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Potential Technology Breakthrough
A 1999 presentation by Drs. Albert van der Kallen, Vice President
Shell International Exploration & Production BV, Research and Technical Services at Beijing

Today I like to discuss with you Technology Breakthroughs, their specific characteristics, how one recognises them, two specific examples from my personal experience, lessons learned and to present examples which have the potential to be the breakthroughs of the 21st century.

For an innovation to classify as a breakthrough I would suggest it has to satisfy three criteria.

  1. Constitutes a substantial discontinuity of present technology.
  2. The potential business impact has to be substantial in excess of hundred of millions $ (if not billions).
  3. Work practices of the whole industry get eventually realigned.

E.g. the introduction of horizontal drilling and three-dimensional seismic would fully qualify as E&P breakthroughs.
A logical question to ask: "How do these breakthroughs occur in the first place, what drives this process?"
I like to suggest that we as human beings have a built-in exploratory instinct to try to understand the world around us, to search for the truth in order to create a better world for ourselves, our dependants and our society as this provides us with a deeper meaning to our lives.

This sounds rather philosophical so let us describe the process a bit more in detail. During the process to come to a breakthrough one can visualise a funnel where continuously observations are fed in, but it requires intuition, some reason and logic to recognise the winners.

At the identification stages it is very critical not to argue and let all logic loose to filter the ideas. To be an stepout the outcome and success will not be obvious, otherwise it would be in place already. At this stage it is important to let the left brain idle, but filter only intuitively if it ever will work and has the potential to create value through e.g. reduced cycle time or improved processes. The few individuals who excel have the intuition and almost physical sense which idea feels right. They posses the passion and tenacity to drive such idea through the organisation. They cannot be stopped at this stage as taking creative risk and be a change catalyst is what makes them tick.

Where are these ideas or triggers coming from? Somewhere at a university or a technical institute people are breeding on the idea mostly from an academic point of view and the people with the right antennae receive this information, understand the potential and get triggered. They have a good feel for the unresolved problems in their business while others do hardly realise such problems exist. They recognise the application potential, pursue frantically a practical solution and initiate a successful pilot to demonstrate the potential to his customers and technical peers. This provides them with the recognition ,a nice by-product, which assists fuelling the creative process.
One would expect the whole E&P community to grasp the opportunity and the asset manager to jump at the breakthrough offered. However at this stage the tools are still immature with no track record and are not field proven and the NIH (not invented here syndrome) and all antibodies of the organisation start to come in play. Typically it takes us as an industry 10 years before a breakthrough is fully recognised by all stakeholders and can make its full bottom line impact and industry work practices are aligned. Only a few years can be described as necessary to mature the product, the rest is organisational sluggishness fed by needs for proven bottom line impact by line managers .As a consequence fence sitting is the norm or to say it differently the process is unduly delayed by lack of technical leadership and adversity to risk taking.
How can we improve this situation and recognise potential breakthrough earlier?
There has to be a culture to challenge current practices and look outside the E&P industry for ideas.

Having described what it takes, it is now time to put some meat on the bone and share a few of my own triggers with you. I have selected three examples out of the E&P geophysical arena

  • hydrocarbon detection,
  • 3D seismic and
  • pre-stack depth migration
It is hard to imagine today, but at the time I joined the industry in 1968 all geophysicists around the world knew hydrocarbons could NOT be detected on seismic. The acoustic contrasts created by hydrocarbons would be too small to be detectable. However, the seismic being acquired showed carbonate reef structures, where the top carbonate reflector of one structure was a strong reflector and the next structure very vague. First structure appeared water bearing while the second structure was gas bearing.
In the bridge building industry Gasmann had already in 1950 (20 years earlier) produced a formula describing the velocity of rocks not only as a function of pore fill, and rock grain material but also a function of the rock matrix. After frantic literature search I ran into this reference and combined with published rock pressure laboratory data could unlock why hydrocarbons could be detected on seismic. The bright spot era in Shell was born. The lesson learned were
  • Even a first assignee can hit the jackpot, neglect the today's knowledge and seek for answers outside in related industries.
E&P is a competitive field and others were finding the key as well (triggered by the amplitude anomalies observed at seismic from elastic provinces such as Gulf of Mexico).
My second example refers to the mid seventies where in the Netherlands the exploration interpreters had ample 2D seismic to define the Rotliegendes gas traps below the salt. However, the maps were inconsistent with drilling results or would change when new infill 2D was acquired.
A 3D seismic consortium was formed in the USA but no field results were available yet. As Chief Geophysicist of Netherlands Aardolie Maatschappij B.V. (NAM), I lobbied from our Shell Headquarters for a million guilders ( million dollars) to test a 3D seismic concept on a small parcel (16 km2) of a field development area. The test took two seismic crews a month and a subsequent 1 year to process the data. A horrendous commitment with a high risk profile at the time. The results were staggering as the two maps at target level were indeed substantially different and a new high block was identified which proved to be gas bearing. The results were presented at the SEG in 1978 and as far as we know represents first published commercial land survey executed by an operator in the world.It was already foreseen that the application would first be in the field development arena Therefore the paper was presented and published at the SPE 1978 proceedings. Shell has pushed the 3D technology in the industry since but the final massive impact took even within Shell some 10 years to materialise. The acquisition instruments had to be built and software to be developed to handle the massive data but this accounts for only some five years prior to take off. Lessons learned:
  • A small team can do it, the historic unit costs are irrelevant as impact is further down the value chain and new customers needed to be found (field development rather than exploration) a cultural shock as geophysicist were embedded in Exploration Departments at the time and Production was definitely another organisational domain.
The last example brings us to 1990 where as a Research community we tried to identify the breakthroughs for the year 2000. Despite the success of the 3D we were convinced structural maps below complex velocity structure were problematic that with the aid of further computer growth the depth migration using 3D velocity models could provide the next imaging breakthrough. No results were available but our intuition told us to put halve of our geophysical research on this subject. Thanks to our early intuition we were again amongst the industry leaders in 3D Pre-stack Depth Migration and 3D PS DM in making an important impact on the bottom line in e.g. pre-salt provinces while we speak. Lessons learned:
  • one can predict breakthroughs 10 years ahead
  • Research managers can demonstrate technology leadership and motivate teams to pursue a stretched goal.
By now I trust that having put you through the reversed time machine you are ready to have a look ahead of us.
There are several areas I would like to address where substantial breakthroughs along the whole E&P business model could occur and I like to present a few triggers to you that make such prediction plausible.

(The forward looking part of this presentation has been left out for this TT website, suffices to say e.g. MEMS technology,fiber optics downhole monitoring, mono-diameter holes were predicted to make substantial inroads)

In conclusion I hope you are convinced about the many potential breakthroughs ahead of us, and let me assure you the oil industry is dependent on this in this highly competitive environment. It will require the right emotional intelligence to recognise the triggers timely and an organisational culture to drive the winning ideas through. The decenia ahead of us in the 21st century should not be less exciting than the ones we have been through.

This is part of keynote speech, which was presented at Petroleum Exploration and Development in the 21st century President Forum in Beijing to celebrate the 40th anniversary of CNPC Research Institute of Petroleum Exploration and Development.

Copyright © Albert van der Kallen, 2002 - 2003. All rights reserved.
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