By John Wishart

With the collapse of the oil price over the last year, companies’ revenues have fallen by around two thirds. What is more, exploration is getting trickier and more hazardous, yet demand for energy will only rise. These are undoubtedly challenging times for the industry, but downturns, as we know, historically throw up opportunities.
The industry has for decades lived in a bubble of high prices, which has stifled innovation. Those days are gone for now, opening the door to a new era where disruptive technologies can transform an industry in need of modernisation.
Some technologies are already in use, others are in the embryonic stages of development. Digital oil fields, drones, unmanned underwater vehicles (UUV) and the ‘Internet of Things’ can all play a part in helping the industry develop and meet its goals of reliability, cost reduction and safety.
Which of these are most deployable in the short term? Remote-controlled aerial drones with high-resolution cameras are already simplifying and reducing inspection times on offshore oil rigs, an otherwise dangerous business. A flood of new start-ups specialising in this work are entering the market and a host of oil majors are already using the technology.
Still largely in development is the work being done on autonomous drones that require no human input. These will be able to operate in very hazardous areas like separators, tanks that separate oil and gas, and can be sent underwater to explore for oil, drilling through rock and sending back information. It may not be too far away that companies are presented with an opportunity to replace a very expensive exploration well with a much cheaper robot.  Total’s open competition to design an autonomous robot to work at onshore and offshore oil and gas sites will announce its winner in 2017.
But these technologies also then present further challenges in assessing the safety of operation, and to what guidelines and standards they should be operated.
Other technology like the ‘Internet of Things’ is changing how data is analysed in real time at oil drilling platforms. Electrical pumps operating at variable speeds are connected to the cloud so they can be monitored hundreds of miles away from a control room.
Data is collected via sensors where it is fed to engineers, providing real time information on pressure, temperature and flow rates. What is more, they will be alerted instantly to when a problem is detected.
Real time analytics are also being used in Enhanced Oil Recovery (EOR) technology allowing output to be maximised at ageing fields. Already, the industry is moving away from data mining because it simulates historical information about a field rather than building a scenario based on what something might look like in the future. The challenge is using this data to create a tool that people can navigate and use.
More uncertain is how technologies that require an Internet connection would be deployed. Cost and safety issues have so far meant there is a reluctance to install Wi-Fi on the some of the most hazardous offshore platforms. While there is a perception that Wi-Fi wouldn’t work in a big steel facility, this has proven not to be the case.
It is true, though, that deployment presents a big innovation challenges for upstream companies. Firms recognise this. Nearly three quarters of companies say the challenges of utilising technology is a key barrier to innovation, according to the Lloyd’s Register Oil and Gas Technology Radar 2015 survey. While most firms rate themselves as better than their peers at conceptualising and developing new technologies, over half rate themselves as no better than or below average at deploying them.
Why is this? Oil and gas firms must meet ever ambitious objectives in a tighter cost environment, making the price of innovation failure very high. Indeed, this risk means that there isn’t yet the collective will in the industry to move forward because companies don’t want to be first to use new technologies in case they go wrong.
The industry also needs more time to adjust to a low price era. With prices only having fallen in the last year, this is hardly enough time for any great shift in innovation to take place.
With oil sitting under $50, there has never been a greater need for the industry to collaborate not just among itself but with other sectors. Collaboration between upstream companies has been limited. This must change.
Crossover technologies must also flourish from aerospace, defence and even the automobile, IT and telecoms sectors. Aerospace is of particular interest to oil and gas firms because both industries require equipment that can withstand huge pressure and extreme climatic conditions.
Upstream companies have only scratched the surface when it comes to innovation and they must adapt to and embrace cost-effective technology that will streamline operations, improve safety and maximise returns. It is not however as straightforward as that: the industry needs, in tandem, to develop new ways of interpreting and integrating data to drive quicker and more accurate decisions. This will lead to myriad benefits, not least finding resources at time when it’s getting harder to do so.

♦ John Wishart is the president, LR Energy and leads the energy business of Lloyd’s Register, responsible for worldwide operations as well as strategy and business development. He leads the organisation in ensuring that LR can help organisations comply with regulations and industry best practice so they can operate safely and productively. The views expressed are his own.