Lessons for a Downturn

Topics: R&D
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Downturns offer you a choice: panic and shut down all but breathing or make use of the opportunities that desperation has handed you. What? In the good times of a price boom, we have no time, and usually no impetus, to alter the way we work and how we apply science and technology. This activity breeds inefficiency and waste, but the flow of easy profits is like an opioid drug, blinding forward-looking senses that should warn us that a price bust may be around the next corner with a demand reduction, manufacturing slowdown, renewable energy advance, or an upset in political alignments.

The world currently needs the energy density and reliability of fossil fuels, but high cost and inefficient use will eventually kill this golden goose. Often, when the good times end, we pull back, believing all the while that the next boom and easy profits are just around the corner if we can just hold on. This is the recipe for bankruptcy.

Every wave of a technology powerful enough to alter the economic landscape in any industry has a life span divided into three parts: an often rough beginning, a period of growth where the technology reaches a zenith of efficiency, and the inevitable plateau where we think it cannot be exceeded or replaced. All the while, a new technology is often quietly building that can upset our comfortable operations world. The history of the oil field is littered with the memories of companies that ignored developments by overreaching only for the profits made available by a boom and ignoring the future. While some would like to believe that wildcatters’ luck will drive the next upturn, the promises of unconventional formations will not be unlocked by chance. An attempt to express the problem might start with a small modification to the proverb, “There are none so deaf as those who will not listen.”

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Lessons for a Downturn

George E. King, Distinguished Engineering Adviser, Apache Corporation

01 August 2016

Volume: 68 | Issue: 8