How the US energy sector innovates amid a belt-tightening business environment: Insights from Joseph Dischinger
I conducted this interview with Joseph Dischinger in December 2020 when the United States energy sector was facing a volatile market and uncertain national political situation. With this challenging business environment then (and now, to a different extent), I asked Joe some questions as to how innovation is playing a key role to in helping companies weather the challenges.
(This interview was first published on TechnologyCatalogue.com. You can view the full interview here.)
We know that the energy sector is walking a tightrope now given the instability brought by Covid-19 and demand uncertainties. Do you think there is still space for companies to introduce innovations?
Absolutely, but Innovation is a big bucket. Is the innovation quickly implemented and going to have an immediate material impact or is it a long-term expensive investment? It has really been a balance sheet exercise this past year I think for most in the energy industry. There is tremendous pressure on cost reduction. How do we reduce costs immediately to stay in business? Companies tend to focus on reducing salaries, wages and benefits because these are dominate costs. Work still needs to be done, but now with less resources. How can we do more with less? There is a focus on automation, digitalisation, and data analytics/machine learning because there is a perception these have the greatest potential to rapidly reduce cost and keep the business going.
But companies need to continue to think about the future and plan what to do when things are more profitable. They need to be ready to move quickly when the business environment improves to invest in longer term innovations, otherwise they will be behind competition. And this is where technological innovations come into play.
So, yes. There is plenty of room for innovation. It is just a function of timing and cost. Companies are always trying to innovate with the right value proposition. The challenge, however, is selecting the right innovation AND just as important, deploying it effectively.
What do you see as top priorities for energy companies to innovate on?
Digitalisation, maintenance, and integrity are all tied to cost and production. These are areas that should be constantly focused on to stay competitive. Constant focus on cost reduction, increased production, and overall profitability; and innovations on the mentioned three priorities are necessary. Safety is also a constant priority, a given one in every business.
Nevertheless, how much a company prioritizes one of these depends on what the base business is and how it can be enhanced. For instance, for a production company productivity and cost-effectiveness is important: automation to drive costs down, integrity to ensure fields are running constantly at the highest efficiency, and maintenance to ensure there are no stops in production.
Carbon emissions can be considered more of a regulatory concern for US energy companies right now, hence this also forms part of their innovation strategy. Finding smart ways to reduce carbon emissions, such as sequestering and utilizing carbon are areas of active innovation. Understanding your carbon footprint through technologies allow companies to proactively reduce emissions while getting ahead of regulatory requirements as a license to operate.
How do you think innovations will help them deal with slowed demand in the sector as well as changing political and legal environments?
Regarding slowed demand, technologies that can reduce cost, the other side of the equation, are important: again, automation, machine learning, artificial intelligence, remote access and monitoring. The ability to optimize production and to make real time adjustments accordingly is the part of the vision for the digital oilfield. The idea is to reach an optimized production rate where companies can make rapid adjustments to changes in the production environment automatically maximizing production. Currently, many times these discrete discontinuous production-related decisions are still made by humans, which takes time and can be prone to suboptimal adjustments.
Changing political and legal environments always impact the energy industry landscape. People forget that when oil became an important commodity 120+ years ago, it was considered a green energy. It replaced much of the whaling industry for lamp oil in the early days. There is a lot of potential for innovation to help energy today in an environmentally friendly manner. Innovations that can help to reduce flaring, reduce carbon, that help to use all products that are produced, present an opportunity for traditional energy companies to be sustainable and remain relevant as we push for energy transition.
For the full interview, check here: https://www.technologycatalogue.com/blog/innovating-versus-surviving-how-us-energy-sector-innovates-amid-belt-tightening-business
Originally published at https://www.linkedin.com.
