The downturn in oil prices has led to a lot of chatter about how best to spend money in the oil and gas world, and M&A activity is frequently cited as a prudent use of funds.
Another use, which came up repeatedly at the 2015 Offshore Technology Conference, is investing in technology, and specifically technology that can be transferred between industries and among companies.
A panel about innovation in the oilfield and cardiovascular medicine featured perhaps one of the first cardiovascular surgeons to speak at an oil and gas conference. (It’s worth remembering that medicine is the other juggernaut industry in Houston, where OTC is held each year.)
Pumps and pipes are an integral part of both medicine and oil and gas production, and this has given rise to a collaborative effort aimed at transferring technologies across industry boundaries.
What surgeons and producers are focusing on is “fundamentally doing the same thing,” said Dr. Alan Lumsden of the Methodist DeBakey Heart & Vascular Center – you can thank the center’s namesake, Dr. Michael DeBakey, for his contributions to life-saving technology like heart-lung machines and the development of MASH units for the military.
“We’re all in the fluid assurance business,” Lumsden said.
William Kline, manager of drilling and subsurface research for ExxonMobil Upstream Research Co., joined Lumsden and highlighted a third industry that Houston can offer for tech transfer: aerospace. He said his company was among the first to try to court NASA engineers when the Space Shuttle program was shut, and he requires his young engineers to go to conferences from different industries – such as automotive – because one never knows where ideas could come from.
Olga Koper, market manager for energy and environment with Battelle, has a background (and doctorate) in chemistry and a love for nanotechnology. She shared her views in the Battelle booth, explaining how the nonprofit research organization’s work reaches everywhere from American government labs to specific projects for individual company clients, including those in the oil and gas industry.
She explained that clients come with a need – ranging from needing brainstorming help with innovation to wanting Battelle’s specialists to build a product to meet predetermined specs – and that the company’s job is to serve as an independent third party to give a solution.
She did note that while there isn’t necessarily a communication barrier between oil and gas and other research organizations or industries, trust is crucial. She said the oil and gas industry “is a group where people know each other and you have to earn their trust. … You cannot break the trust.”
Her colleague Richard Davis, research leader in the applied physics group in Battelle’s national security division, called the oil and gas industry “a very forward-looking industry” that is rife with technology that could be transferred into other industries.
“They do a good job of dabbling in a bit of everything,” he said.
But research and technology take funds, of course. Koper said she thought the tightened belts could encourage companies to turn to research out of labs and higher education, in an effort to gain more efficiencies.
In a Tuesday morning session, Tom Teipner, vice president of North America offshore with Schlumberger, said his company puts a great deal of investment into research (their 2014 annual report shows $1.2 billion in research and engineering), and added that a risk of current financial times is that companies may have to cut R&D budgets.
During another panel, an audience poll asked which factor would play the most significant role in shaping North American production: the price of oil, advances in new technology, government policy, and companies’ ability to adjust cost structures. The results were fairly evenly divided among the choices, with 25% of the audience pegging new tech as the biggest future determinant.
So what does this mean moving forward? Will companies indeed invest in technology as a way through the current economic landscape, or will they see it as an extra that can’t be afforded when prices are low? I agree with Koper and Davis that the oil and gas industry has a tremendous amount of technology that other industries could use – and it would be a shame if oil and gas didn’t also benefit from some judicious use of others’ knowledge.