In collaboration with customers and supported by its 14,000 colleagues and research facilities, DNV GL runs joint industry projects (JIPs) to develop new solutions, standards and recommended practices that add value by solving industry challenges.

Despite challenging market conditions, DNV GL continues to invest 5% of its annual revenue in research and innovation projects to help customers become safer, smarter and greener. Half of these investments are focused on digital innovations, and one-fifth is dedicated to long-term strategic research.

The company has a long and successful track record of JIPs. In a period of cost constraints and increasingly complex oil and gas production, finding solutions that increase efficiency and production has never been more important. The first official JIP was undertaken in the Norwegian Continental Shelf in the 1970s. Over the period from the 1970s to date, having started an average 20 JIPs per year, the company has managed between 500 and 1,000 JIPs.

To address the industry’s need for smart solutions that reduce complexity, DNV GL funded 43 new JIPs in 2016 in addition to launching a new Step Change innovation program to help customers leverage opportunities from digitalization. It is initiating a further 48 projects in 2017. In the last couple of years it has had about 40 ongoing and each year has funded 40 to 60 new ideas depending on budgets available and customer demand.

Industry benefits

All JIPs seek to solve a specific technical need and, where possible, to develop a new standard, recommended practice or technology that benefits the industry at large. DNV GL provides a neutral platform for sharing ideas in a fiercely competitive market. It provides a level of impartiality where discussions can take place and business performance and a drive for innovation can be safely improved.

The key benefit for the industry is that JIPs are identified by multiple stakeholders as a challenge, and the subject matter is addressed from many perspectives. It is an inclusive process, and the company’s role is to be an independent expert and facilitator.

Collaboration challenges

The main challenges in collaboration are perceived loss of control and lack of trust between participating partners. This is managed by being transparent and clearly communicating intentions and agreeing parameters.

In a survey initiated two years ago the company asked the question, “What are the key issues hindering cooperation in the industry?” At that time, 44% reported that lack of trust between industry players was a factor. That said, 87% of the respondents at that time said that the industry could cooperate more. There seems to have been a change in attitude since the reduction in oil price, and cooperation is key to secure a strong and sustainable recovery.

Topic selection

DNV GL has a robust annual process for the collection of ideas. These must be whittled down into those which are deemed to be of greater importance to the industry. That is not to say that the others are not important. They may be ideas that are well in advance of current thinking or market requirements, and so these remain on standby for funding as the more pressing challenges are tackled.

The ideas come from DNV GL personnel who work closely with their customers discussing their key challenges. They gather ideas, evaluate them and put forward suggestions for JIPs. The geographical regional management personnel facilitate the internal processes to capture ideas in their regions, for instance, by workshops, sessions at team meetings, etc. The person that suggests the idea might ultimately become the project manager of the JIP.

Ideas are evaluated with respect to value for customers in three areas: cost reduction; standardization; and operational efficiency such as aging assets, lifetime extension and digital services. The regional managers will then rank and prioritize JIP initiation ideas from their region and pass them on to the head office, which collates all the ideas and chooses those to proceed with.

The oil and gas industry understandably has a strong focus on reducing cost, but safety must be maintained. Great cost benefits are expected to be achieved through standardization, replication, simplification and advanced supply chain management. Energy efficiency and climate change also should be considered. The demand for energy is expected to increase by more than 50% by 2050. At the same time, climate change demands a more sustainable use of energy. On the pathway toward a sustainable energy mix, the oil and gas industry needs to take responsibility by being transparent and reducing its environmental footprint.

Downturn effects

Direct R&D budgets are suffering because of the downturn. The result has been a willingness from everyone in the industry to think carefully, not only about survival in the short term but how the industry will be shaped in the future. The industry needs to adjust to the mindset that oil prices will be lower forever.

Collaborative platforms unlock a lot of value. Typically, there are 10 participants in a JIP, so new ideas are being developed at a fraction of the cost. As an example, DNV GL’s research facilities at Spadeadam, U.K., secured a large carbon capture and storage project toward year-end 2016, demonstrating a strong desire to drive new projects not only from a multicompany perspective but also geographically since companies in Scandinavia, Asia-Pacific and the U.K. are collaborating for this JIP.

Following a survey, Oil & Gas UK announced in December that the collaboration index score had moved up from 6.1 in 2015 to 6.6 in 2016. More than 85% said collaboration is part of their day-to-day business, and 98% recognize that collaboration is crucial for future business. So there is a definite positive move toward working together. To augment this view, 723 senior sector players were questioned on the benefits of collaboration as part of DNV GL’s most recent Industry Outlook survey “Short-term agility, long-term resilience.” It found that 22% of respondents said that they are increasing collaboration to maintain their innovation agenda.

Measuring success

There are some JIPs that originated and, due to lack of funding or participation, are challenging to continue. DNV GL is careful in that respect to select those that would be of most benefit to its customers to ensure cost benefit as the idea progresses.

Key to success with the JIP concept is to make the technical outcome tangible by publishing industry standards and recommended practices that serve as a reference point to all stakeholders. For example, the company’s pipeline standard DNV-OS-F101, which was initially developed 40 years ago, has been used on 65% of offshore pipelines globally. It is a great example of what industry collaboration can achieve regardless of the peaks and troughs in oil price.

R&D will be a key enabler to make the industry more cost-effective, but it cannot innovate on its own. Working together on JIPs and improving operations through digitalization must be part of the solution.