Innovate or die. In today’s Energy industry, characterised by challenge and change, few would dispute the validity of that time-honoured advice. Happily, the innovation pipeline is promising, bolstered by growing appetite for collaboration, a sharper focus on attracting new talent into the industry and an increasingly interconnected global network of knowledge.
And yet, speed of adoption lags behind that of other industries; industries that are subject to the same rash of safety, legal, commercial and financial pressures faced by Energy companies, such as Aerospace. Additive manufacturing and unmanned aircraft systems are two examples of technologies that are already widely used in sister industries but are yet to see wholesale adoption within the Energy industry – despite the significant and tangible benefits on offer. As well as learning lessons from other industries, we need to develop a greater understanding of what’s stopping us.
Clearly, difficult market conditions have curtailed investment in technology to a large extent – for most organisations, the focus is on operating costs rather than enhancement. So any investment that gets over the line will have a solid case for cost reduction. On the flip side, the urgent need for cost reduction creates a stronger drive for innovative technology that that facilitate efficiency and value.
In an industry that is primarily concerned with monetising high-risk, capital-intensive assets, few organisations can afford failure. As a result, risk appetite is minimal – which effectively means that many innovative technologies simply cannot scale the risk threshold, however promising, until they have been tried and tested and standardised – by which point funding has long since expired.
Despite these challenges, at a our Houston executive briefing it was recognised that, when it comes to innovation, deployment is key, not development. There was also an understanding amongst participants that collaboration with industry and public sector partners can help to overcome some of the issues. Although this in itself is not without its challenges, the opportunity to share risk and resources can have a dramatic impact on an organisation’s ability to unlock and accelerate the benefits of innovative technology.
Ultimately, it is clear that technology plays a fundamental part in ensuring that hydrocarbon reserves can be extracted efficiently and, within the Energy industry, there is a strong desire to learn and improve. As part of our drive to advance this, Lloyd’s Register Energy has recently launched a global programme of research and dialogue involving senior executives from across the industry, the Technology Radar.
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Cost-risk evaluation leads to deferred P&A.
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