Digital Magazine Investors Upstream Year 2021

From R&D adopters to innovators in the Oil & Gas Industry

R&D solutions have positively triggered innovations following sustainability and the security needs of the future.

rubi alvarado – energy capital

By Rubi Alvarado – General Director, Energy Capital

The oil and gas (O&G) industry has been both an adopter and innovator of overarching technology improvements since its beginning. From recovering the hydrocarbons needed to power our economy to doing so while complying with safety, human welfare, efficiency, and environmental standards, the sector has a long history of familiarity with Research and Development (R&D) solutions.

Reasons behind R&D investments in the O&G center

For decades, O&G companies have raised the question of how they can succeed in an industry where supply is limited and demand is stringent. Therefore, they’ve looked for ways to adequately satisfy the global market for energy with unconventional resources previously challenging to recover.

Several producers have acknowledged the importance of utilizing and investing in sophisticated technologies to find and produce tomorrow’s hydrocarbons. Considering that most of the world’s ‘easy oil’ reserves are exhausted, O&G players are harnessing the opportunities of an increasingly technologically-driven world.

In this sense, R&D efforts have helped reduce uncertainties for E&P companies since, with new developments, they can currently increase their recovery efficiency. Accordingly, the industry is becoming more capable of safely producing unconventional resources in previously hostile or non-feasible environments.

Similarly, this technological approach from the sector has been strongly driven by incidents. For instance, the Deepwater Horizon accident (1994) and Shell’s Brent Spar disaster (1995), just to recall a few. Safety concerns raised by stakeholders, organizations, and society; made it essential for the industry to improve its equipment and facilities through technological advancements.

Until recently, companies also started to comply with mandatory environmental standards and new security concerns such as cybersecurity. R&D solutions have thus positively triggered innovations following sustainability and the security needs of the future.  

Trends and advancements: from adopters to innovators

In fact, according to Saudi Aramco’s 2019 reports, most O&G large producers and service companies globally have significantly increased their R&D investment in recent years. For instance, in a survey conducted in 2018 by classification society DNV GL; energy industry executives identified digitalization, cybersecurity, subsea, pipelines, Enhanced Oil Recovery (EOR), advanced materials, smart emissions reduction, and energy storage as top R&D priorities.

In this sense, we should not dismiss the advancements that O&G companies have developed. Mainly, in terms of technologies, techniques, and industrial needs. With more companies quantifying and disclosing the data related to their R&D investment strategies; other industrial sectors can assess the historical innovations coming from the energy industry. Technological processes in the sector have, in fact, led to major competitiveness and innovation outcomes, with great spin-off benefits in other industries.

A crucial recognition

Besides, we should remember that both large and small oil and gas companies are eligible for R&D incentives in almost every country globally. In the US, for instance, this incentive presently values nearly 10 billion dollars, also resulting in substantial tax benefits.

It is crucial to recognize that we cannot achieve a sustainable world in the long term; particularly, without access to oil and gas. Although the calls to immediately cease fossil fuel use may be appealing; we cannot dismiss the fact that hydrocarbon resources are still essential to support the global economy.

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