Industry View

1. Strong technical backbone related to the new technology. The more complex or revolutionary the technology, the stronger the required backbone and the difficulty to integrate the new with the old.
2. Willingness and ability to take risk. The willingness is mostly a personal trait. Ability is related to access to financial resources, as well as the culture and business drivers of the organization. Organizations need to adopt business measures that reduce the immediate risk of being an early technology adopter.
3. A healthy mix of long and short term business objectives. The value of many technologies comes from their long term use.

4. Time. Maturity of use and operational reliability of the new technology improves with time. So does the ability to know how and where to apply it. Just as reading golf instruction manuals does not make a person a golfer, reading about new technology does not make an expert. One needs to go through the learning process, which involves actual hands-on experience.
5. Visibility and measurement. There is no disagreement about the long term value of technology. If so, it needs to be included as one of the direct measures by which successful business practices are identified.
6. Involvement. All new technologies mature with use. During this phase an involved and interested user can play a pivotal role in the speed and direction of technology maturity.

Q: The circumstances of a very small producer, mid-sized independent, large independent and major are quite different. How does what the producer brings to the table vary with the size of company?

A: Larger companies are more process and policy-driven than smaller ones. While these improve cost and operational efficiency and predictability, they also may hinder innovation and risk-taking. Larger companies are more likely to have access to broader in-house technical skills, but this also slows down the decision-making process. The technical staff in smaller companies has a larger involvement in purchasing decisions than in larger companies. Larger companies have more elaborate purchasing processes that often discourage acceptance of new technology in favor of lower direct costs. Emphasis on cost is even more dominant in National Oil Companies for whom direct cost is often the only mechanism for awarding contracts.

The reorganization of large companies into smaller Business Units and Asset Teams was intended to create the best of both worlds; the efficiency of a large company together with the speed and focus of a small company. While in many regards this has been a successful business strategy, it is doubtful that it has helped accelerate acceptance of new technology. Within the oil and gas industry, the general opinion is that small and mid-size Operators are more receptive to new technology than the Majors. This point has a tremendous impact on the use of technology by the industry. The profitability of a new technology depends on its ability to go beyond the innovators and early adopters and become acceptable to early majority and pragmatists. This involves larger oil and gas and National Oil Companies.

Market studies clearly show the slow adoption of new technology by the oil and gas industry. Changing this market dynamic is going to be slow and will require awareness and participation of all industry segments. It will require a change in industry business philosophy, shifting focus from short term cost to long term value. Major oil and gas companies with their proven successful record of implementing change are natural candidates to lead this effort.

Dr. Ali Daneshy is the Director of Petroleum Engineering Program at the University of Houston and a partner in Dapish Oil and Gas Strategy Consultants, which provides consultation services related to analysis, business planning, marketing and launch of new technology. He has over 30 years of experience in the development and launch of new technology in the oil and gas industry. During his tenure at Halliburton he was the Vice President of Integrated Technology Products and responsible for the launch of several novel technology-based business units, including Enventure Global Technology.

Dr. Daneshy has published extensively on innovation, use of technology, and novel strategies for profitable technology launch. He also conducts short courses on these topics for the oil and gas industry.