Creating the right business ecosystem for the resource industry

A recent CSIRO report provides a solid perspective on the trajectory of the oil and gas industry and its pathways to growth. One of the recommendations for ensuring the longevity of Australia’s oil and gas sector is to create a business ecosystem that allows the industry to thrive.

The report Oil and Gas: A Roadmap for unlocking future growth opportunities for Australia (Roadmap) explores a number of strategic opportunities to help address the sector’s challenges and improve global competitiveness. These opportunities harness the power of science and technology to transform existing operations and create entirely new business models.

The strategic opportunities include:

• Utilising technology breakthroughs that will help lower the cost of locating resources and producing reserves, thereby improving the global cost-competitiveness of the industry
• Investing in rapidly evolving digital technologies that provide opportunities for safer and more efficient operation and maintenance of oil and gas assets
• Developing technologies and processes that reduce the environmental and social impacts of field developments and processing plants, which may also provide financial benefits to the Australian oil and gas sector

Creating the right business ecosystem is vital to unlocking the strategic growth opportunities identified in the Roadmap, and will require a coordinated effort between oil and gas companies, suppliers, governments, researchers and community stakeholders.

The Roadmap also deals with broad themes that may be hindering innovation and collaboration in the sector. It identifies key changes that need to be made to overcome these obstacles as well as potential enablers, emphasising that the sector needs to act on these points soon, or risk being overtaken by international competition.

A better approach to collaboration

The Roadmap suggests the sector can improve on its approach to collaboration and drive better innovation outcomes by collaborating in new ways. This will build competencies that are new to the business, break into new markets, or do both.

Collaborations with research organisations will help to create completely new technological paradigms while partnerships with other sectors may be needed to move into adjacent markets. Both are needed to create completely new businesses.

Reducing the cost of doing business is also important, with Australia having a growing reputation for high costs, which may deter industry investment.

Investments in digital infrastructure and reducing the costs of physical infrastructure, such as pipelines and processing facilities, through shared models, may help.

Despite Australia’s significant oil and gas resources, there are potential challenges to ensuring continued adequate, reliable and competitive delivery of energy in Australia’s liquid fuel and natural gas sectors.

Additional analysis of the supply side of the energy market from an energy security perspective is needed. This may develop support for opening up exploration and production of Australia’s resource base, and decrease its reliance on imported liquid fuels.

Removing policy uncertainty

According to the Roadmap, one of the major issues that was raised during consultation with the  industry relates to policy and regulation.

Over the past decade, several policies and regulations aimed at managing climate change have been introduced and repealed in Australia. The lack of an explicit decarbonisation goal is creating significant uncertainty in the oil and gas sector, and represents a significant investment risk.

Common standards for technologies and equipment; streamlining existing regulation and identifying potential reforms; and a stable greenhouse gas emissions policy, will help to provide investment stability in the upstream oil and gas sector.

Improving the sector’s public image and social licence to operate – through strong and productive trust-based relationships with local communities, stakeholders and the Australian public – is also critical to the future viability of the sector.

Increasing the level of trust with the communities where projects are conducted; continued research on social issues related to the sector; and strengthened communication of science, technology and energy concepts with the public may also help improve perceptions of the industry.

Wade Elofson, founder of Powered, an Australian energy and resource focused business development company, said that oil and gas companies need to be proactively identifying and investigating new opportunities and exploring ways that science and technology can help to unlock growth.

“Global megatrends, strategic opportunities, enabling technology, and business ecosystem changes are all good starting points, but businesses need to create specific innovation strategies that are tailored to their goals and objectives as an organisation.

“For the oil and gas industry to last long into the future our energy producers need to continually look for innovations that can help lower the costs of production and improve efficiency.”

For more information on any of the subjects covered in these articles, please contact info@poweredaus.com.au or call Wade Elofson on +61 474 128 517.