The Energy Transition is driving change in the oil and gas sector, to respond to this challenge Innovateer advised one major IOC on its technology programme and recommended appropriate changes.
Can there have ever been such a challenging business environment for oil and gas companies? With a low oil price, concern over emissions and climate change and the associated investor pressure, there is unique and relentless stress on these companies to stay competitive whilst developing strategies for the future. A company’s technology strategy is particularly important in this context because its activity can be a distinctive source of reduced costs, reduced emissions or provide new revenue streams to enable business diversification (if not complete transformation).
The pace of change in the external business environment is a significant challenge for oil and gas technology programmes though; traditionally these operate on an annual cycle of proposing, agreeing and funding technologies (over multiple years). However, this relatively sedate pace in the face of the Energy Transition can result in some technology programmes becoming redundant and, in a large organisation that is inherently slow to respond, it results in two problems; 1) technologies that are no longer relevant or needed are funded longer than they should be and 2) other (new) technologies are not assessed and/or incorporated quickly enough into the programme.
Innovateer was initially engaged to provide an external perspective to the client’s activity set and assess its relevance for the Energy Transition (with a focus on its upstream activity). The intent was to establish the gaps in the programme and develop activities that could seek funding in 2020. It quickly became apparent that the company had a huge range of activity underway across different parts of the business, the challenge was not finding gaps but in understanding what value the existing component activities had. Whist the complete range was assessed in a quantitative way and a number of technology gaps were identified, the analysis ultimately revealed a more significant gap: an overall vision and direction for the activity. In other words an answer to the question, “where are we trying to get to”?
In any company, without an overall aspiration and direction it is not possible to truly shape a technology programme’s activities to help deliver it. Given this finding, Innovateer’s scope evolved accordingly. Instead of solely identifying gaps in the programme, the need for overall direction was highlighted to the company’s technology management in two distinct areas: 1) existing assets and operations and 2) future assets. These two categories encompassed the client’s entire upstream activity set.
Despite the unintended outcome, the analysis and provocative, constructive delivery has resonated with the client and the company is currently addressing the recommendations made by Innovateer.