Cooperation or Eroding Competitive Advantage?

Independent oil and gas producer Hess Corp. issued an urgent plea for technology sharing this afternoon at World Trade Group’s E&P Summit.
“We’re all chasing the same technologies. We’ve got to change our mindset and collaborate to create all the technology that we need,” Scott Heck, senior vice president of exploration and production technology for Hess, said.
Intellectual property is a touchy subject for energy companies, which are locked in a man-versus-nature battle as they try to harness natural resources from increasingly difficult plays such as the deep waters of the Gulf of Mexico.
According to Heck, Hess and other similar companies face the same three challenges in deep water:
* poor sub-salt imaging
*too much time between lease agreements and first oil production
* ineffective drilling and completion techniques
Heck argued that most energy companies only have truly proprietary access to certain types of technology for a short time anyway so they might as well share it from the start to cut down costs.
In 1998 companies working in the Gulf’s deep water were drilling to a depth of 20,000 feet beneath the sea floor under 5,200 feet of water, according to Heck. Price tag: $30 million.
In the ensuing decade there’s been serious price escalation. Today, those same companies are drilling to a depth of 33,000 feet in 9,000 feet of water at a cost of $125 million or more for such projects, he said.
“Proprietary technology is an illusion,” Heck said. “Collaboration (in the past) would not have compromised our core intellectual property but it could have improved speed of delivery.”