What do the Oil and Gas Industry and NASA have in Common?
I realise that is a strange question which could lead to a vast array of disconnected answers. The complexity of engineering is comparable; to extract minerals from deep within the earth as it is to break huge pieces of metal free from the grips of earth’s gravity and send it into space would be the response I would expect most. Though perhaps partially true that is far more complex than how I see the two are related.
The simple way they are both comparable is waste and that they are both lost. Waste, because of the huge resources that are unnecessarily wasted in pursuit of their overriding goal. Lost because nobody is quite sure where they are headed. The current uncertainty which has recently proliferated the oil and gas industry has been prevalent at NASA since arguably the end of the space programme. If they are honest, which after spending hundreds of billions of dollars they may not be willing to be, what real advancements and developments have NASA achieved since then? Technology has advanced beyond recognition but it has been said that we have now lost the capability to land on the moon. In a similar way in which the disappearance of the Romans led to the modern world losing the technology of cement for centuries in terms of technological progress and innovation, we have devolved in comparison to what we have historically achieved.
This takes me onto the one main difference between the two. NASA has been challenged from the most unexpected place, the free market. SpaceX and Elon Musk have grown to be a real palpable alternative to the status quo. Don’t get me wrong they will never supplant NASA, how could they when NASA are handed a government budget of around $18b dollars every year, but they are the only aerospace company achieving what can be considered tremendous advances of both innovation and technology. Put simply they landed a rocket motor on a floating autonomous platform in the middle of the Sea. Read that again. I don’t want to resort to hyperbole but that may be the most impressive feat of engineering in human history.
They are not just more innovative than their competitors, see Boeing, Lockheed Martin and to a lesser extent Blue Origin, they lapped the competition before they have stopped mocking and realised the trouble they are in. SpaceX approach to this is hardly revolutionary. They hired the smartest people and trusted them to make the right decisions, but to say that is all they did is to oversimplify the process.
- They fabricated everything they could themselves: Instead of paying specialist suppliers huge product costs SpaceX wasn’t content to accept the status quo. They rejected over engineering in favour of more than adequate tried and tested solutions in order to reduce costs and ensure competition.
- Only employ those who are necessary: The reason the dominant aerospace contractors are slow-moving behemoths of paperwork is that their prime customers are governments. This has lead to wildly over-sized engineering teams not doing very much but because there was a contract in place which pays per employee, they need people in place to maximise revenue. Sound familiar..?
- Frugality: The company made hatch handles out of parts for bathroom stall latches to save $1,470, and found that using racing-car safety belts to strap in astronauts was more comfortable and less expensive than custom-built harnesses. It used live people inside a full-size model to make sure that astronauts could move about the cargo capsule, rather than computer simulations. “They’d say, ‘Well, we could go buy this from this vendor, but it’s like $50,000. It’s way too expensive, it’s ridiculous. We could build this for $2,000 in our shop,’” said Mike Horkachuck, the NASA official who was the primary liaison with the company. “I almost never heard NASA engineers talking about the cost of a part.”
- Technology not History: SpaceX always thought of itself as a tech firm, and its clashes with NASA often took a form computer developers would recognize as generational. SpaceX followed an iterative design process, continually improving prototypes in response to testing. Traditional product management calls for a robust plan executed to completion, a recipe for cost overruns. “We weren’t just going to sit there and analyze something for years and years and years and years to the nth degree,” said David Giger, a SpaceX engineer. “SpaceX was built on ‘test, test, test, test, test.’ We test as we fly. We always say that every day here, ‘Test as you fly.’”
So what can the Oil and Gas industry learn from SpaceX?
The current economic uncertainty in the industry has led to renewed vigour towards cost cutting but that hasn’t yet proliferated through to innovation. The industry is content to employ antiquated methods, utilise outdated employment models and re-use inefficient extraction processes in what seems to be nostalgia of industry passed. That is married to a climate of adverse risk; rarely are new product utilised, even those that have been proved safe, regardless of the cost benefits associated. Technology must be embraced, innovation must be encouraged and experimentation must occur in order to ensure the long term economic viability of the industry.
Instead of evolving, improving and becoming more efficient the industry has stagnated. Why hasn’t automation been adopted offshore for the most dangerous tasks? Simultaneously improving safety and efficiency. Vast swathes of the industry could be augmented with technology which would assist offshore workers with their tasks and create a more vibrant and diverse industry. Eventually, will technology, automation and robots pave the way for fully autonomous rigs and platforms? Potentially. What will follow will be tremendous protest relating to the replacement of workers, which is without being cognitive of the new roles which would be created by such a paradigm shift.
Instead of a longing for over-engineered and excessively stringent control of materials the supply chain could be simplified to exploit materials and products which already exist in similar sphere reutilising them in more innovative ways. Bespoke doesn’t always mean better but it often always means more expensive.
The oil industry must evolve and embrace entrepreneurialism. It must learn from its mistakes, cut waste and ensure the detrimental effect of the recent industry opulence remains banished.
If it doesn’t, we may require a visionary industry equivalent of Elon Musk to blow the doors off the industry and alter its trajectory while the rest of industry mocks before running to catch up. It often feels like the industry moves at a glacial pace until everyone realises somebody else has stolen their trousers. Only embarrassment and mistakes seem to lead to change instead of proactively implementing an approach of iterative development leading to fantastic cumulative progress.
