Challenging times make it more important than ever for the industry in Scotland to embrace innovation says David Rennie, our international sector head for oil and gas.
As companies continue to adapt to the challenges affecting the oil and gas sector and search for ways to make improvements in efficiency, there is a risk that investing in innovation can become a casualty.
Yet past experience shows that it’s the companies which invest in innovation during difficult times that are more likely to thrive and grow.
And, of course, innovation is crucial to the future of the North Sea, both to improve our efficiency levels and help unlock the considerable level of reserves that remain.
Developing a culture of innovation
For decades Scotland has excelled in oil and gas innovation and is recognised the world over for its experience and expertise in this area.
The importance of innovation
While the current times are challenging, it is important that technologies continue to be developed and that they are deployed as quickly as possible. Increasingly technology and supply chain innovation will be the source of our competitive advantage for future growth.
David Rennie, Scottish Enterprise
That said, oil and gas as a whole has historically spent less on research and development (R&D) than some other sectors. Data from the UK government a few years ago indicated that the UK oil and gas industry R&D spend was equivalent to 0.3% of sales compared to 1% across the economy as a whole.
As the oil and gas market continues to be tough, innovation remains a key enabler for Scotland’s supply chain to unlock the global opportunities in existing, new and emerging markets.
That’s why in February this year, First Minister Nicola Sturgeon announced we had allocated £10 million towards helping companies reduce the risks associated with carrying out R&D, as well as providing access to specialist experts to help companies kick-start innovation projects.
Since then we’ve contributed £7 million towards 70 innovation projects with a total project value of £16 million.
This includes Sciencesoft Limited, which in July this year announced it was to embark on a new research and development project to develop an integrated solution for chemical enhanced oil recovery reservoir simulation.
It is hoped the project will increase the company’s revenue by over £21 million once complete and secure 28 jobs. We are supporting the company to deliver this £3.6 million project with £1.5 million of R&D funding.
Take a closer look at our support for innovation in oil and gas
Collaborate to innovate
Often the best ideas come from collaborative working and by building stronger links between industry and academia, higher levels of innovation will be achieved.
The Oil and Gas Innovation Centre, funded by £10m from the Scottish Funding Council, plays a significant part in helping achieve this aim.
And, of course, the new Oil and Gas Technology Centre is being delivered as part of the Aberdeen City Region Deal.
The new centre will help make Scotland a focal point for oil and gas technology development with a focus on technology priorities such as reducing the cost of drilling wells and unlocking small pools.
Innovation, however, can come in many forms.
It’s not just about developing the right technology, it’s also about having the right processes and procedures in place to maximise value and efficiency.
Delivering greater efficiencies within the industry is a key priority for Scotland’s Energy Jobs Taskforce, to help drive the transformational changes required to ensure the industry's long term sustainability.
Take BP for example. Over the last three years the company has worked hard to improve how it manages its inventory to address high costs and production efficiency issues in the UK Continental Shelf.
As a result, BP has reduced its number of storage locations from 120 to 48, significantly reducing costs. In addition the disposal of surplus spare parts has generated around £25 million from scrap materials - generating a significant value from obsolete equipment.
Supporting innovation in oil and gas
Through the Scottish Manufacturing Advisory Service (SMAS), the manufacturing arm of Scotland’s economic development agencies, we helped deliver 28 oil and gas projects last year, creating £6.5 million of value added benefits for the companies by helping reduce waste and improve quality, cost, delivery and capacity performance.
So far this year the team has completed a further nine projects with 28 more in progress.
The slowdown in the sector has also prompted our SMAS team to deliver additional support, exploring how the oil and gas sector can learn from best practice in other sectors.
How SMAS can help your business
This has involved organising learning journeys as well as a conference in collaboration with Oil and Gas UK.
Scotland is well placed to support innovation in the oil and gas sector and if it is to continue to adapt to the new 'lower for longer' environment, it needs to build on its track record of ambition and industrial innovation.
And we're ready to help as many companies as possible in this area.
To discuss how we can help your oil and gas company innovate, contact our specialist innovation team.
Talk to an innovation expert