December 2015
Industry leaders outlook 2016

Innovation beyond technology: The new imperative

Hydrocarbons have never been easy to find or produce. Now, in addition, we must contend with low prices. But, to the more-than 7 billion people on our planet, whose quality-of-life depends on safe, affordable energy, the price of oil and gas does not matter.
Dr. Nathan Meehan / Baker Hughes, a GE Company

Hydrocarbons have never been easy to find or produce. Now, in addition, we must contend with low prices. But, to the more-than 7 billion people on our planet, whose quality-of-life depends on safe, affordable energy, the price of oil and gas does not matter. Without it, we could not feed half of the world’s population. Every measure of quality-of-life, from GDP-per-capita and infant mortality, to education and clean water, is correlated to consumption of modern fuels. This situation should not change in the foreseeable future.

So, our industry faces a new imperative: Enable safe, affordable energy to improve people’s lives, and do it more safely, economically, quickly and sustainably. We can’t compete—or even survive—doing business as usual. We need innovation.

The audacity to create a better world. Innovation is about seeing the world differently than others see it, and taking it from where it is, to where it should be. Innovators tend to be creative, passionate and courageous—even audacious—in their obsession to make the world a better place.

There is an added dimension to innovation in our industry and throughout business. Business innovators focus not only on making the world a better place, but also on doing so in a way that brings value to market.

Innovation to add value has been a hallmark of our industry since its inception. The very question of when the industry began can be answered by looking at its commercial value. The world generally considers the Drake oil well, drilled in Pennsylvania in 1859, as the inception of the modern industry. However, a successful exploratory well had been drilled in Baku, Azerbaijan, a decade earlier, and a salt brine well drilled in 1858, in West Virginia, produced oil and gas as accidental by-products. What set the Drake well apart was its commercial value. “The importance of the Drake well was that it caused additional drilling, thus establishing a supply of petroleum in sufficient quantity to support business enterprises of magnitude,” wrote Edgar Wesley Owen in his 1975 book, Trek of the Oil Finders.

Innovation and collaboration. Innovation doesn’t happen by accident, and its scope extends far beyond technology. Innovation comes about by thinking differently and creatively; by connecting seemingly unrelated ideas, and putting them together in unrelated ways, to produce something novel or original. This requires collaboration among diverse, disparate groups of people.

While there is a mental model of the “lone inventor,” working alone to bring an idea to fruition, this is rarely the case in any significant technological advance. Innovation in oil and gas has generally been a group effort.

At Spindletop, Captain Anthony Lucas stood on the shoulders of those who had come before him, when he combined the use of fishtail bits, water-based drilling mud, and a steam-driven rotary drilling rig, to bring in the well that triggered the Texas oil boom. Reuben C. Baker’s casing shoe and offset bit for cable tool drilling influenced Howard R. Hughes, Sr., and Walter Sharp to develop the first roller-cone bit. Henri Doll, Roger Jost and Charles Scheibli conducted the first electrical logging operation while working for Conrad and Marcel Schlumberger, who invented electric well logging.

Throughout its history, innovation in the petroleum industry has been collaborative. Continuing, and strengthening, that collaboration has never been more important.

Extending the bounds of collaboration. One of the greatest things to have happened in our industry during the past 10 years is that asset teams are now truly multi-disciplinary, offering opportunities for oilfield service providers to collaborate more closely with clients, and with service providers and professionals from other industries.

The knowledge upon which our industry’s innovation depends resides everywhere. It lives in agencies, universities and laboratories; in different geographies and cultures; and in various industries. So much innovation occurs today, that focusing within one’s own organization, industry or culture is a recipe for failure.

My company has actively participated in an endeavor called Pumps & Pipes, which was founded in 2007, specifically to explore potential crossover ideas and technologies among academia and Houston’s medical, oil and gas, and aerospace communities. This and other collaborative endeavors will proliferate in coming years.

Inspiring innovation. The good news is that this is a great time for innovation. When oil prices and rig counts are high, asset teams scramble to keep up with activity, so there is little time or inclination to innovate. When prices are lower, we rise to the challenge to do something different and better. During the extended period of low prices in the second half of the 1980s, modern horizontal drilling was commercialized, geosteering was invented, and slickwater fracturing expanded in applicability, SAGD was advanced from idea to reality, and many of the technologies required for deepwater development were born or advanced to commercialization.

So it is with innovation. We need to inspire and excite one another with a vision that will help us—all of us—feel like we are empowered and contributing to improve our companies, our industry, and our world. Instead of a mission statement, Baker Hughes has a purpose: Enabling safe, affordable energy, improving people’s lives. This purpose rings true for me. wo-box_blue.gif

About the Authors
Dr. Nathan Meehan
Baker Hughes, a GE Company
Dr. Nathan Meehan serves as senior executive advisor to Baker Hughes and is president-elect of the Society of Petroleum Engineers. Previously, he was president of CMG Petroleum Consulting; V.P. of engineering for Occidental Oil & Gas; and G.M., Exploration & Production Services, at Union Pacific Resources. Dr. Meehan holds a BS degree in physics from the Georgia Institute of Technology, an MS degree in petroleum engineering from the University of Oklahoma, and a PhD in petroleum engineering from Stanford University. He served as chairman of the board of the CMG Reservoir Simulation Foundation and as a director of the Computer Modelling Group, Ltd.; Vanyoganeft Oil Company, Nizhnyvartosk, Russia; Pinnacle Technologies, Inc.; SPE and JOA Oil & Gas BV. He is an SPE Distinguished Member and the recipient of SPE’s Lester C. Uren Award for Distinguished Achievement in petroleum engineering, the Degolyer Distinguished Service Medal and the SPE Public Service Award. He is an appointed member of the Interstate Oil & Gas Compact Commission and a licensed professional engineer in four states.
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