Companies can extend 'ecosystems' to thrive after downturn

There appears to be light - however faint - at the end of the very long tunnel that is the global offshore E&P outlook.

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 methodically 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 necessary 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 than ever.

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 Paradigm’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 approach. This workflow brought more knowledge than previous studies 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 applications exchanges that stimulate sharing of best practices and workflow improvements among users industry-wide. Equally important 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 accelerate the commercialization of new capabilities. To that end, in January, Paradigm reached outside the industry to announce a partnership 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 integrating 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 without strong and continuing investment in technical expertise - wherever 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 consultants 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 displaced 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.

Arshad Matin

President and CEO

Paradigm

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