Sponsored story: Arresting the decline in oil production

Ian Anderson of Camcon Oil looks at the way in which smaller companies can maximise oil production.

There is much speculation and debate about the point in time when the maximum rate of global hydrocarbon extractions is reached – commonly referred to as 'peak oil'. Regardless of perception or reality, oil operators are under increasing pressure to expand their accumulated recoverable reserves and at the same time increase the efficient extraction of hydrocarbons from their reservoirs.

There is no doubt that new innovations, technologies and product solutions will play a significant role in the coming years to respond to the global quest to arrest the decline in oil production and hence return to maximising the production from oil reservoirs. The key to increasing recoverable reserves is research, development, manufacture, supply and use of new product inventions. To facilitate the timely introduction of new technologies, the attitude towards embracing such solutions will without doubt change.

As expected, oil operators view the adoption of new technology solutions as a commercial risk. Adopting any new approach means dealing with a number of unknowns – that in itself contributes to the risk. In circumstances where the innovative solution is being developed by an industry 'new entrant' the perceived risk is understandably increased.

Tradition dictates that the most obvious source of any new product initiative resides with the large service suppliers that carry the appropriate infrastructure, expertise, industry knowledge and resource in place to bring the product to market. However, these large integrated service companies tend to focus on incremental developments with a large potential market that can substantially increase their market share. It is invariably left to smaller service companies and new entrants to exploit ideas with a smaller initial market, since even a small increment in market share can translate into significant growth for a smaller company. New entrants and smaller suppliers are invariably the source of radical, new innovations.

New entrants operate in a more flexible manner and are able to set up appropriate business models quickly to facilitate the supply of the new technology to the oil operators. They certainly seek partnerships with established service companies that have an understanding of the exploration and production markets, providing access to an established supply chain, distribution and support infrastructure.

The challenge for small, new entrants is to overcome the obvious barrier to entry where there is a significant lack of incentive for global supply companies to adopt innovative technologies, particularly if they potentially displace established profitable product lines. Barriers to entry are especially evident for companies offering disruptive technology solutions.

Despite numerous barriers to enter this market place, new products and innovations are entering the supply chain process and progressing to proving field worthiness. Camcon Oil Limited gave due consideration to all of the challenges associated with breaking into the oil industry before committing to a programme of business development. It was imperative that Camcon Oil Limited did not just replicate and deliver a 'me too' solution to reside alongside the established methods of operation.

There is a determined focus on being able to deliver a technology step change with the new product development that delivers very significant benefits to the Oil Operators. Camcon Oil identified an opportunity to develop an intelligent device that introduces management and operational advantages far beyond current capabilities, developing an intelligent gas lift unit offering variable operating valve combinations and eliminating the need for any well interventions. This is an essential ingredient for any new product introduction, especially from a business that is classified as a new entrant.

To complement the product development programme, product distribution, installation and support agreements in selected geographies are now in place, based upon traditional OEM type supply agreements – the remaining challenge is to conclude the product endorsement process with our supporting oil operators through successful field trials and continue with the product supply to the industry.

Author
Camcon Oil

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