Economic efficiency of innovative activity at oil and gas enterprises



The article reveals the role of innovation projects in oil and gas business. In this work is presented the profitability statistics of enterprises that use innovative approaches for implementation of their activities in environmental, economic, and technological aspects. A detailed information in this research is also consist of new methods of oil and gas production, forecasts for the near future oil and gas business. During the researching, several kinds of key performance indicators of innovation management were presented. To the conclusion, the role of high-qualified personal is considered as a very important for modern oil and gas business.

Keywords: economic efficiency, oil and gas business, innovative activity, KPI, start-up, venture projects, oilfields.

At present, there is an obvious correlation between the innovation activities of the companies from different sectors of the economy and their success in increasing revenues. Over the past three years, the growth rate of 20 % of companies, that are leaders in the field of innovation, has been 16 % higher than the growth rate of the least innovative companies. That is why the problem of innovative development of the company is becoming increasingly important.

In addition, next five years, according to the forecasts of the leaders of the companies in the sphere of innovative development, their growth rates will accelerate even more than in least innovative companies [1]. Companies of the oil and gas sector have a higher revenues growth rates of their companies compared to almost all other industries [2].

Perhaps a part of this growth will be driven by rising energy prices, but this is not the main growth factor. Stakeholders of oil and gas companies are consistently and purposefully working to bring a production capabilities of their enterprices to a new level.

Technological innovations provide an opportunity to extract from the use of a «cluster pad» for drilling multiple wells in one sector, contribute to increased productivity, while exepting the need to expand the geographical presence of the sector companies in remote regions. According to some estimates, the average oil and gas well output in North America has quadrupled in just six years. This is consistent with the results of research carried out in many oilfields conducted over several decades. It is obvious that today oil and gas companies can building their rightly work in many areas right now.

Over the period from 2005 to 2015, the number of patents in extractive industries has more than doubled [3]. Innovation in the oil and gas sector is not just about increasing the extraction of raw materials. Another important direction is to ensure the safety of operating activities. This may include discovering a new ways for control the mechanical integrity and technical condition of materials when environmental conditions change.

Also it is important to create new systems for monitoring, maintenance and repair of production. Innovations in the field of ensuring the safety of production and labor protection became more important as the enterprises of this industry more often conduct their activities in extreme conditions. [3]. Companies that are leading in the development of innovative solutions will have a great advantage over their competitors in the future.

Today, any decisions regarding innovative development can have a very serious impact on the operation results in the long term. Here is an example of the production of biological algae fuels. Researchings in this direction have been going on for many years. Currently, the pilot project is being developed in Canada as part of the program «Innovation Alliance of Oil Sands Developers in Canada» (COSIA). Within the framework of the project, it is envisaged that algae will grow in an oil refinery that uses biomass from waste heat and by-products from the drilling process. This is the subsoil fuels, extraction of which was impossible 10–20 years ago [2].

The oil extraction from oil sands as well as shale gas in the recent past was too much complicated and expensive. But at present times the development of such resources is rapidly changing the situation in the North American market. Increasing the shale gas production is a well known fact, but this is not the only example of changes in the industry. Also there is a steady increase in the oil recovery ratio.

The Permian oil and gas basin is an US area measuring 250 by 300 miles, covering the western part of Texac and the eastern part of New Mexico. Oil production began here in 1921. Ten years ago, oil production from wells in this area was discontinued. But the introduction of new drilling methods (in particular, the hydraulic fracturing method, or «hydraulic fracturing») led to the oil production recovery during the last three years [2]. Currently, this field accounts for 14 % of the total oil production in the United States. However, the hydraulic fracturing method is by no means the only new drilling method that has an impact on recovery of production volumes.

Another important trend of the oil and gas sector is the development of corporate venture projects. BP, Chevron, Shell, ConocoPhillips and other companies have specialized divisions engaged in corporate venture projects. Investing in small start-ups is another way how companies in the sector hedge invested funds and expand access to a wide range of technologies in different industries.

In addition, for some companies this approach helps to maintain the balance of their innovative portfolio. Small start-ups make it possible to invest in technologies that can radically change the face of the whole industry without attracting large internal resources. Some of these companies also support venture capital funds specializing in environmentally safe technologies or on energy. Corporate venture projects are carried out not only by international oil companies. This direction is also presented at the level of national oil companies [5,6,7].

Some oil and gas companies, on average, allocate a smaller share of their revenues for the development and implementation of innovations compared to companies in other industries. Nevertheless, according to R & D Magazine, in 2013 the companies of the fuel and energy industry planned to allocate almost 16 billion US dollars for R & D. Obviously, the evaluation of the success rate of innovative projects is very important. However, what aspects of innovation should be a subject of evaluation? What are the justified targets? These problems are still very difficult for the top-management of companies: half of respondents from the oil and gas sector recognize that determining the right indicators in the assessment of innovation is a challenge for their companies [2].

During the determining of success indicators of innovative solutions, leading companies go far beyond the traditional indicator of income for investment. One of the standard indicators for oil and gas companies is monitoring of existing licenses. Other qualitative approaches can also be very useful. The Italian company Eni has developed an integrated approach to assessing the effectiveness of its R & D program. Different business units are guided by different types of innovations, and this is reflected in the system of key performance indicators. The indicators accepted in the company are divided into four categories:

1) the value of 31 (benefit) for the company (both tangible and intangible);

2) the efficiency of the portfolio;

3) the effectiveness of projects;

4) match with the strategy of the company.

One of the examples of material benefits is savings in terms of capital expenditures. This indicator allows to determine the amount of savings obtained through the use of innovative technology instead of the best available traditional alternative technologies at the level of capital expenditures [4].

The number of non-financial (non-financial) performance indicators includes the number of patents and publications, as well as the number of unique developments (know-how) transferred to other business units of the company. At present times, the true measure of success in the field of innovations can not be considered only through the prism of financial indicators. Thus, companies should not to deny the fundamental role of innovation in the development of the oil and gas industry today.

Technological innovations have a huge impact on all aspects of the supply chain. Technical progress that begins from the three-dimensional and four-dimensional seismological survey to the improvement of fractional distillation and isomerization, gas liquefaction and regasification technologies, has a great importance for the exploration, drilling, production, processing and marketing of oil and gas.

The availability of appropriate scientific and technical management is very important for the formation and implementation of an innovative strategy in the oil company. Scientific and technological progress is required for the future of the enterprice.

The companies of the fuel and energy complex are in a process of considering and creating the prospects of using nanotechnology, biotechnology and environmentally safe solutions in chemistry. Leaders in the field of innovative development, will get great competitive advantages. The manager of the innovation sphere is not only an expert in a certain technical field of knowledge, but also a researcher, organizer and manager in one person. Consequently, the team of such specialists in the company is a great competitive advantage.

Тhat is why, being at an innovative way of development, the oil and gas sector enterprises should devote enough resources to:

1) attract the most qualified employees,

2) sponsor potentially most profitable innovative projects and start-ups

3) increase the environmental friendliness of its activities

4) create such innovative technologies that allow the maximum use of a limited number of natural resources.

References:

1. Krasivskaya V. N. Neftegazovyy kompleks Rossiyskoy Federatsii v innovatsionnom razvitii // Innovatsionnaya nauka. 2016. № 1–1 (13).
2. Kryanev D.YU., Zhdanov S. A. Nauchnoye obespecheniye novykh tekhnologiy razrabotki neftyanykh mestorozhdeniy s trudnoizvlekayemymi zapasami // Bureniye i neft'. 2012. № 8. S. 29–32.
3. Shchepakin M. B., Solkina A. A. K razrabotke indikatorov sostoyaniya regional'nogo rynka nefteproduktov i integral'nogo pokazatelya effektivnosti yego regulirovaniya//Ekonomika i predprinimatel'stvo. 2015. № 2 (55). S. 345–352
4. 2016 Oil and Gas Trends // strategyand. pwc. URL: http://www.strategyand.pwc.com/perspectives/2016-oil-andgas-trends (date of the application: 07.04.2017)
5. [Electronic resource] URL: http: // venturebeat.com (date of the application: 07.04.2017)
6. [Electronic resource] URL: http: // www.shell.com (date of the application: 07.04.2017)
7. [Electronic resource] URL: http: // www.4 — traders.com (date of the application: 07.04.2017).