Jørn Madsen: Industry must embrace collaboration, automation to compete with other energy sources

By Kelli Ainsworth, Associate Editor

In a cyclical industry like oil and gas, downturns are an unfortunate reality. When downturns hit, the industry always works to cut costs, but they inevitably rise again in the next upturn. However, this cycle may prove different, Jørn Madsen, CEO of Maersk Drilling, said in the plenary session at the 2017 SPE/IADC Drilling Conference in The Hague, The Netherlands, on 15 March. “I think we’re facing a new reality,” he said. “We will not just be competing against each other. We will be competing against other energy forms like solar and wind, and that means that the oil industry, if we don’t change, will lose and lose fast.” Increased collaboration and automation could help the industry become more efficient and reduce its costs, he said.

The industry cannot move forward under the assumption that oil prices will reach $100 again any time soon. “The current oil price is most likely here to stay and for a long time,” Mr Madsen said. At the same time, it’s important to realize that the industry ultimately delivers a commodity. “A low-margin game requires a different approach than we’ve taken in the past,” he added.

Collaboration will be a key part of this approach, he said. Opportunities for cross- value chain interaction and partnership abound. “If we look to other industries that have been in similar situation that we are in, it’s been inevitable that the players in the industry have found new ways of working together,” he said. “In order to be efficient, you have to collaborate, you have to integrate and you have to share data and other information between the parties.” He pointed to the Pressure Control by the Hour partnership between GE Oil and Gas and Diamond Offshore as the sort of collaboration that the industry should – and he believes will – continue to pursue.

In addition, the time has come for the industry to fully automate the drilling process, Mr Madsen said. Maersk Drilling has been taking steps toward this goal and is preparing for a full-scale test of a remotely operated drill floor. “This is the last step before automating the drill floor,” he said. The company is also leveraging data for a digitization project focused on preventive maintenance. Another project is focused on gathering drilling data automatically and using it for real-time performance management on the drill floor.

As data and digitization reshape the drilling industry’s processes, they will also change the skillsets required of industry employees. “We might need to start thinking of ourselves as software companies,” Mr Madsen said. Some positions might require a higher level of education due to the advanced digital systems with which employees will have to work, he added. Because automation can take people off the rig, which drives down costs, multi-skilling will likely become critical, as well.

At the same time, the next generations of employees will ultimately reshape the industry and its culture, he added. “The young people that we’re bringing into the industry might bring the collaborative way of working with them and the use of technology that they already embrace.”