Nearly everyone we know in the Denver oil and gas community looks forward to Meetups organized by the EnergyTech Mashup group, and last week’s event featured three guest panelists from E&P companies with operations in Colorado and in some cases, worldwide. The panelists included:
- Seth Urruty, COO, Board Member, Camino Natural Resources
- Matt Duffey, Intelligent Operations Manager, BP Lower 48
- Chris Bement, VP & GM, Western Operating Area, EnCana Corporation
Joe Magner with Darcy Partners moderated the panel through the discussion topic “Innovation Culture Counts.” Prism Group was there, and in this article we cover the highlights and key observations from this gathering of E&P executives responsible for evaluating, implementing and assessing innovative solutions at their companies.
Strong industry interest. There were 117 oil and gas professionals registered for the event, confirming strong interest in Energy Tech, especially for a Tuesday evening during the middle of summer when most people are taking vacations, climbing fourteeners, mountain biking, fishing, hiking, kayaking, stand-up paddle boarding, sailing, seeing a concert at Red Rocks, enjoying microbrews on the patio…yeah, just normal Colorado summer stuff!
But we digress, back to the panel discussion.
Needs. Overall, there was consensus that managing large volumes of data and leveraging it across functional disciplines is a crucial need.
Each panelist expressed a desire for subsurface data – more of it, better use of it and greater cross-functional integration of it. Solutions that give asset teams better quality data to use in decision making and help them collaborate more effectively across departments are in demand.
The common thread running through all the stated needs was the desire of E&Ps to optimize their organizations’ initiatives to increase recoveries (EURs), reduce costs and strengthen economic returns. Optimizing well spacing, drilling and completions for each reservoir is the primary operational focus, and technologies that facilitate these goals are of high interest to operators. Importantly, the panelists agreed that information technology solutions were an essential element to improving the gathering of data, making analytics more useful and freeing knowledge workers from data input to they can focus on analysis and planning.
Data quality. For all the talk of developing a culture of innovation, the panelists put data quality as one of their top priorities. The snazziest analytics packages are only as good as the quality of data that goes into them. Information is the raw material of decision-making and if knowledge workers don’t have quality data and information, then their innovations and ideas will miss the mark.
Culture shock. Duffey said that he has been in the oil business for 18 months. Before that he was driving a submarine in the U.S. Navy. His observation was that the ethos driving a culture of innovation has as much to do about fostering and promoting good ideas as it does with changing the way people think about work. The culture of innovation shifts perspective from working harder to finding a way to work smarter.
Duffy said, “Many of our VPs got to where they are at by working 80-hour weeks and doing heroic things. Those behaviors were rewarded, but they aren’t necessarily the behaviors that will make us successful in the future.” BP and other companies embracing an innovation culture want to reduce their reliance on “heroes” and instead make innovation just part of their everyday business processes, regardless of where the idea comes from or who dreams it up.
Sources of innovation. Duffey had a surprising answer to the question where do innovations come from? He cited one case of adapting an application developed by an avid Pokémon Go player to help the fastest route to the locations of characters he was seeking in the famous augmented reality game. That same technology is now being applied to solve logistics problems, helping increase the efficiency of operations.
Employees an obvious and important source of innovation. Bement noted that one of EnCana’s young engineers developed new best practices for well completions that were adopted. Those innovations are now the source of significant improvements in well productivity and returns. Oh, and by the way, that young engineer got a promotion, further demonstrating that innovation is a prized trait at EnCana. This demonstrates the way an innovative corporate culture can reward a different type of “hero.”
Implementing innovation. Bement had a refreshingly candid take on a key factor for success in implementing an innovation culture. In his example of evaluating a new downhole pump technology, he said, “We want to fail fast and learn quickly,” noting that every potential solution has risk associated with it and if the first installation was unsuccessful “we don’t know if we hit the ten percent probability of failure on our first try,” and emphasized it was important to look at more than one instance before writing-off a new idea.
When it comes to technology BP is putting its money where its mouth is. BP Ventures has announced making investments in multiple Energy Tech companies just this year, including Voltaware, StoreDot and FreeWire. Download the BP Technology Outlook 2018.
Seth Urruty stressed that to really make innovation part of your company’s culture, it was important to be a “serial learner.” The panelists all agreed that it was important to avoid complacency and assumptions that restrain innovation. As Urruty emphasized, “Everyone is a manager and you own it. The GIS analyst knows more about GIS than me. He’s in a better person to make decisions.” Based on that, Urruty’s door is wide open to those with new ideas.
Barriers. New innovations can face some tall hurdles when it comes to acceptance. Urruty noted that his company is private equity backed, and sometimes funding can be a challenge. The other panelists noted funding was a challenge, and they had to prioritize the innovations that are allocated time and money. Yes, even BP.
The other side of the funding coin is cost. Perhaps as a shot across the bow to business development executives, both big company panelists noted that vendors need to “be realistic” on who owns the data and how to price accordingly. Apparently, they got the memo on value pricing.
Business savvy. Panelists noted that any potential innovation must be supported by a strong business case; “First, comes the business case” remarked Bement. Vendors and employees proposing innovations must come to the table with clearly articulated benefits, costs and ROI with risk factors identified. This isn’t Shark Tank, you have to come to the table prepared to answer the tough questions and have evidence of successfully applying your innovation to oil and gas problems.
Summary. We note that operators large and small are benefitting from implementing a culture of innovation. Embracing technologies that improve organizational efficiency, productivity and effectiveness both in the field and the office are helping these companies do more with less and operate better.
Organizations of different sizes have different technology needs. For example, Camino Resources grew from 10 employees last year to 60 today by utilizing technology-based solutions to increase and maintain productivity. There’s no way they could have grown that fast without leveraging technology. On the other hand, BP and EnCana both operate thousands of wells and their focus is on applying new technologies across a large asset base to generate significant financial and operational improvements that can be seen on the bottom line.
From our perspective, it feels like we are only in the bottom of the first inning when it comes to Energy Tech! Play ball!
About Prism Group
Prism Group is a full-service management consulting firm providing marketing, investor relations and financial consulting solutions to the oil and gas, Energy Tech, oilfield service and financial sectors. We offer brand development, Content Marketing, marketing automation, advertising creative, website design, technical illustration, corporate valuation, non-deal roadshows, media and more. Leaders who are serious about building value and delivering results rely on Prism Group for strategic communications, marketing and financial advisory.
Prism Group is also a founding sponsor of the Energy Tech Showcase, where innovative companies meet customers and capital sources.