Home / ANALYSIS / Analysis: R&D for take-off

Analysis: R&D for take-off

by Guest on May 10, 2018

Export oil pipelines at a facility in Iran.
Export oil pipelines at a facility in Iran.

The 5.8mn kilometres of pipelines that support the flow of oil and gas throughout upstream, midstream and downstream operations are among the most vital systems underpinning the entire hydrocarbon industry.

Yet surprisingly, the components of these pipelines are an area where engineering innovation has remained largely unchanged for decades. And while a three-year downturn has rightly triggered a cautious and conservative approach, the nascent recovery is sharpening the focus on the small details that could cumulatively make a big impact on efficiency, productivity and the bottom line.

It has been well-documented that for oil and gas companies to survive, maintaining day-to-day operations has had to be the priority, while research and development (R&D) has taken somewhat of a backseat. PwC notes an average 18% year-on-year decline in R&D spend when the downturn hit in 2015, and this has only continued. Unsurprisingly, this has had a direct result on the speed at which new technologies are coming to market.

It’s in the details

This pace of change has been particularly pronounced at a component level, where the value of investing in the smaller parts that support bigger systems has been lost in the scramble to simply maintain general operations. Upgrades to these components in oil and gas pipelines could have a game-changing impact on their overall functionality, in terms of efficiency and reliability. What’s more, the cumulative effect of these upgrades could be huge for the bottom line. Yet they have been somewhat overlooked as victims of their own inconspicuousness.

One of the key reasons is a disconnect between the budgets allocated to technical teams and those allocated to operations teams. Technical departments are fundamentally responsible for driving R&D, while the operations teams have the power to implement new technology. This often means that there is limited scope for new solutions to be integrated. On top of this, in an understandably risk adverse sector, executives tend be rewarded more for short-term successes than long-term ones, which further discourages them from making the sort of investments that yield returns down the line.

But opportunities do undoubtedly beckon, with pipeline components now ripe for a revamp. And to achieve this there is no better place to look than an industry that has been forced to constantly reinvent technology from top to bottom: aviation.

Lessons from aviation

As one of the most global industries in the world, the aviation sector faces challenges from geopolitics and demographic shifts to environmental concerns, yet along the way engineering innovation has become key both to survival and growth. Susceptible to volatile commodities prices and pressured by swathes of competition, aviation companies are constantly developing pioneering and elegant upgrades to every part of their systems. These investments in R&D reap big rewards, delivering safer, more efficient and more profitable operations.

Furthermore, they have developed processes that allow them to adopt innovations at incredible pace. A golden balance has been struck, where companies are neither too risk adverse nor gung-ho, enabling them to implement solutions that don’t just improve performance but additionally provide a platform for long-term sustainability.

The 2017 EU Industrial R&D Scoreboard ranked global aerospace R&D intensity (the metric used to gauge the level of an industry’s investment to spur innovation through research) as ‘high’ at above 5% of net sales along with, among other sectors, computer services, defence and pharmaceuticals. R&D intensity for oil and gas producers by contrast was ranked as ‘low’, at below 1%, along with electricity, forestry and paper, water and multi-utilities.

Airliners are made up of complex parts and systems, many of which have benefited from constant reinvention and redesign during the industry’s rapid evolution. Switches, tubes, adapters and avionic controls in everything from hydraulic systems, cockpit controls, landing gear and wings have placed component-level innovations at the heart of the aviation engineering agenda.

In a bid to cut costs, engineers have found ever-more creative ways to reduce aircraft weight, in turn cutting fuel consumption during flight.

For example, engine manufacturers have found ways to reduce fuel usage by lightening their turbines using composite materials for fan blades and fan cases. New manufacturing methods such as 3D printing have also offered radical ways to design aircraft components, while electrical systems are being introduced in some aircraft to replace their heavy, mechanically-controlled counterparts.

This engineering culture, which includes the adaptation and application of already-existing technologies, could provide big benefits to the players and drivers in the oil and gas sector. And it seems this cultural shift is already underway.


Please click here to comment on this article


Name *
Email *
Subject: *
Comments: *


ArabianOilandGas Awards
Utilities middle east
Construction Week Online Middle East
Hotelier Middle East
Arabian Supply Chain Middle East