Oil and gas slowdown: A cyclical downturn in innovation?

October 27, 2015 | By

Despite the current environment that is creating opportunities for innovation, almost half of oil and gas executives admit they have fallen short of their innovation goals, according to a new report from Lloyd's Register Energy, an integrity, compliance and specialist risk consulting services group.

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In fact, the number of respondents who say they have fallen short has almost doubled as the price of oil has gone down. Only 26 percent reported they had fallen short in spring 2014.

"The oil and gas industry is undergoing a period of significant uncertainty. The oil price slowdown is clearly impacting investment in innovation initiatives. However, our report finds that contrary to perceived wisdom, innovation has a crucial role to play in the current environment, where it creates operational efficiencies and is cost effective," said John Wishart, group energy director, Lloyd's Register. "To innovate properly and achieve business goals companies must address a number of common challenges, including collaborating more openly, using data more effectively and changing traditional mind sets. Encouragingly, our findings show that overall the industry understands the need for innovation and has begun reaching out to other sectors to gain technological insight."

The report concludes that the cyclical downturn should be a driver of innovation, not a barrier. However, the majority of oil and gas executives believe the oil price will sit between $50 and $70 in the next year -- with the highest percentage (27 percent), believing it will hover around $70. This will, in many cases, hinder investment in innovation.

More advanced data collection and analytics are a must have in the current low oil price environment, according to the report. Lack of data and systems integration across different parts of the business are huge barriers to successful data collection and analytics, with silos being the biggest cause.

For more:
- download the report

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