What To Cut, Where To Invest: Developing A ‘Ruthless’ Approach To R&D Management

18 July, 2016

Michael Sequeira, Deepwater Practice Lead at OTM, writes in E&P magazine about developing an R&D management approach to remain competitive in a cost-driven environment.

It’s not a surprise that the tumble of the oil price has had a dramatic impact on innovation within the oil and gas industry. Staff and capex have been cut dramatically, large field developments have been deferred, and R&D budgets and new technology initiatives have been reduced through a simple mantra of “reduce your activity until it fits a smaller budget”.

With all indicators pointing to the current downturn being one that will continue well into the medium-term future, senior technology managers and innovation decision-makers will need to make the most of their reduced funding.

To survive the current environment, operators need to either “reduce costs, borrow cash or liquidate” as bluntly outlined by Saudi Arabian Oil Minister  Ali Al Naimi during the IHS CERAWeek in February 2016.

That said, operators—and by extension the numerous vendors that service their needs—are just as reliant on technology and innovation as they were prior to the oil price crash in 2015. The need to safely find, develop and operate the fields of the future remains as challenging as ever before.

To secure future growth, it’s obvious that the era of “easy-and-cheap” oil is a thing of the past.  Many operators have squared up to the need to develop more technically challenging resources such as deepwater, HPHT fields and of course, the fast-paced and fragmented unconventionals arena.

On the other hand, service companies need to remain technically and commercially competitive as a matter of urgency, if not survival. This means improving operational efficiency and “investing smarter” allowing them to serve the industry at a reduced cost, with new tools and techniques that meet changing times.

To view the article online go to the E&P website, or download the pdf below.

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