with Anna Aabø, President, International Research Institute of Stavanger (IRIS)
Just yesterday BP announced plans for a USD 100 million advanced materials center in the UK. In a competitive international environment, how do you see Norway maintaining its edge as an oil and gas innovation hub?
Norway invested heavily when the petroleum industry first came to the country in terms of people and infrastructure. However, it is becoming increasingly apparent that other countries are investing in R&D infrastructure especially in places like Brazil and the Middle East.
One of the strong aspects of the Norwegian R&D environment so far has been the applied nature of our research in oil and gas. This is in part thanks to the infrastructure we have in place. In fact, just outside this building we have a large-scale drilling rig which can be used as an independent verifier for new technologies. Although some companies may have similar assets for in-house testing, this drilling rig is currently unique as an independent testing ground. It can be used both for evaluating technologies of companies and those of IRIS before these technologies are taken offshore. Other countries are starting to catch up with similar infrastructure investments.
In addition to infrastructure in general, Norway also has a strong culture of innovation. Norway’s research system is not based on hierarchies where individuals are working in intellectual trenches, but is informal and flexible allowing researchers to expand into other research areas and discuss their ideas freely with anyone from an intern to a top-level manager. This allows ideas to spread very quickly and is a key to Norway’s innovative success.
The third factor in Norway’s success as an innovation hub is the close dialogue between research institutes and industry. Researchers are well aware of the challenges faced by the industry and the industry responds by contributing strongly to the financing of research projects. As an example, IRIS competes for 96 percent of its budget based on our own ideas. We approach the Research Council of Norway and there is a competition round after which we can expect to receive between 30 and 70 percent of the financing for the project, if successful. The rest of our financing has to come from the industry itself and they need to find our project interesting in order to invest. The system is therefore set up for research to be relevant and thankfully this means that it is not too hard to find private-sector financing.
I believe that these three elements of infrastructure, culture and the dialogue with industry will to some extent allow Norway to stay ahead. However, that is not to say that the competition is not building up.
IRIS works internationally with subsidiary companies based abroad – one company was recently started in Brazil, another has been in Moscow for around 15 years. IRIS also has a lot of cooperation with international universities in the USA, EU, Brazil and Russia – there is not so much in the East yet but these partnerships will come. This international collaboration allows us to keep an eye on what is happening around the world in research and ensures that we maintain our competitiveness as an institute.
Traditional models of innovation assert that experts should move freely between companies for the cross-pollination of ideas. In Norway, innovators tend to be quite loyal to their company. How are ideas able to move freely between experts – where are the fora?
The Research Council of Norway has established arenas for experts to collaborate. The Norwegian Ministry of Energy and Environment has established OG21. OG21 represents a partnership of research and industry where the future challenges were drawn up and the board of OG21 is composed of all those who are involved in these challenges. IRIS has also been involved in establishing several arenas including the Ullrig drilling rig outside which can serve as a meeting ground for expertise in drilling. IRIS has also been responsible for establishing the link between Stavanger University which owns 50 percent of IRIS and the oil and gas industry. In addition, we work to create collaboration with other research institutes like SINTEF and other Norwegian and internationally based institutes.
IRIS is very involved in drilling and well innovations but it does not compete directly with the large oil service companies who are producing company specific hardware and software. Instead IRIS takes the data from their activities and creates mathematical models, giving holistic prognoses for development. Norwegian institutes like IRIS have an advantage in actually being more independent than commercial vendors. Commercial vendors often have their own established technology and this breeds a certain path dependency; IRIS and other research institutes on the other hand live for change, collating the results across all vendors to arrive at ideas for best practices and new innovations. This has led to IRIS creating a number of blue sky projects which have since become successful spin off companies.
Norway has been responsible for some profound innovations in offshore production including the Condeep Rig. Do you believe we will see another game changing innovation coming out of Norway?
I believe so. It has been quite a while since the last major discovery but the Norwegian Continental Shelf has become interesting again over just a few short years. The technology environment in Norway is now adjusting to the challenges of new fields.
When the petroleum industry came to Norway there were rudimentary HSE conditions in place and one of the major innovations that Norway brought to the industry was to move from the manual operation on rigs to mechanized operations. This transition took place in 1985 here at IRIS (at that time known as Rogland Research) in combination with HITEC which subsequently sold this technology to National Oilwell Varco. Now we are taking this process further to automating the entire drilling process – something for the “Nintendo generation”.
Last year IRIS established a company called Sekal which is based on the mathematical models we have developed and uses a drilling control system which at the rig site assists the drilling crew by making sure that drilling incidents are minimized. In any field development, drilling costs account for around 40-60 percent of the overall costs. The drilling environment can also be a extremely complex in mature reservoirs and it needs to be done differently. Sekal is commercializing an innovation which we expect to change the drilling environment significantly.
Overall, IRIS has 220 employees and in its spin off companies we can count a further 85 researchers and innovators. So the research creates jobs and leads to commercial innovations.
How do you assess the process of commercialization in Norway and how does IRIS approach the task?
It is not easy but IRIS has focused on this element. The first step is actually convincing researchers to give up their “babies” as they’re research is extremely important for them. However people here at IRIS have developed a proudness of being innovators.
I should say that the different funding schemes developed by the Research Council of Norway and innovation Norway have improved a lot which have enabled the first phase of research to be better financed. The next step is securing private financing to set up a company. IRIS has done this a couple of times and each time IRIS’s track record has improved in drawing more private financing.
One of the major challenges is actually a human resources issue. Our researchers are not usually commercially minded and IRIS tries to keep them in IRIS, set up a small business and then find a commercial manager to take it over. However it is surprisingly hard to find this type of entrepreneur.
How then do you find entrepreneurs?
Around Stavanger there are many initiatives being implemented and small businesses founded. These are sold for significant amounts of money to major international service companies. The entrepreneurs who sell these companies have money and are interested in seeing new technology developed. IRIS is therefore drawing on these people to take our spin off companies through their initial stages. Almost all universities have some form of entrepreneurship programs so the situation is improving.
What would be one of the most interesting projects that IRIS has launched?
The work that we are doing in environmental technology is very important and has the potential to make Norwegian enterprises extremely competitive as a technology base. Norway has the potential to set industry standards across the world in this area. Much of the technology developed in Norway has had this environmental dimension.
IRIS is looking at the biological impact of the industry – I like to say that we are asking Mother Nature how she is feeling – for example we use blue mussels as a form of early warning for hydrocarbon leaks. We check their heartbeat and the opening of the shell as we check humans for their wellbeing. The mussels are extremely accurate in measuring the water quality. It gives an early alert and we can then take blood and urine samples to ascertain the impact of a potential environmental damage. The subsidiary company implementing this is called Biotaguard and its services include leak monitoring and long term environmental impact assessment.
Biotaguard’s technology has been and are employed at field tests in Norway and one is planned in Canada. Of course one of the problems with the take up of this technology is the possibility of unwanted results. Contrary to what you might believe however, after having performed studies it shows that the pollution levels have gone down around the Ekofisk field.
Given that oil companies might be wary of this type of study, how exportable is this environmental technology?
Brazil is an obvious outlet for this technology and discussions are ongoing on how to proceed. Indeed our partnership with Brazil extends throughout our research areas. There are significant challenges when drilling ultra-deepwater wells. However, all companies would like to improve oil recovery representing our main research areas.
In the case of Russia, our part owned company there is focusing both on oil recovery studies as well as environmental studies. There is always a perspective on the environmental side although it is not ingrained in the production culture. Nonetheless, environmental technology of this type is giving companies a competitive edge when in many foreign markets.
IRIS has set a 2020 aim of being recognized as a leader in its respective focus areas of environmental monitoring, drilling automation and improved oil recovery. What is the main challenge you see in achieving this goal?
The three areas are very different. In terms of drilling and well research, IRIS is a leader in Norway and collaborates with leading Norwegian companies. We are probably already a world leader in this area. Certainly our commercial spin-offs are very successful. One of our companies Sekal, has recently won a frame agreement with Statoil in competition with internationally based service companies. This is an indication of the quality of our technological innovations.
Looking at enhanced oil recovery, we are on an international standard but there is a lot of good international competition so it would be hard to establish where we fit in the top tiers. IRIS has had a nine year project for the Ekofisk license and they believe that this has helped them to increase their recovery from estimated quantities. IRIS is well ranked internationally in this regards.
We are now focusing on developing environmental research to an outstanding international level.
What would be your aims for international research partnerships?
IRIS has a long list of international partnerships with Moscow because of our companies there, with the USA including prestigious universities like MIT and Stanford. It is important for us to work with organizations that are not doing exactly the same thing as us. IRIS is therefore collaborating on a research partnership with NASA. NASA contacted IRIS because they are investigating the possibility of drilling in space..
IRIS was established as a child of the oil and gas industry but a lot of our expertise is generic knowledge which can be applied to other areas as well. Geothermal is a major research area now, which heavily concerns the drilling system. Wind turbines would be another element of research which is growing in addition to the biological energy area. In fact, IRIS is looking at a program for feeding bacteria on gas to produce edible proteins for fish food. So IRIS is diversifying its research and applying it to a wide range of areas.
The oil industry is often said to belong to men, scientific research engenders a similar perception. To what extent is Norway a different case when it comes to women in this industry?
When I was younger I used to think a lot about this type of thing but nowadays, I do not think about it. Across the petroleum industry women are filling the top ranks. We see women are taking more and more prominent positions for example in Statoil. Things have already advanced a long way in a positive direction in Norway.