The Selfish Technology Gene - Discussion and Reply
- Ben Thuriaux-Aleman (Arthur D. Little) | David Thompson (Arthur D. Little)
- Document ID
- Society of Petroleum Engineers
- Journal of Petroleum Technology
- Publication Date
- August 2008
- Document Type
- Journal Paper
- 90 - 92
- 2008. Copyright is retained by the author. This document is distributed by SPE with the permission of the author. Contact the author for permission to use material from this document.
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- 45 since 2007
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To the Editor:
In their guest editorial, “The Selfish Technology Gene,” (April 2008) authors Robert K. Perrons and Lew Watts provide an interesting scenario in which oil and gas companies would keep their technology investments proprietary. Arthur D. Little believes that this oversimplifies the current situation. The industry is characterized by a range of technology strategies (Fig. 1) and, while there may be a shift towards increased proprietary technology, the industry cannot afford to develop all its own technology in-house and will need to think carefully about which technologies should be proprietary.
In our work on technology management, we have highlighted that companies need to balance ownership of their technologies with opportunities for value creation from their investments. Keeping technologies proprietary prevents companies from extracting the full value of their technology investments. Shell is a case in point—it has made significant progress in extracting value from its technology investments by making some of these commercially available.
Although third-party technology suppliers have not always been responsible for the invention of new technology, they have excelled at refining the technology. While this is often not counted as technological development, it has played a great part in bringing new technologies to the right price point and reliability, something the oil companies could not afford to do on their own. For this reason, we do not see service companies being threatened in the near future.
The comparison with investments for a fabrication plant for chip manufacture in the article is unhelpful. Microchip manufacturers keep their technology proprietary because it influences chip design and performance, key factors in an industry in which differentiation and performance are very important. But a barrel of oil is a barrel of oil. Oil and gas E&P companies sell commodity products, and technology investments serve to access resources or reduce production costs.
The key area where Arthur D. Little feels that technology will be kept proprietary is in the development of unconventional reserves. This is because there is considerable uncertainty about pay-offs from this area and the potential for technology development.
Ben Thuriaux-Alemán, Manager, Arthur D. Little, UK
David Thompson, Senior Manager, Global Energy Practice, Arthur D. Little
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