Oil services firm reaches out to academia

Schlumberger intends to increase its spending on academic research tenfold, to 20 per cent of its half billion dollar annual budget. A first collaboration agreement, just signed with Supélec (the École Centrale de l’Électricité) and the École Centrale, Paris, underlines the new strategy.

Like Lazard in banking or Roche in pharma, oil services company Schlumberger is a legend in the corporate world. Founded in 1927 by brothers and inventors Marcel and Conrad Schlumberger to commercialise their electrical measurement process for mapping subsurface rocks, the company has always kept itself at a discreet distance from the Paris establishment.

For the past 80 years the multinational has maintained technology leadership partly by keeping breakthroughs from the eyes of competitors. But industrial secrecy is no longer on top of the agenda.

Hidden no more

In Schlumberger's Clamart labs – one of the main R&D centres of the group, with 500 scientist, engineers and technicians from a total of 3,500 worldwide – Innovation manager Yves Morel explains: “The time when you placed a group of scientists in a facility hidden in a forest, limiting their exposure with the outside world to reading scientific publications, is over.”

“Today, innovations come from everywhere. What differentiates you from competitors is no longer strong intellectual property protection, but faster time to market.”

Morel thinks universities have been forced to change, too. “You find more people now who want to carry out fundamental research that meets industrial needs, in order to produce innovations.”

This mix provides the basic ingredients of Schlumberger’s fundamentally changed R&D strategy. Already, the company has established partnerships or relations with 45 universities worldwide, and opened its own labs on campuses such as Cambridge, UK, the University of Moscow, Tsinghua in China and King Fahd in Saudi Arabia. In addition it is moving all its US research operations into a new facility at the Massachusetts Institute of Technology.

“At Clamart, we are in the process of increasing our R&D spending on academic collaborations tenfold,” says Christian Besson, marketing manager of the centre. “Long term, the vision is to spend 20 per cent of our R&D budget on external partnerships.” To do that, Schlumberger will have to expand the scope of its university partnerships.

Identifying collaborations

The agreement just signed with École Centrale and Supélec is an illustration of how Schlumberger wants to develop its R&D strategy. Instead of a classical research contract, the deal establishes a framework in which four professors become the company’s ambassadors within the two “grandes écoles”. Their job is to identify and establish collaborations across disciplines and expertise.

“We used to collaborate with academic researchers mainly through research contracts. You have a problem, you envision a solution, and you simply outsource part of the work to PhD students to execute it,” explains Morel.

In this model most of the intellectual property remains in the hand of the industrial partner. In many cases the university researchers hardly knew in which final technology their research was part of.

Under the new R&D policy, the IP for oil-related applications will stay in the hands of Schlumberger Clamart. But the academic partners are free to exploit their discoveries in other fields.

“What we want now is to involve university researchers much earlier in the innovation process,” says Morel. Basically the idea is to come up with a problem – maybe heating heavy oils to alter their viscosity in rocky mountain oil sands, cementing wells under 4000 metres of Arctic water, or accessing undersea oil fields from onshore – and let university researchers offer broad solutions rooted in science or engineering fields in which Schlumberger is not involved currently.

The search for the new

“The scope and productivity of science has increased so much recently that there may be a totally new solution for an old problem that we are simply not aware of,” notes Morel.

A good example is microbiology. Schlumberger employs an army of physicists, geoscientists and chemists, but hardly any biologists. But, as Morel puts it, “Believe or not, there is life in oil fields. Even with 150 Celsius temperature and 1,000 atmospheres pressure. We wonder if it possible to engineer those micro-organisms or enzymes to improve the recovery of oil.”  

These types of new opportunities seem infinite. Measurement used to be the core business of the company, but now it represents only 30 per cent of its $4.3 billion annual revenues.

Schlumberger has developed technologies that can place wells in reservoirs only eight feet thick, miles away from the drilling rig. Such operations require expertise in technologies as diverse as robotics, computer visualisation and fluid mechanics. And Schlumberger no longer seeks to model a reservoir only from the surface, but also from within the reservoir itself, using new emerging nanotechnologies.

Recovery is the critical topic Schlumberger wants to its university partners to tackle. “On average only 30 per cent of the oil contained in existing oil fields has been extracted,” explains Christian Besson. “Increasing the recovery rate of existing oil fields by 1% would add 2.5 years tof world consumption.”

The peak's not there, yet

In other words, for people at Schlumberger all the talk about an imminent peak in oil production is irrelevant. That being said, the technology to recover the 70 per cent of oil hidden in little cracks or isolated pockets of existing fields is yet to be invented.

“At seventy dollars per barrel, many new recovery techniques will become economically viable”, says Besson. But the exploding demand for oil services and the rising prices for materials have also dramatically changed the picture.

These economic constraints lie behind Schlumberger Clamart Centre’s new R&D policy. But this new approach will have no bearing on Schlumberger’s overall R&D spending. Indeed, the company plans to increase the half a billion dollar R&D budget. “We do not want to transform universities into applied research centres, but to offer opportunities for good fundamental research to be applied,” insists Morel.

With the age of easy oil coming to an end to an end, the new policy at Schlumberger Clamart is a clear expression of the company’s desire to increase the percentage of oil and gas recovered from reservoirs. And even before the last drop is pumped, Schlumberger hopes that its innovative approach to R&D will have opened up new businesses such as carbon dioxide sequestration, subsurface water management and deep geothermal drilling.