Infrastructure, Energy & MaterialsJanuary 11, 2018

Three Ingredients for Upstream Oil and Gas Innovation

In its report “What it takes to be successful: Three hallmarks of…
Avatar Mark Bese

In its report “What it takes to be successful: Three hallmarks of a healthy oil and gas organization”, McKinsey examines what oil and gas companies must do to remain successful: ramp-up innovation; empower frontline leadership; and attract the next generation of workers. The digitalized, or rather, virtualized oil and gas business has a leading role to play in making these hallmarks achievable, to unlock oil and gas innovation in upstream and downstream. But first, let’s look in some detail at what McKinsey recommends.

McKinsey writes that the old way of looking at operational discipline that was based on early bets on the resource lifecycle no longer apply given lower prices and increasing supply. Given that oil and gas companies rank below others in enabling innovation, they believe that if this does not change, an innovation gap will result and impact their ability to react to sudden changes.

The McKinsey authors continue by saying that the focus has been on standards, compliance, and risk management, but that little has been done to tap into the improvement possibilities that rest with frontline employees and lower-level leaders. The authors of the article state: “Finding ways to create global standards and disciplined execution, while also allowing empowered cross-functional teams the freedom to innovate and move fast, is now becoming an imperative for healthy, high-performing oil and gas companies.”

They next look at empowering frontline leadership by evolving central functions to allow local sites to pull them in as needed, rather than focusing on pushing out mandates. The authors write: “Away from the frontline, another oil company has created significant flexibility for its R&D engineers—for instance, providing freedom to set their own working hours and location—and encouraging rapid prototyping of concepts to prove them instead of following the same approval process required for other business ideas. In this environment, one engineer created a new subsea concept that cut development and operating costs by up to 30 percent.”

A third area looks at the changing labor capabilities that will be required by oil and gas companies around advanced analytics, remote monitoring, and other digital solutions. They believe, rightly so, that competition for such labor will be directly with technology companies. To compete means successfully attracting more millennials, who do not see oil and gas as an attractive industry, with 14% of them stating they would not want to work in it, higher than any other industry.

Dassault Systèmes’ 3DEXPERIENCE platform addresses all three of these recommendations already today in the oil and gas industry, and throughout many other industries as well. As a scientific and business platform, it enables collaboration across disciplines, geographies and time. It enables virtual versions of business, operations and processes to be created by tapping into the data that is generated by and during exploration, planning, production and logistics. This virtual world can be utilized to not only ensure excellence in execution during operations, but also to find new ways of doing this by allowing ideas too costly to be tried out in the real world to be explored and proven in the virtual one.

Providing immersive experiences of operations and social collaboration delivers a richer and more rewarding experience for workers as well, allowing them to push the boundaries of what is possible in new and exciting ways. With it, workers are using technology that their peers in other industries such as high tech employ in design and innovation. The result is a more engaged workforce and one that feels part of the future, not the past.

Learn more about Dassault Systèmes’ solutions for upstream oil and gas.

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