Failures are the seeds of success, engineers told

The seeds of tomorrow's upstream technology are in today's failures, if oil and gas companies are willing to take the risks and learn from their mistakes, George E. King, a veteran BP engineer, told a Society of Petroleum Engineers meeting Tuesday.

DALLAS�The seeds of tomorrow's new upstream technology are in today's failures, if oil and gas companies are willing to take the risks and learn from their mistakes, George E. King, a veteran BP engineer, said Tuesday at the annual convention of the Society of Petroleum Engineers (SPE).

"Innovation usually starts with several failures," he said. "Everyone loves to talk about successes, but when is the last time you saw an SPE paper that analyzes a failure? Technology comes from our mistakes, failures and recovery�that's the foundation of experience."

However, King said, "We often quickly and quietly bury our mistakes when we should be doing full postmortems and learning from them. Ideas may also come quietly out of solutions that we choose to ignore because of either their apparent simplicity or their source."

A lack of willingness to accept technical risks with a higher level of initial failures, coupled with a reluctance to change comfortable work habits, are "two of the most formidable barriers" to the development and acceptance of new technology, he said.

That's why it has previously taken 7-20 years or longer to get a "new" technology into the field.

"The idea for horizontal wells originated in the 1930s, but wasn't tried until the 1950s or given wide application until the 1970s. Multilateral drilling dates back to 1952," said King.

"Sometimes the original patents have already expired before the technology is in use. We can't afford that long a wait in the future," he warned.

Other barriers to the development of new technology include:

� A lack of understanding what innovation is. "Some companies and more than a few individuals still equate the number of patents held with being a technical company," King said. "Patents are meaningless. You don't get rich off of royalties. You make money by putting technology to work. The purpose of innovation is to reduce operating costs and increase reliability and profitability."

� Cost-cutting. "The cost-cutting mentality of the 1980s-1990s will bite us," King said. "It breeds a risk-adverse culture that stifles innovation."

He said, "Remember that much of a company's 'technology' is resident in its people, not the color of pig-iron that is part of the company or its current alliance. You can hire technology[-minded people], but then you must listen to them."

� The "not-invented-here" syndrome. "Some of the big companies are the worst examples," King said. "It doesn't really matter where good technology comes from. Accept it, prove it can work, and apply it."

� Batch completions. "Cost-cutting batch completions are okay for cookie-cutter wells, but learning and improvement is not possible," said King.

� Severely reduced well numbers. "Some deepwater fields in the Gulf of Mexico are being developed with only one or two wells. This reduced well count makes both learning and cost reduction very difficult. Improvements in well costs and productivity are usually not seen until the third or forth well in a series," he said.

� The wrong set of metrics. "If drillers are still using cost per foot or a variation as the main performance metric, then there is no serious driver to improve well production performance," said King.

"If you're successful 100% of the time, you're not pushing the envelope of innovation as much as you should," he said.

"Many of the best ideas and step-changes in innovation come from small companies and individuals. But they are frequently stepped on for lack of funding or a listening ear," King said.

By comparison, he said, "Silicon Valley companies may sort through 150,000 potential ideas a year to come up with just one or two winners."

BP has formed a committee to help develop such ideas among employees and even outside sources. "We established a fund where employees can get the time and money to work on new ideas," he said.

"Growing an idea to a concept requires a review of the idea to determine if it has a technical chance of working and an economic return that is worth the investment of time and money," King said. "Some can study an idea to death."

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