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In a number of ways, the future of offshore is bleak; diminishing oil reserves, the rise of renewables and increasingly urgent calls to act on climate change have made offshore drilling an increasingly expensive operation and one that yields ever-thinning profit margins.

This is compounded by the industry’s historic reluctance to innovate, due to the complexity of offshore operations and the potentially devastating human and economic costs of accidents and mistakes; the Deepwater Horizon spill alone claimed 11 lives and reportedly cost BP up to $62bn and is an example of the potential dangers of deviating from safe and established ways of working.

Despite these concerns, start-up companies offering new technological solutions to the industry’s challenges are pushing ahead with their work, with the support of the Oil and Gas Technology Centre (OGTC) in Scotland, and its TechX Accelerator programme. The project aims to back 100 oil and gas start-ups, with the second cohort of successful applicants announced earlier this year.

The project aims to provide more than just financial support, and the initiative’s first cohort of companies have taken advantage of a range of other opportunities, including a four-month programme at the OGTC’s facilities in Aberdeen and support from the project’s partners, BP and KPMG, to help the companies scale up their solutions and pitch them to investors. While economic and technological challenges remain, those involved in the programme are optimistic that the project will fast-track innovative solutions and bright mines to key positions in an industry in decline.

Accelerating innovation

“Many of the new technologies we need to ensure energy security for the UK and to accelerate the industrial transition towards a low carbon agenda don’t exist yet, so we need to do a better job of finding and supporting early-stage tech companies,” said David Millar, TechX programme director, highlighting the need for technological innovation, and the difficulties faced by many start-ups in the sector.

Millar added that nine out of ten technology start-ups are statistically likely to fail, and those that do succeed require more than a decade of investment and development, time that the oil and gas sector frankly does not have.

“Without TechX setting this up, it would take [start-ups] four to five years to do this on their own,” he said. “It takes just three weeks on our programme.”

This rapid pace of development is as critical to the success of these start-ups as the £100,000 offered in funding, and the access to mentorship and networking events offered by the programme.

Without TechX setting this up, it would take [start-ups] four to five years to do this on their own. It takes just three weeks on our programme.

“Organisations like the OGTC and programmes like TechX help drive the introduction of new technologies, new ideas and new energy into established industries like the oil and gas industry,” said Dr Rotimi Alabi, managing director of RAB Microfluids, one of the companies to feature in the project’s second cohort. RAB has developed a solution it has dubbed “lab-on-a-chip”, where microchips are added to the lubricating oil in heavy rotating machinery to analyse its performance and condition in real-time.

The solution has obvious advantages for the offshore sector, by enabling companies to respond quickly to machine failure or even predict damages and stoppages ahead of time. This reduces the time needed to repair or replace machines, but this potential alone was not enough to see the project develop from concept to working prototype. Alabi noted that both the financial backing of the programme, and its work in introducing the start-ups to potential investors and industry majors, were vital in delivering the solution.

“RAB Microfluidics would not have considered venturing into the oil and gas industry without the tremendous support received from the OGTC and TechX,” he said. “In my opinion, they are becoming the life blood of the industry in terms of stimulating collaboration within the industry.”

Redefining attitudes and inspiring change

The project’s most significant consequence, however, could be to inspire change in a sector long considered resistant to change. Millar described the financial support offered by the project as “unparalleled”, as the project aims to add £2bn to the UK economy through its support of the start-ups and redefine oil and gas a sector that welcomes innovation.

“Since we opened in February 2017, we now have over 200 projects across our six solution centres and over £120m co-invested across these with the industry,” said Millar of the progress the OGTC has already made. “To find these 200 projects we have screened nearly 900 different technologies. We can’t achieve all that without industry support so there is a shift in progress, which is fantastic to see.”

These changes are already apparent in the impressive diversity among the companies; RAB’s background is rooted in academia, with Alabi’s PhD project at the University of Aberdeen providing the basis for the company, which was awarded £60,000 in funding by BP while still affiliated with the university. Conversely, Blue Gentoo, which provides monitoring solutions to predict the formation of gas hydrates, which can cause pipe blockages, is led by Jeanette Forbes, who has 19 years of expertise in leading technology firms and is eager to use this experience to give something back to the industry.

The project aims to add £2bn to the UK economy through its support of the start-ups and redefine oil and gas a sector that welcomes innovation.

“The opportunity to play a part in transforming what has been a real issue to the flow assurance sector, in an industry which I have worked for almost 40 years, was very appealing,” said Forbes. “At this stage in my career it is all about leaving a legacy and giving back to the younger generation to enable them to have the same opportunities that were offered to me. They are the future pioneers and need to be encouraged to join what is an exciting industry for problem-solvers.”

This emphasis on ensuring future generations of entrepreneurs and innovators is also influencing the TechX programme itself, with Millar describing a parallel project, the TechX Venture programme, as a “start-up builder” that supported a further five new companies with low-carbon solutions, two of which went on to be a part of the full TechX Accelerator programme.

Challenges ahead

Addressing the industry’s hesitancy has been a significant challenge for both the accelerator programme in general and individual start-ups in particular, especially considering the need to deliver a financially profitable solution. One of the OGTC’s long-term goals for the programme is to establish an independent funding model for the project, to enable future start-ups to receive support without direct intervention from the centre. This need to deliver this combination of encouraging innovation and ensuring profitability is at the heart of many of the start-ups.

“All start-up companies face challenges and for Blue Gentoo to be successful, we have to give operators a compelling reason to change from current ways of working,” said Forbes. “We need field trials and sufficient funding to move forward and we’re working hard to turn wide interest and curiosity in our product into a sustainable revenue stream.”

One of the OGTC’s long-term goals is to establish an independent funding model for the project, to enable future start-ups to receive support without direct intervention from the centre.

Until the accelerator programme can reach a stage of financial self-sufficiency, the OGTC will continue to work closely with applicants to help them overcome these challenges. The centre is currently considering applications for its third cohort of start-ups and is continuing to provide tailored financial support for companies already under the group’s stewardship.

“We are building a wide and diverse investor network across the UK and internationally,” said Millar. “Just this week KPMG hosted our first TechX investor dinner in London where five of our cohort from last year met with eight London-based investors to try and raise the £8m they are looking for now.”

Millar also noted the centre’s work on the human element of developing a start-up, and how the OGTC is looking to help protect entrepreneurs and innovators as their companies grow. The centre is aiming to improve the percentage of successful start-ups from 10% to 50% and beyond.

“This year we have spent more time on mental health, mindfulness and mental toughness drawing on elite level sports and some teachings they can offer,” he said. “So TechX is making positive strides in these areas but there is still much to do and we look forward to taking great strides on this in the coming year.”