Nygaard. Controlling the flow of oil and gas subsea.pdf (original) (raw)

OLGA is a software model developed in Norway from the 1980s that simulates the flow of oil, gas, water and sediments in pipelines on the seabed. This technology has enabled the transportation of unprocessed oil and gas from below the sea directly to the shore for processing. In so doing, OLGA in its mature form rendered the offshore oil and gas platforms unnecessary. As such, OLGA have turned out to be a game changer in offshore petroleum industry. It is not an exaggeration to state that OLGA prolonged Norwegian oil and gas business, and made several reservoirs exploitable due to the drastic reduction of costs. Statoil, the Norwegian state owned oil company, have calculated that OLGA reduced their costs with 26 billion dollars over 20 years. OLGA has become an international success, and has today a market share of 90%. In 2012 Schlumberger bought the property rights for the OLGA software. The software was developed by nuclear researchers at the Norwegian institute of nuclear research, funded by several oil companies. How was it possible for a new petroleum nation with no experience to develop such an important and innovative technology in an oil economy controlled by a few big multinational companies? In my paper, I will argue that we need to include five factors in order to explain how Norway developed the OLGA technology. First, Norwegian offshore petroleum extraction provided unprecedented technological challenges, i.e. challenges that the existing international petroleum industry did not have ready answers to. This challenges were connected to the demanding conditions in the North Sea, especially the deep sea levels. Second, Norway set up specific institutional arrangements of its oil economy in order to limit the power of the multinational oil companies, which among many things favoured national research and technology development. Third, the quest for innovations and technology development answering to specific national offshore needs was perfectly timed in order to tap into a reorganization of the national systems of innovation in Norway, specifically the Norwegian institute for Atomic research who was in need of funding due to political decisions abandoning the ambition of implementing nuclear power in Norway. Fourth, pitching the idea for funding to develop OLGA to Statoil was extremely easy, since the actors on both sides of the table had been strategic actors in establishing both the nuclear research institute and the national oil company – and they all knew the technology underlying the idea from the nuclear research. Fifth, developing OLGA benefited from the overall offshore and subsea technological innovations that accompanied the refinement of the software with growing empirical input into big data. These subsea technological innovations further benefited from the long-lasting traditions of Norway as a sea-nation, and eventually led to an internationalization push at the turn of the 21th century, in which the subsea-technologies and companies were most successful. To comprehend how OLGA transformed the international petroleum industry, we need to understand the challenges it originally was designed to answer to. When the oil and gas reservoirs on the Norwegian continental shelf was discovered at the turn of the 1970s the oil companies met new challenges. The Norwegian continental shelf is very deep with sea levels up to 600 meters’ depth. Many of the biggest reservoirs was at depths on more than 200 meters. Internationally, it was said that extraction of oil and gas was not cost effective at sea levels deeper than 200 meters. Thus, Norway set out to develop concrete platforms in order to safely and cost effectively produce oil and gas at these sea depths. Sparked by increasing oil prices the Norwegian concrete platforms became a success, and Norway consequently developed a growing offshore supply service industry. During the 1980s it became evident, however, that the Norwegian offshore petroleum industry was struggling with rising costs, and declining oil prices threatened the future of Norwegian oil and gas business. OLGA enabled cost effective extraction of oil and gas at deep sea levels many kilometres from the shore even in periods with low oil prices. As a consequence, oil companies and companies reliant on the platform technology went through restructuring processes – some disappeared. As OLGA was exported internationally, the software has opened up new opportunities for oil and gas extraction offshore many places. This paper is based on archives from the Norwegian institute of nuclear research, the Norwegian oil administration and Statoil. This case provides new insights to the technological development enabling petroleum activities offshore, specifically how OLGA transformed the flow of oil and gas from below the sea to the shore. Moreover, this case provides insights into the specific Norwegian national systems of innovation directed towards the oil economy, and the software dimension of the third industrial revolution.