Op-Ed: The Frontier Series: Innovations in energy
February 9, 2018
Kirk Coburn is member of Shell Technology Ventures, Shell’s corporate venture capital fund and a successful serial entrepreneur, venture capitalist and early-stage angel investor. Hank Torbert, a founder of The Frontier Conference, interviews Coburn about the energy industry’s ongoing transformation.
You have been an active investor and leader in the energy innovation space for decades. Tell me a little about why you focused on the space?
I feel called to be here. My grandfather and father were both in the energy industry. It is in my blood and something that captured my imagination since being a small child. I used to look at gigantic jackup rigs leaving port and be in awe at the engineering and mastery. As a child, my grandfather would show me photographs of the ancient and modern world depicting an industry that literally enables human development. I also live and play in the outside world and know that we have a great opportunity and responsibility to manage the energy transition. There has never been a better time to be in this space.
What are the key drivers of innovation in the oil and gas sector now?
In oil and gas, the two key motivational drivers are lowering costs and making existing operations more sustainable. There so many macro issues driving innovation right now including: advances in software, massive changes in generational makeup, the change in mindset from peak oil to abundance, the rise of unconventional resources and society’s ambition to move to a low carbon future. As a result, entrepreneurs are leveraging the macro trends to deliver solutions that are cheaper, cleaner and safer.
The oil and gas industry is built in innovation – from onshore and offshore drilling methods, use of AUVs/UAVs, transport, etc. What technologies and ideas will be the most disruptive for the sector?
This deserves a much longer discussion. In a nutshell, the large problems that we are trying to solve include reducing the number of people onsite (robotics, automation, IOT) both onshore and offshore, adapting to a hyper cyclical industry that rises and falls with the commodity price (new business models including on-demand labor) and increasing the efficacy of production (technologies that improve completions and maximize production which include better chemistry, software and downhole tools).
As major oil and gas companies focus on becoming “energy” with a broad range of solutions for their customers, how willing are they to adopt new technologies?
Shell is a global leader in embracing the energy transition as we have recently announced huge acquisitions in solar, wind and electric vehicle charging solutions. More to come!
If I were an entrepreneur seeking to provide innovative solutions to the energy sector, what should I be focused on now?
The future of energy is a land grab, and the elephant in the room is the utility. Electrification is coming. Not only is the world trying to replace hydrocarbon-based power generation with electricity coming from renewables, 16 percent of the world is still living without any power at all.
What’s the most impressive technology you have seen this year?
I believe in the power of the platform. I was at Dell when the internet took off, and we are only touching the surface. Uber was launched in 2009 and is now a household word. Alibaba features almost a billion products on its platform and does not own a single item of inventory. Airbnb is the larger than any hotel chain and does not own a single property. Facebook is the world’s largest media company and does not produce a single piece of content. The platform is coming to oil and gas and will soon change how we do business.
I get a lot of questions about capital availability for emerging companies in the industrials sector, including energy. What can you tell us about the VCs and corporate venture capital firms’ appetite for new technologies? Is this the right time, given the changes in the energy sector?
The right time is NOW. There is so much happening across the entire energy value chain, the capital is available. Due to the market dynamics of large customers that require high protection of our people, we are careful in selecting the right teams that have a capability and history of being able to execute. We do invest in first-time entrepreneurs, but they must understand the risks and be able to answer why they should be trusted. We are not any different than most endeavors.