As a nation, Israel is not the first that springs to mind when you talk about hotbeds for oil and gas technology, but there are plans afoot to change that. Gil Shaki, senior director of energy, cleantech, and infrastructure at the Israel Innovation Authority, a quasi-governmental company responsible for injecting 4.3% of Israel’s GDP into the private start-up sector, is looking to change that.
Israel is always high up in innovative cybersecurity, and entrepreneurship rankings and over 300 multinational corporations across a wide range of fields have already chosen to build research and development centers there. The ultimate goal of the Innovation Authority is to leverage Israel’s recent offshore natural gas discoveries to develop an Israeli knowledge-based supplier industry integrated into the oil and gas sector, both locally and, more importantly, globally.
As a nation, Israel possesses negligible reserves of crude oil but does have abundant domestic natural gas resources which were discovered in large quantities starting in 2009, after many decades of previously unsuccessful exploration.
Diversified technology needs
Despite this lack of oil and gas experience, Shaki believes that Israel is well placed as a technology supplier to the sector. “When you talk about oil and gas especially about the upstream industry, the technological needs are very diversified; from software related technologies to water treatment to chemistry and biochemistry,” he says. “There is a wide range of technologies. Many of those technologies are not necessarily purely oil and gas technologies, but instead technologies that can be applied in the oil and gas sectors.
“We have 184 Israeli companies that have a value proposition to oil and gas. Most of them are not oil and gas specific, but they have technologies that can create value in the oil and gas industry and areas like monitoring and control, IT and communication.”
Striving for operational efficiency
Shaki points out that the volatile price of oil has made the global oil and gas industry realize that they cannot control the price of the end product, but they have to have better control on their cost structure. He adds that part of that solution is through innovation and technology and part of the solution is through digitalization and automation technologies.
“Israel is known as a start-up nation, very strong in ICT-related technologies and it follows the same process that we have seen in the automotive industry,” Shaki says. “Israel hasn’t been a traditional player in the automotive industry, but once the car becomes a computer, suddenly we have over 500 start-ups with amazing technologies applied in the automotive industry. We believe the same potential lies there also when you talk about oil and gas.”
High price for failure
Shaki concedes that oil and gas is a very conservative industry because the cost of mistakes is very high in terms of human lives, environmental impact and of course cost. “But they have deep pockets and can finance innovation,” he continues. “It just takes much longer. Technology companies that want to enter this field, we train them towards it, to understand it, to assimilate it, that it is a marathon. It is not something that in one year you penetrate, and it is easy, but rather to be aware of that that it requires perseverance and endurance to enter with this innovative technology.
It is the lower for longer cycle that oil and gas have been through that has opened the door for different types of innovation from different industries. “The industry has become more open to evaluate and try new technologies,” Shaki adds. “From our side, the technology companies understand that they need strong partnerships with players who understand the sector. Deeply understand the vertical and that it takes time to get in. The two sides are getting closer, and you can already see results of Israeli companies succeeding to get into this market.”
Creating value for oil and gas
Shaki’s primary message is that Israel is known for its very high level of technological capacity and innovation. “A lot of it is relevant and is already creating value in the oil and gas industry answering the drive to reduce costs, but also other drivers such as increasing productivity,” he says. “Even as a start-up nation, Israel could create value in the oil and gas industry. The oil and gas industry is in a phase of change, and in need of innovation. We have an abundance of thinking and innovation and technologies that are creating and could further create value in this changing energy world.”