Innovation is imperative to energy industry success: Deloitte
Study says an integrated approach is necessary for oil and gas companies to survive.
TORONTO — The Canadian oil and gas industry, under pressure to reduce production costs, achieve greater environmental targets and satisfy a complex stakeholder environment, must embrace innovation, says a Deloitte report.
Innovation State of Play: Oil and Gas Edition, conducted by Monitor Deloitte, found that surveyed companies hold a narrow view of innovation as a way to increase operational efficiency through R&D. It looked at 10 oil and gas companies, representing 67% of the production in Canada in 2015
The study found 86% of innovation within the oil and gas industry is implemented with the aim of optimizing discreet aspects of current production approaches, with 44% of companies specifically focused on technical solutions.
Most companies see innovation as the key to survival through globally competitive costs and as a means of shifting the public perception of the industry. Yet most respondents have begun to innovate only in select areas and have yet to make innovation a strategic priority or to act upon it in a consistent or integrated way.
Combined with industry’s risk-averse culture and intense focus on operational efficiency, the capacity for companies to innovate broadly and systematically contracts even further.
The professional services company says companies need to look beyond technical issues and R&D to focus on a broader spectrum of innovation types from profit models and networks, to branding and stakeholder engagement will more effectively and consistently deliver higher results across the triple bottom line.
“Taking an integrated approach to innovation and collaborating with stakeholders within and outside the industry may be the only way to bring about a shift to the industry’s down cycle,” said Andrew Swart, Partner, Monitor Deloitte.
“Considering the magnitude of environmental, social and economic pressures facing oil and gas companies, a unified strategic approach to innovation will be necessary to thrive. A disconnected approach rarely works.”