety.
Those are the results of a survey of 257 oil and gas executives and professionals who work for international and national oil companies, independents, and the service sector in Asia, Europe, and the United States. Conducted by Lloyd’s Register Energy and Longitude Research, the survey examined the rate of upstream innovation and which technologies were likely to become widely adopted in the near and medium term. Some of the participants in the study included Shell, Maersk Drilling, Woodside Energy, UK Onshore Operations Group, Enertech, GE Oil & Gas, TouGas Oilfield Solutions, Horton Wison Deepwater, and the US National Energy Technology Laboratory.
Among the findings are:
- 73% surveyed believe innovation in the upstream sector is increasing.
- 68% intend to increase R&D budgets in the next 2 years.
- In the past 2 years, 46% of breakthroughs have been driven by international oil companies and 31% by pure exploration and production (E&P) companies.
- Respondents expect an increasing role in technology spending by national oil companies (NOCs). Two-thirds of those polled expect NOCs to increase their spending on R&D significantly.
The technologies thought to be most valuable in the short term and likely to become mainstream by 2020 are automation, including remote and subsea operations; enhanced oil recovery advances; integrated real-time operating systems and related software advances; deposit-resistant materials and coatings; injection fluid and additive improvements; and improvements in inflow control devices and valves.
High-impact technologies going mainstream in 2020 and shortly thereafter include high-pressure/high-temperature drilling, wellhead, and related technologies; multistage hydraulic fracturing; automated and wireless monitoring; digital wells, systems integration, and related technologies; remote sensing, radio-frequency identification, and related technologies; horizontal electrical submersible pumps; steam-assisted gravity drainage and other heavy-oil extraction techniques; composite risers and related technologies; and gellants and other fracking fluid ingredient improvements.
The survey was conducted in April and May of this year, before the recent drop in oil prices, and respondents noted that high oil prices since the mid-2000s have led to hefty increases in R&D and innovation spending. Although price seems to drive innovation spending, technology adoption is affected by industry culture. In the survey, only one quarter of respondents said their companies are “early adopters,” while 56% of respondents described themselves as “fast followers,” adopting technologies that have proved their worth. A major factor in slow adoption is the difficulty of testing technologies in appropriate, real-world conditions. More than one in five said this was the biggest problem ensuring quality-assurance requirements associated with deployment.
Innovation Follows Price
John Donnelly, JPT Editor
01 November 2014
Don't miss out on the latest technology delivered to your email weekly. Sign up for the JPT newsletter. If you are not logged in, you will receive a confirmation email that you will need to click on to confirm you want to receive the newsletter.
19 June 2019