Is short-termism damaging the oil industry?

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Editor An emphasis on short term profits hasn’t hurt the fossil fuel sector in the past, but could the lack of a long term plan now be damaging its prospects?

Whether it’s installing new infrastructure in the world’s deepest oceans or mapping and analysing vast swathes of unexplored seabed, the oil and gas industry frequently operates at the limits of what’s possible.  For this reason, it’s often compared to space exploration in terms of the problems it faces and the environments in which it operates.

But, as a forthcoming report in The Engineer explains, whilst the space industry is a well-known source of technology that goes on to have applications elsewhere (memory foam, satellite television and scratch resistant lenses to name just a few), the same can’t necessarily be said of the oil and gas sector.

In fact, as we report, the sector is heavily reliant on technology developed elsewhere to solve some of its most pressing problems. And there doesn’t tend to be much technology flow in the other direction.

It would of course be inaccurate to suggest that the industry invests nothing in research: it pumps billions into priority areas such as the development of new fuel and lubricant formulations. What’s more, by relying heavily on other industries for solutions the industry is also a major funder of UK research.

And there’s nothing particularly unusual about outsourcing large chunks of research. For instance, Rolls Royce, one of the UK’s most successful engineering companies, carries out a large proportion of its research through its network of university technology centres. And there are numerous other examples of companies using the wider research base to perform work that was once carried out in-house.

But as Imperial College’s Petroleum Engineering chair, Prof Ann Muggeridge, tells us ‘the industry isn’t very good at looking forward.’ And with a number of high-profile investment funds recently getting out of oil on the basis that it’s not viewed as economically sustainable in the long-term, industry should perhaps be concerned that growing perceptions of short-termism will only accelerate this process.

To read more about technology transfer in the oil & gas sector, watch out for the next issue of The Engineer, which is published on Monday 13th October.