New R&D model offers ‘intellect on demand’

LASLO OLAH, Texas Institute of Science (TxIS)

Under the auspices of the Texas Institute of Science (TxIS) in Richardson, the Global Research Alliance (GRA) draws from a database of more than 18,000 mainly post-graduate petroleum technologists scattered throughout the Eastern Hemisphere. In the face of R&D limitations imposed by the so-called “crew change” in the West, the GRA initiative was conceived to revolutionize global technology development in the petroleum sectors.

The institute employs an advanced search-engine-based database to wholly monitor the scientific and technology background of the GRA, which comprises PhD professors, scientists, developers, test lab personnel and other professionals working within more than 2,000 faculties and departments, more than 800 test laboratories and over 190 universities and research institutes. Some 90% of the database consists of relatively untapped intellectual talent from Eastern Europe and FSU, with the remaining 10% from China, Hong Kong and Taiwan.

The initiative encompasses the database and search engine with a proprietary algorithm that is supported by TxIS’s nine global offices. The global facilities maintain direct relationships with participating GRA members within their respective territories. Fundamental to the approach is the assembling of teams with the disciplines necessary to meet the unique requirements of a specific project.

Since TxIS’s creation in 2006, its affiliated professors and researchers have been heavily involved in a significant number of R&D programs, representing a wide spectrum of technology criteria from the exploration to the refining sectors. Further, all intellectual properties (IP) rights arising from technology development programs automatically revert to the client company.

Addressing the workforce shortage. The TxIS methodology is in direct response to the continuing shortage of qualified personnel within the Western Hemisphere petroleum industry. In the 2006 study called “The workforce crisis in the upstream oil and gas sector” by Applied Strategic Finance at the University of Houston’s C.T. Bauer College of Business, the authors investigated potential limitations to optimum efficiency and production within the industry. They concluded that the overriding threat to productivity could be found in Independent Petroleum Association of America (IPPA) statistics that had “40% of the industry’s skilled professionals reaching retirement age by 2010.”

 The study went on to determine that the two primary impact criteria are Direct Employee Cost (DEC), Lost Profit from lack of experienced staff (LP), and Strategic Opportunity Cost (SOC). While DEC encompasses the “indentifying, hiring, training and retaining of qualified employees,” LP’s main drawbacks to optimum productivity are “delayed or cancelled projects; an inability to implement growth and expansion plans; and costs related to safety issues, and cost of alternative staffing methods.” The study defined SOC as “lost profits associated with a lack of long-term strategic vision and a short-term tactical approach to management.”

The genesis of this growing workforce crisis can be traced back to 1986, when crude oil prices fell below $10/bbl. The crash spawned a large number of layoffs, forcing furloughed workers to migrate to other industries. Other factors are an aging workforce, a dwindling number of university graduates, a negative image of the industry among students and the growing global demand for crude oil. The study concluded that “when the total costs from the first two conceptual categories (DEC and LP) are combined, the magnitude of the workforce crisis is evident, notwithstanding the record revenues of the industry.” The study calculated DEC at $2.2 billion annually and LP at $2–3 billion a year.

During the Cold War, Western-developed technologies were prohibited from being exported to the communist bloc. As a consequence, those governments were forced to invent most of the technologies they required. Universities were the only institutions capable of delivering R&D to the client, the respective government, operating under centralized power. This model left little leeway for “research for research” activities. Consequently, it created a university generation with a non-academic view of technology development.

The commercial value of this mentality is at the heart of the new model, which addresses the divergence between the industry’s increasing number of technology challenges and the decreasing number of technologists capable of solving them.

Today, TxIS has direct access to more than 18,000 technologists, with indirect linkage to about four times that many. To help fill the technology gaps even further, TxIS hopes to eventually have 100,000 members in its GRA network.

A new paradigm. The shortcomings of the legacy R&D model necessitated the development of a new technology paradigm, Fig. 1. An industry-wide discussion has been taking place with regards to the limited arithmetic of the “all internal engineering” model. Generally speaking, an R&D organization’s output is the number of people multiplied by their expertise. By definition, a traditional R&D organization operated by a client, specialized engineering firm or university is limited by its given sources, which must be kept on the payroll.

Fig. 1. The TxIS model represents a fundamental structural change in personnel requirements for specialized R&D efforts.

TxIS designed its 3D operating model based upon its clients’ identified interest criteria. The initiative’s Research and Engineering Services division not only has provided R&D work, but also has completed numerous assignments involving technology trend investigation, performance enhancement, QA testing and patent gap analysis. With access to more than 800 test laboratories, TxIS has also played a role in complex testing problems.

The initiative’s client base ranges from comparatively small companies with revenues of less than $200 million to those generating multi-billion-dollar annual revenue. Correspondingly, TxIS’s effect on industrial output varies by the size of the client. In the relatively small market category, its main value is placing a client on equal footing with the industry leaders. Even in the large market segment, sometimes a key discipline is missing, technologists are otherwise occupied, or test laboratories are not available.

Furthermore, U.S.-based universities that rely on public funding are prohibited from transferring the IP rights to the client. Since TxIS works exclusively with Eastern Hemisphere resources, innovations arising from the program are not covered under the U.S. Bayh-Dole Patent and Trademark Law Amendments Act, thus allowing all created intellectual property rights to be handed over to the client.

Moreover, TxIS has long recognized the value in working together with retired professionals. The company’s Technology Source Network (SourceNet) continues to augment the members in its database. The initiative works with many of the retirees in gaining access to companies, contracting them for project consultancy or for help with design work.

Key to the success of the model is full integration into the client’s engineering organization throughout project duration, which may be from two to three days up to many months. Upon receiving an assignment, TxIS first identifies the specific disciplines required. The search engine is used to locate all potential contributing GRA members to develop a team to cover all possible contingencies. Once the client approves the composition of the team, the proposal and subsequent scope of work (SoW) contract are developed and signed by both TxIS and the client. A typical turnaround time between receiving the problem and issuing the SoW is under 10 days.

Throughout the program, all communication channels between the client and selected technologists remain open, as if the team members were employees of the company’s engineering department.

Rather than operating under a formal marketing strategy, TxISW acquires clients through references. A strict non-disclosure policy is maintained. All contracts are approved at the university level and signed by the head of the department or the dean of the respective school.

Track record. Over the past five years, TxIS has successfully delivered just-in-time research, engineering and product development to a number of smaller and major companies. The projects have run the gamut from resolving specific exploration issues to improving product performance.

By way of illustration, an executive of a major offshore drilling contractor said that, as water depths increase, the TxIS model has proven beneficial in solving a host of proportionately difficult problems.

“TxIS offers the offshore drilling contractor a unique solution to problem solving. As the water depth increases, drilling systems become increasingly more complex,” said Scott Marks, Senior Engineering VP of Noble Corp. “The complexity at times can result in interface issues, material compatibility issues or application issues. TxIS, with its broad global footprint, can immediately assist the drilling contract to resolve problems in short order. Often times, TxIS has the technical expertise in the same geographical location as required, resulting in a reduced time line to a solution.”

The range of technology challenges have included the development of alternative lining material that enabled a major supplier of pumps, valves, seals and associated products and services to expand its market base. In another, a tool company that manufactures passive devices contracted TxIS to increase the throughput of gas flow under different field conditions. Subsequent computer simulation models successfully calculated the different operational scenarios and identified the design changes necessary.

In another example, an international oilfield service company requested development of a prototype miniature pressure sensor for harsh-environment service. TxIS researchers successfully developed a new design solution for the required sensor, which not only provides a wider measurement range than existing products, but also has as a high potential for further development. The TxIS network also identified design changes that enabled a supplier of seals to the oil, gas, chemical and power industries to minimize or eliminate the damages caused by electro-corrosion during feed-water applications.

Going forward, TxIS has outlined plans for access to the expertise of hundreds of thousands of scientists. There are also plans to organize research consortia, possibly including joint ventures between universities. The mission remains the same—to provide dynamic, versatile and client-oriented research, development and application engineering services to augment the clients’ scientific and technological needs.