IOCs, NOCs, and Service Companies: An Emerging Innovation Ecology
- Mukund Karanjikar (Chevron Energy Technology Company) | Kevin Jakubenas (Chevron Energy Technology Company)
- Document ID
- Society of Petroleum Engineers
- Journal of Petroleum Technology
- Publication Date
- December 2009
- Document Type
- Journal Paper
- 16 - 17
- 2009. Copyright is retained by the author. This document is distributed by SPE with the permission of the author. Contact the author for permission to use material from this document.
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The collaboration landscape for new oil and gas projects has changed significantly in the past several years because of the need to bring massive production projects on line in shorter times. No company can do it alone. A triangular involvement of international oil companies (IOCs), national oil companies (NOCs), and service companies has become a necessity.
The driver for this new collaboration landscape is the scope of challenges facing new projects, including project locations, country policies, capital, technology, and the ability to manage the production. In the era of easy oil, location and capital were the prominent reasons for collaboration. But with today’s harder-to-access oil, technology plays a more pivotal role in the success of projects. The IOC/NOC/service company collaborative landscape presents a set of opportunities as well as challenges for technological development. Collaboration is now an integral part of technological innovation. Productive collaboration for innovation requires an ecology unlike one that oil and gas industry has previously seen.
Partnering for Innovation
Partnering for innovation is vastly different from partnering for capital or resources. Capital and resources exist and can be quantified using well-accepted methods; technological innovation is a promise of a better future based on ideas. Innovation is a matter of creating something that does not currently exist. Collaborative innovation is getting multiple groups to work toward a goal in which the path is unknown and discoveries may not occur on schedule. A vast amount of knowledge and ideas has to change hands before a useful piece of technology can be deployed. Learning occurs everywhere: in the field, glass-front offices, world-class laboratories, or at pilot rigs.
To understand the various skills required, it is worth examining more closely the respective roles of IOCs, NOCs, and service companies in the current innovation ecology.
IOCs. These have been the leaders in the “ability to produce oil.” The know-how of more than 100 years in managing resources around the world resides within these companies, and they have created many of the game-changing technological breakthroughs that enable today’s oil and gas production. IOCs also have a very strong global intellectual-property (IP) portfolio that spans the entire value chain from exploration to distribution. Their manufacturing ability is a unique strength for future innovations as downstream knowledge is leading to innovations in the upstream development of challenging resources.
Service Companies. In today’s world, it is impossible to produce without the involvement of service companies. Service companies originated in operations but now successfully manage technologies and have been responsible for numerous technological innovations. In the process, these have managed to develop a strong IP portfolio with respect to their core competencies.
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