This page reflects viewpoints on the political, economic, cultural, technological, and environmental issues that shape the future of the petroleum industry. Offshore
Magazine invites you to share your thoughts. Email your Beyond the Horizon manuscript to David Paganie at firstname.lastname@example.org.
BEYOND THE HORIZON
There appears to be light – however faint – at the end of the
very long tunnel that is the global offshore E&P outlook. Everyone
agrees 2016 is a wash. Some hopefully view 2017 as a year of slow recovery. But many business plans call for increased demand beyond
2017, fueled by the number of projects that have been deferred during recent years and the continuing long-term push to move further
into deeper, more difficult waters. One forecast published recently
calls for global offshore capex to recover and grow over the coming
five-year period with an overall compound annual growth rate of 9%
between 2016 and 2020.
This growth prospect, welcome as it is, presents some unique
challenges to an industry left less able to meet long-term challenges
by an extended season of low prices, budget cuts, reduced spending and attrition among both skilled workers and suppliers. This is
certainly evident in today’s E&P environment, where according to
PWC’s global team of strategists, operator capital spend on exploration alone has dropped 26% since 2014.
Progressive offshore players can break this cycle by investing
in what Paradigm calls an Innovation Ecosystem during the down
times. Though counterintuitive to some, this approach applied me-
thodically and with discipline can lead adopters to emerge from a
constrained economy fully intact and able to:
• Promote, deliver, and deploy industry-wide innovation
• Surround investors, partners, and customers with the neces-
sary expertise to embrace the upturn
• Build a foundation for long-term company and industry health.
While the offshore industry has been distracted by the rigorous
demands of an extended recession, challenges have intensified, including increasing geological complexity, skills gaps in the workforce, and growing data intensity required for operational success.
Rising capex in uncertain industry environments puts added stress
on operators and suppliers alike. In addition, it makes investments
in systems interoperability, closer engagement with stronger partners, and extended networks of technical expertise more important
The backbone of any company in the offshore industry is its digital platform. As the industry moves out of recession, those who
have broken down the barriers of proprietary systems and alleviated
siloes of data interoperability will be positioned to take the swift lead.
Front runners will be those who can access and blend innovation
from wherever it arises, and glean true and immediate intelligence
from integrated and high-definition systems whether in-house
or from the data banks of partners, providers, or associations. In
the case of one energy company focused on finding and extracting
oil and gas from multiple continents, the implementation of Para-
digm’s seismic interpretation and visualization system and a variety
of enhancement add-ons helped the geosolutions team develop an
advanced seismic analysis workflow using a new interpretation ap-
proach. This workflow brought more knowledge than previous stud-
ies on the same initial dataset and resulted in a new strategic and
operational decision not to go ahead with a second well as planned
before the project. The cost of a new potential well in this asset was
saved following this study.
Sharing through bi-directional connectors will be vital, as will ap-
plications exchanges that stimulate sharing of best practices and
workflow improvements among users industry-wide. Equally im-
portant in economic uncertainty is effectively managing risk. As
the uptick occurs, savvy offshore operators will seek to more tightly
engage a broader ecosystem of partners and vendors with an eye
toward importing fresh innovation from both within and outside the
industry. This will require vendors to find creative ways to leverage
their unique strengths in concert with other market players to ac-
celerate the commercialization of new capabilities. To that end, in
January, Paradigm reached outside the industry to announce a part-
nership to deliver Reservoir Driven Production Optimization as part
of GE’s emerging digital suite pursuit. This alliance has spawned an
upstream solution designed to optimize field level production by in-
tegrating subsurface knowledge with production intelligence. Going
forward, these types of alliances are expected to become a growing
part of the fabric of offshore oil and gas.
Offshore players will never realize their visions of excellence with-
out strong and continuing investment in technical expertise – wher-
ever they find it. Expanding on in-house scientific excellence, early
adopters will be called to further innovation by building individual
relationships with a virtual bench of experts from independent con-
sultants to regional service organizations selectively engaged to
bring on-demand expertise into operator environments. As an added
bonus, these efforts forge a path for the unusually large pool of dis-
placed geoscience experts to continue working in the industry.
In short, by creating this extended ecosystem – partners and people enabled by a world-class platform –c ompanies can create a hub
not just for driving innovation, but leveraging the broad expertise in
the industry to generate tangible bottom-line results. For those willing to invest now in their own Innovation Ecosystem, this progressive approach leads to a clear win-win for growth, sustainability, and
new capabilities the market will require through 2020 and beyond.
President and CEO
Companies can extend ‘ecosystems’
to thrive after downturn