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An Innovative Future for Oil and Gas

An Innovative Future for Oil and Gas

2015 was certainly a challenging year, during which we all saw widespread cost cutting on capital costs in the oil and gas sector. In 2016 we are inevitably going to see further cuts with, perhaps, a greater focus on operational cost reductions. With the reality of barrel prices levelling out at $50, the role of innovation and technology in the sector is evermore seen as the key for longer term profitability. 

This is not a new story. We only need to look at the Press to see calls for new solutions to bring swifter and more sustainable recovery in the North Sea, especially for less economically viable fields.

What is hugely exciting for us working in the sector, is the real innovation which is happening now. Take for instance, Total’s Laggan Tormore project in Shetland – an opportunity realised because of stretches in innovation, enabling recovery of previously untouched resources. 

Then we have new “think tanks” emerging, driving innovation like the Oil and Gas Authority and the Oil and Gas Technology Centre. The Industry Leadership Group has placed innovation high on the agenda to handle the changing commercial landscape of the North Sea economy. These initiatives all complement other long established and successful groups like the Industry Technology Facilitator. 

At the end of January, lawyers from our Firm attended the Oil and Gas Intellectual Property Summit in London. The clear message from the Summit was the acute awareness that those responsible for capturing and managing IP within the sector, must be agile. Legal hurdles will remain in place and we in turn need to ensure that they do not become insurmountable or even a brake on innovation, to guarantee smart new thinking is kindled - not stifled. 

Other themes from the Oil & Gas IP Summit included:

 

  • The recognition that patents are still an important part of any IP portfolio in the sector even during cost cutting. They establish a placeholder in the market which deters misuse. Considering the 20 year life of a patent, it would be foolish not to seek protection during a relatively short term slump in oil prices.  The new Unitary Patent (where one Unitary Patent will give technology patent protection across the whole of Europe) is welcomed.
  • Retaining the confidentiality of know-how is as valuable as ever, recognising that sensible disclosure of IP to third parties via nominated parties (like IP Gatekeepers), is a good way to ensure flow is monitored and controlled. The new European rules on trade secrets were welcomed to give greater formality to what can be categorised as a business trade secret.  In particular, the EU Trade Secrets Directive will bring regulations which will be understood by US in-house counsel. Much more readily than our current common law rules.
  • Establishing an IP framework in collaborations is, understandably, essential. The legal structures however, should be streamlined with more thorny issues such as ownership of IP tackled at an early stage to ensure a project will get off the ground. 
  • IP should be firmly on the boardroom agenda with directors or management accountable for IP strategy, recognising that IP and innovation is a standalone issue for businesses. 

 

A lot is happening in the sector just now, with different challenges and fluctuating needs and demands. But what is clear is the need to ensure ideas are realised quickly. Walking around the Subsea Expo in Aberdeen this month demonstrates the appetite for the opportunity in the market for innovation.

Ross McKenzie
Associate

Colin Hulme
Partner

Burness admin