Lloyd’s Register (LR) has released a new study entitled ”Oil and Gas Technology Radar 2015” revealing the need for greater collaboration, data analysis and cultural change to address the innovation challenges in oil and gas industry.
- The report finds that 47% of oil and gas executives say they have fallen short of their innovation goals in 2015 – a twofold increase since early 2014.
- It also reveals that 2/3 of respondents say they are under pressure to collaborate more with other organisations within the sector.
- The study points to the continuing challenges to innovating successfully, including collaboration, data collection and analysis and industry culture, highlighting the continuing need for innovation in the current industry environment and for the future sustainable development of the industry
The oil and gas industry is undergoing a period of significant uncertainty”, said John Wishart, Group Energy Director, Lloyd’s Register. “The oil price slowdown is clearly impacting investment in innovation initiatives. However, our report finds that contrary to perceived wisdom, innovation has a crucial role to play in the current environment, where it creates operational efficiencies and is cost-effective.”
“To innovate properly and achieve business goals companies must address a number of common challenges, including collaborating more openly, using data more effectively and changing traditional mind-sets”, continued Wishart. “Encouragingly, our findings show that overall the industry understands the need for innovation and has begun reaching out to other sectors to gain technological insight.”
In the opening part of Technology Radar 2015, the report considers the role for innovation in the changing innovation landscape and concludes that the cyclical downturn should be a driver of innovation, not a barrier. Crucially for industry professionals, the report outlines three scenarios for how different oil prices may affect innovation, examining the types of innovation that will be prioritised in each scenario. The majority of oil and gas executives believe the oil price will sit between $50-$70 in the next year, with the highest percentage (27%), believing it will hover around $70. This will in many cases hinder investment in innovation.
The report also looks at how executives are placing increasing emphasis on collaboration, both internally and outside of the industry, as they adapt technology from other sectors. Two-thirds of respondents say they are under pressure to collaborate with other organisations within the sector. When they do collaborate, upstream companies focus on the early stages of a project, and often around safety. The report reveals an overarching cultural shift is still required to fully integrate genuine collaboration in innovation.
Finally, in part three the role for data collection and analytics in driving innovation is assessed, finding that more advanced data collection and analytics are a must have in the current low oil price environment. Lack of data and systems integration across different parts of the business are huge barriers to successful data collection and analytics, with silos the biggest cause of the issue.
Despite understandable pessimism due to the current landscape, Technology Radar 2015 shows that the downturn in the oil price is strengthening the need for innovation, not weakening it. The unique insights provided by this report show industry professionals how they can address the challenges to better innovation and enhance operational performance.
The Report takes the pulse of innovation now and the outlook for the next few years. The following Infographic, which is available at the report, depicts what is happening in the low oil price environment:
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