Business Cycles and Innovation Cycles in the U.S. Upstream Oil & Gas Industry

Time: Friday, April 19, 2019, 11AM-1PM
Location: Schlumberger Doll Research (1 Hampshire St., Cambridge, MA, USA)
RSVP: Registration is required. Please RSVP with the link below and arrive 15 minutes early.

When oil and gas prices are declining and low, “innovation” is frequently invoked as the key to continued petroleum industry viability and profitability. But what kind of innovation can be expected on the short time scales – on the order of a year – cited by industry executives, analysts, and the press? 

Efficiency, process, and technical improvements, which do not require significant research and development investments, continue independent of business cycles. These classes of improvements can indeed increase production and reduce costs over relatively short time scales.  On the other hand, major technological innovations that require sustained investments of human and financial resources can take a decade or more to mature.  In this research, we develop insights that can help the upstream oil and gas industry—exploration and production companies as well as service companies—better understand oil price and innovation cycles. We conceptualize upstream technology innovation from two directions: from the top down, based on econometric analysis, and from the bottom up, based on case studies of key upstream innovations.

Oil price cycles can be relatively long, but the time needed for research, development, and widespread adoption of important technologies can be even longer.  The results of this research suggest that industry participants who expect to commercialize major technological or industry-changing innovations should be willing to support R&D through business cycles.  For market participants lacking that commitment, a more realistic strategy is an incremental, short-term focus on process improvements.

From 1980 to 2018 Robert Kleinberg  was employed by Schlumberger, attaining the rank of Schlumberger Fellow, one of about a dozen to hold this rank in a workforce of 100,000.  Dr. Kleinberg was educated at the University of California, Berkeley (B.S. Chemistry, 1971) and the University of California, San Diego (Ph.D. Physics, 1978). From 1978 to 1980 he was a post-doctoral fellow at the Exxon Corporate Research Laboratory in Linden, NJ.  His work at Schlumberger focused on geophysical measurements and the characterization and delineation of unconventional fossil fuel resources.  Dr. Kleinberg has authored more than 100 academic and professional papers, holds 39 U.S. patents, and is the inventor of the OBDT oil base mud dipmeter tool and the CMR combinable magnetic resonance tool, which have been commercialized worldwide.  He is currently a senior fellow at the Boston University Institute for Sustainable Energy, and a senior research scholar at the Columbia University Center on Global Energy Policy.  Dr. Kleinberg is a member of the National Academy of Engineering, is the 2018-2019 American Physical Society Distinguished Lecturer on the Applications of Physics, and serves on the Board on Earth Sciences and Resources of the National Academies of Sciences, Engineering, and Medicine.