Growth lies in innovation

Oil news
Oil news
Opinion by Gemma Noble and Luke Johnson

Building an agile workforce, establishing a culture of innovation and embracing technology and big data will be crucial to success in the oilfield services sector. Gemma Noble, Audit Director at EY, and Luke Johnson, CEO at Cognitive Geology and finalist in the ‘Rising Star’ category of EY Scotland Entrepreneur of the Year 2018, explain why.

It’s safe to say that technology and innovation have had a vital role to play in the development of the oilfield services (OFS) sector. In recent years, as market conditions worsened, many companies focused on becoming more collaborative and innovative to reduce costs, streamline operations and differentiate offerings.

But, as the oil price improves and the market recovers, is there a risk that this driver for change and innovation could disappear?

Disrupting the status quo

According to Gemma Noble, opportunities for the OFS sector are plentiful, but they will only be realised if companies are prepared to disrupt the status quo. “It’s a question of how quickly, not if, the industry’s innovation mindset will change,” says Gemma.

This begins with people. Headcount reductions have resulted in the average age of employees rising to 43, and significantly fewer new joiners under the age of 30. “Attracting new talent and transferring existing knowledge to the new generation is crucial to unlocking innovation,” explains Gemma.

“We need to make the sector a place where those at the start of their career can see their future, and where their fresh thinking is harnessed to spark new ideas, particularly as those in this age bracket are ‘digital natives’.”

Recognising existing talent should also be a priority – “it’s crucial that the sector moves away from pigeonholing existing staff and encourages their contribution” – as should embracing ideas from other sectors.

Moreover, innovation across systems, processes and technologies will be fundamental. “Companies need to find the ideal blend of human and machine capabilities in every function, capitalising on new technology and digital tools,” says Gemma.

Organisations such as The Oil & Gas Technology Centre in Aberdeen are helping companies to implement digital technology and big data analytics to great effect. “This can help to highlight where the limited budgets available for much-needed innovation can make the biggest impact,” explains Gemma.

Technologies such as Robotic Process Automation (RPA) will be essential in providing increased digital security, accuracy and compliance, contributing to cost savings and freeing up employees from administrative tasks to focus on value-added activities and creative thinking.

Innovation in action

The directive to adopt these innovations must come from the top if companies want to encourage long-term supply chain diversification, says Cognitive Geology’s founder and CEO Luke Johnson. Proven innovation, too, is important. “It must be proven to be safe and accurate before you can risk lives, the environment or capital.”

Based in Edinburgh, Cognitive Geology has developed software offerings for operating company (OPCO) end users: Hutton, which emulates the behaviours of geomodellers to make predictions away from well control; and Smith, which speeds up the production of publication quality technical prints from hours to seconds.

Innovative thinking has been at the heart of the company since its founding in 2014. “Our founders are OPCO end users themselves,” says Luke. “Technical software concepts are hard to validate with customers. But, by putting domain experts from OPCOs into our product teams, we become our own ‘customer’.” The company also works with Shell, which encourages start-ups to help bolster the supply chain.

Employment is another area where the company has acted differently. “I hired software engineers from outside the sector,” says Luke. “Our industry once led high-performance computing, but today we’re eclipsed by gaming, the online marketplace and blockchain. Bringing external talent in is the first step to catching up.”

Finally, at an office level, idea sharing is encouraged. “We define ourselves by four cultural pillars: ambition, curiosity, collaboration and invention,” explains Luke.

Crucially, these approaches could give OFS companies the potential to unlock activity in the UK Continental Shelf (UKCS). “The UKCS must continue to manage its costs to compete against other hydrocarbon basins,” says Luke, who is hopeful that the company’s offerings will improve UKCS economics by helping end users to make quality decisions faster.

“The UKCS is a tough operational environment and, although its peak production is behind us, the know-how built in the UK to solve UKCS challenges can be exported indefinitely,Luke concludes./

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