Deloitte report into innovation within the oil and gas industry

Deloitte recently released the results of their research into the current perspectives on innovation within the Canadian oil and gas sector: Innovation state of play : oil and gas edition 2016. Whilst the study focuses on a single location it provides an insight into attitudes within upstream companies to innovation and an assessment of how successful they have been in practice.

Ten integrated upstream oil and gas companies participated in the study, representing about 67% of Canadian production. Highlights from the report include:

• A majority of companies agreed that innovation is crucial if they are to compete globally in terms of cost, which is critical to their survival.
• 86% of respondents said their innovation focused on core level ambitions, which include cost reduction and finding better ways to increase production.
• Across the board ‘respondents cited a lack of collaboration both internal and external’ as hindering innovation.
• Barriers to innovation are fundamentally linked to the sector’s risk-averse culture.
• The companies lacked the processes, structure and incentives to enable innovation, with employees operating in silos preventing cross-functional collaboration. This makes it especially difficult for majors to transform.

The report concludes that companies will need to look beyond core innovation to transformational advances to yield the greatest returns. Companies will require a change in culture, structure and processes if they are to achieve this goal.

From our perspective, the study reinforces the potential impact of innovation and collaboration but demonstrates how difficult large oil and gas companies, particularly the majors, find it to implement in practice. The industry recognises that it is not doing enough and the call to convert awareness into action is getting louder.

We will return to this theme in further posts when we will focus on how companies can encourage collaboration and innovation, and discuss how the MFD Consortium is working together.