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Interview

with Martin Sigmundstad, Director, Arena Integrated Operations

14.11.2012 / Energyboardroom

As a spokesman for Norway’s innovation in the offshore technology sector, what is your perspective on Norway maintaining its leading position as an offshore technology leader when we have mounting competition from other regions?

Norway’s oil and gas industry is at the end of a forty-year S-curve and we are looking for ways to replicate this curve. Increased oil recovery (IOR) is perhaps one of the most important innovation drivers for the industry in that respect, as well as new technology related to drilling and well design, and the position Norwegian companies have in the subsea market has to be defended every day!

The North represents some challenges but Norwegian companies are more or less used to many of these kinds of challenges. How much of a step-up in terms of innovation is required?

The North is for big businesses with the credibility, political skills and capital to back themselves up. The agreement between Russia and Norway on the grey zone is of course a step in the right direction to open up this area for oil and gas activities. In terms of innovation for these areas, subsea technology has an advantage in that the operating environment is more or less similar in all geographic locations which mean that much of the basic technology already is in place. Another important technology that will play an important role in the north is the Integrated Operation Technology and mind-set. For extreme and remote operations we will need multidiscipline teams of people engaged on a real time basis. This will call for new ways of working within the operating organisations and across boundaries between operators and suppliers. A lot of the technology elements are already in place, but the courage for full-scale use across the Norwegian industry has to be developed step-by-step.

From where does this courage come?

I think the driving force has to come from the industry, which should be willing to take the first steps, but the government and employees on all levels also have to be willing to contribute.

You said that Norway is at the end of a curve that must be restarted in terms of technology. Do you see a future opportunity for Norway to make another game-changing innovation or discovery?

Some of our 1970’s developments are now worldwide standards; the earlier you start, the longer you can lead. We have a good starting position since we have been working in harsh and sensitive areas from the start and are used to account for efficient and safe working methods. Additionally, within the marine sector, Norway has a long history of being innovative. We also have a lot of people who have worked the whole S-curve which can probably stimulate at least the start of a new S-curve. The “flat” social structure in Norway is also a factor that contributes in creating a good environment for innovation.

In terms of the Norwegian innovative model, what are the advantages of this privatized model of innovation as opposed to a traditional top-down government-sponsored model that you see in other countries?

For me, government money is as good as private money for research, and I hope for more public money as there is always a lack. To my mind, Norway’s advantage is that there are many small corporations with a lot of freedom to innovate. There is an increasing tendency for big corporations to accept this and buy innovations through acquisitions of these companies instead of developing ideas themselves. The bigger organisations have also learned that it is a good idea to keep and stimulate the structure in these small companies instead of integrating them in the big organisational structure.

Another factor I would highlight is that there is a tendency here in Norway to stay with your company (sometimes this is due to our geography). One might consider this an almost Japanese trait. However, you get much more into the corporate spirit than you would in a job-shopping environment as you might have in the US. . Norwegians are very connected and loyal to the companies for which we work.

In most innovative markets the innovation force comes from individuals starting in one company and bringing innovations to a second company to develop. How does the Norwegian industry create the same cross-pollination of ideas?

This is the other model of thinking; the more you circulate people, the more you get out of them. To some extent it may be correct, but I think that long-term relations between people who work together as a group can create “group skills” that can be an extra dimension in creating an innovative working environment. Moreover it is not easy to transfer “innovation” from one company to the next; skills, on the other hand, can more easily directly be transferred between organisations will pay off in the long run, innovation requires more focus on creating a “social” working environment and not just structure and efficiency. From my own experience investments in people and organisations are as important as products and technology.

How do you see The Accelerator as a facilitator of these informal relations between companies?

Like a good football team, you can have star players, but the team may still be collectively loose. Thus the interaction between players and what they learn from each other – cluster thinking – is one of the most important things to cultivate. Despite tough competition, it is possible for competitors to find common ground on which to cooperate. In our case we have seen that the name Accelerator is relevant to a lot of processes in the value chain for new technology developments. R&D is normally a phase in the development process that is well planned and “taken care of”. However, the process of verifying and commercializing products for the oil and gas market is too long and complicated. The main idea behind The Accelerator is to bring competence from operators and small and big technology companies together to try to improve the time and cost picture for bringing new technology to the market. Good onshore test sites like Ullrigg will play an important role in this respect. I also think we should start to prepare for a future where the hardware part of the product plays less of a role in the relation between customer and supplier. The technology and mind-set of “integrated operations” enables the “competence” part of the product to be delivered and supported from “anywhere” and on a continual basis. This can be an important factor in keeping technology centres/main office functions in Norway even in a situation where the physical marked move.

What influence do you expect the contrast between renewable energy and oil and gas – the green/black divide – to have on the attraction of specialists to oil and gas innovation?

I do see that green energy can sometimes undermine the oil and gas sector. Forty years ago, working in the oil industry here in Norway was considered prestigious. Today, the image of the oil industry being an attractive place to work may be lost and instead we are perceived as destroying the world. However I also think the technology shift from hardware to software attracts young people, which will counteract this green-black dilemma.

Green energy is dependent on black energy, so we need to continue working diligently while being environmentally conscious. Furthermore, I do not think oil companies should be forced into green energy projects that “anyone” can establish and where the O&G companies can not capitalise on their technology base and/or ability to handle big multidiscipline projects., In the longer term, however, O&G companies should have the potential to play an important role in the future “green” energy markets. I have my doubts; however, if today’s O&G companies are “rigged” in the best way to just “walk into” these markets.

Will we see more financial weight being thrown behind innovation in Norway? How is it compared to other countries, and how much more should be invested?

I certainly hope so. In the past, the money that oil companies have had to invest in Technology development has proved to be one of the most important elements in building up a Norwegian O&G industry and top class research institutions.

At the time when the money was spent I think many of us working in traditional businesses felt that we were throwing away money, today we realise that we have harvested from these investments for years. I hope we can find a system where we can revitalize the “Norwegian model” and where a company like Petoro takes the initiative to provide funds and run programs for strategic developments within the O&G sector.

What are some of the most exciting projects towards which the Accelerator program is currently working?

At this point it is slightly premature to say what the main project will be but it will certainly involve stimulating efficiency along the value chain for technology development and verification.

What are some of the major ambitions you would like to achieve over the next five to ten years for Accelerator?

I want a collective mindset that facilitates open and genuine cooperation. This means our program has to be very clever in finding areas that give some quick results that can demonstrate for the major players that The Accelerator is worth the effort Accelerator should have the ambition to reduce the average time from new technology to market product from ten to four years and the cost down by 40%.

You said this is a year-on-year program. In terms of investments in these programs and development of these organizations, how much are members willing to contribute to the budget?

The Accelerator program has not risked finding out how little can we ask for to get started. Without being a financial institution, Accelerator has asked for very little because this organization will only facilitate the process while the member organisations will provide the “working force”.

What is your personal motivation for coming to work here every day and achieving all your goals?

I will continue to work for as long as I can. I feel I have forty very exciting years in the industry behind me and to that extent I want to give something back to the new generation of entrepreneurs in the Incubator in the Innovation Park here in Stavanger. Working with young people is stimulating as they are very cooperative and open for new ideas. The Norwegian model has proved to be a good basis for development and renewal of the industry in the past and I see no reason why it should not work for us in the future!

On behalf of the Accelerator program, what would you say to new partners who could assist you?

I think the need for energy is much bigger than we would like to admit. The best we can do on a short term basis in the O&G cluster is to focus and further develop our technology base so that we hopefully can supply the world with “old” energy developed in a safe and environment friendly manner until a “new” energy base can take over. Those who believe that the O&G industry is a sunset industry are wrong,-we have just started a new technology driven phase that will last for many decades still!

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