Theoretical physicist Albert Einstein has been quoted as saying, “Anyone who has never made a mistake has never tried anything new.”
Learning from mistakes and failures can lead to bigger and better things. The oil patch is no exception.
Sanchez Energy CEO Tony Sanchez encourages its crew to sometimes break wells.
“But don’t break too many,” Sanchez said. “Break a few. If you’re testing a reservoir for a certain completion design, take it to a level to where a certain set of wells, a small set, is broken, because in the unconventional world you’re not going to get zero. You’re going to get something; the question is the rate of success.”
His words were spoken during a session on accelerated technology adoption at Rice Alliance’s Energy and Clean Technology Venture Forum in September. Sanchez and other panelists seemed to agree that having a risk-taking culture was a key component.
Companies must build and embrace this type of culture as the oil and gas industry works to overcome obstacles—including extending the production life of shale wells—to meet future energy needs.
“We’re in the first inning of this unconventional revolution. It’s just starting if you really think about it,” Sanchez said.
Using data to test new techniques is critical to moving to the next chapter in the shale game. But sometimes new techniques fail. True, it’s not a good thing, and it should never be the goal, nor should be consistently making mistakes.
Kirk Coburn, venture principal for Shell Technology Ventures, was also a panelist. He recalled his time working in procurement before joining Shell and the risk-averseness of some of his procurement colleagues.
“They were not willing to make the changes to drive true cost savings because they were afraid,” Coburn said. “They want to keep their jobs.”
And who could blame them? Everyone saw the layoff tally rise as profits plummeted during the latest downturn and the one before that and the one before that.
But Sanchez added that they must be encouraged to try. “You’re not going to know where those limits are until a particular project fails,” he said.
Risks and experimentation are worth taking—within reason—to learn and grow. Perhaps that Silicon Valley mantra needs a little tweak: fail fast, fail not so often, fail forward.
Having the right culture for innovation could set the long-term leaders apart from the laggards.
When Sanchez gives town hall talks to company employees telling them it’s OK to test, he said he can see it in their eyes. “It’s almost like they are unshackled,” he said.