Oil sands alliance COSIA changes how companies compete

Collaboration resembles Tour de France style competition, not boxing

November 16, 2012

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Illustration Pete Ryan

More than 150 years ago, the modern oil and gas industry was born in Pennsylvania. Historical accounts of the birth of the industry tell a story of scrappy entrepreneurs competing to develop oil, based largely on hunches, recording their spectacular successes and their miserable failures. The rivalries between these figures in history were fierce and stories about how they duked it out, round after round, are a hallowed testament to the intensity of competition in the oil and gas industry.

As the industry has evolved, the way we compete has changed. While the industry sometimes still dukes it out in securing resources, capital and even talent, a cultural shift has occurred on how to compete in most other areas. This competition resembles the Tour de France, more than it resembles a boxing match. In the Tour de France, competitors ride together in a pack, called the peloton, drafting behind each other, saving energy and increasing the speed of each rider. Yes, there is ultimately a winner in the Tour de France, but all riders benefit from the peloton.

What does collaborative competition look like in the oil and gas industry? In the oil sands, six companies have come together to form the Oil Sands Leadership Initiative (OSLI) to achieve world-class performance on land stewardship, water management, sustainable communities and technology.

These can be competitive advantage areas. For example, the technology development group in OSLI is exploring novel ways of configuring wells in the oil sands to achieve more efficient production. This is a model of competition where each company is accelerating its performance shoulder to shoulder with other companies in a similar business.

Early signs point to collaborative competition having impacts on three stages; industry-wide performance (a faster peloton), more companies collaborating (a bigger peloton) and new forms of long-term collaborations with unlikely partners (new pelotons).

Industry-wide performance should improve as companies leverage their own research dollars with their competitors, and share operating practices. This leveraging should increase the pace that technology is identified, qualified past the lab- and field-demonstration phases, and should accelerate industry performance, even if each company is using technology or best operating practices for its own gain. The spirit of competitive collaboration has produced bigger partnerships like Canada`s Oil Sands Innovation Alliance (COSIA).

One of the biggest impacts of competitive collaboration is a cultural shift toward more collaborative models in all parts of the oil and gas business. A dramatic example can be seen in the innovative stakeholder collaboration approach used for the Northern Gateway pipeline. Northern Gateway is engaging stakeholders through the creation of Community Advisory Boards, called CABs.

There are five regional CABs along the Northern Gateway route, and each CAB has a mix of many different and varying interests. Some of the CAB members are openly opposed to the project. Yet Enbridge Inc., the pipeline proponent, has publicly committed to being an active participant in at least 20 CAB meetings a year, four per each regional CAB. This is a new form of in-depth discussion and collaborative dialogues. They have been established during the regulatory process, but will likely be in place for the entire lifetime of the project, assuming it is built.

If collaborative competition yields improved industry-wide results, the growth of these models will continue, and the cultural shift towards further collaboration will likely persist. But there will be some companies that get less out of collaboration than others. For them, the big question is one of choice. If you aren’t going to place on the podium, will you still ride with the peloton?

Dan Zilnik is the manager, environment and climate, for Statoil Canada

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