The Key to Cracking the Energy Supply Chain: Relationships

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Canada 3.0

Guest post written by Max Fawcett. This article originally appeared on the Canadian Digital Media Network website. TODAY is the last day to purchase early bird tickets for Canada 3.0.

It’s one thing to come up with a great idea. It’s another to actually get it to market.

That’s doubly true when it comes to the oil and gas sector, where a complex and often opaque supply chain make it difficult for entrepreneurs to know how and where to pitch their products.

On Oct. 28 in Calgary, the Canada 3.0 program at the annual Canadian Energy Supply Chain Forum will aim to demystify what can be a frustrating process for small companies hoping to engage energy giants.

How frustrating? Just ask John Brinkman, founder and president of a Welland, Ont.-based Imbibitive Technologies.

It’s named after Imbiber Beads, a product that was the very reason for creating the company in the first place in 1994. The beads, based on the technology behind diapers, can absorb up to 27 times their own volume in oil or other liquid chemicals – a useful trait when you’re trying to keep a spill from becoming a catastrophe.

You would think the oil and gas sector would be all over a technology like this. And, unfortunately, you would be wrong – so far, at least. Brinkman, quite understandably, is discouraged by that.

“There’s a lot of bovine excrement out in our marketplace,” he said, using a gentler term for what he really meant. “We can back pretty much everything up with sound technical evidence and third-party testimonials, and yet there’s still skepticism.”

Ken MacLean, president of Serious Labs, an Edmonton-based industrial simulations provider, can attest to the skepticism that often meets new ideas in the energy sector, especially those that come from outsiders.

“There’s a real kinship among those guys. They share information, and the word of mouth is very strong. Without that insider access, they’re not open to new ideas,” MacLean said.

And while his company counts some of the industry’s biggest names among its clients, including Halliburton and Ensign Energy Services, he said it’s still a challenge to get the energy sector’s attention.

“At Serious Labs, we have several customers in that space. We have some credibility. It’s still hard.”

That’s why it’s partnering up with its second customer in the space, Snubco, in order to build out a simulation product it can sell to other customers.

“They’re subject matter expertise; we’re process and technology,” MacLean said. “But without that face of a company and a brand? I wouldn’t do it.”

MacLean thinks that those who break into the energy sector need to be mindful of that human element.

“If I had one piece of advice, it would be to start hanging out where these guys hang out. Join a club. The only way to get credibility with these people is by knowing them. If you don’t, you’re going to have a hard time having any success selling there.”

That explains his company’s partnership with Snubco. “They know where the guys hang. They know who to talk to. They’re the ones that get invited on fishing trips, not me.”

Of course, that sort of strategizing is beside the point if the product can’t hold its own. And that, according to Osprey Informatics CEO Michael von Hauff, is about more than just providing a new solution to an existing problem.

“There has to be a return on investment from an operations point of view,” von Hauff said. “It actually has to lower costs.” For Osprey Informatics, which landed its first client in 2012 and offers companies the ability to monitor their equipment at a distance, ROI comes from reducing the frequency of manned trips into and inspections of that equipment – a clear cost saver.

“When we were first starting out, we had to learn the proper language and how to explain to our clients that this system’s not a security system, per se, it’s an operational too,” von Hauff said. “Once we were able to figure out how to explain that to our clients, the pickup was a lot faster.”

Jeremy Bernard, a marketing strategist and principal at Legend Marketing, said the ability to identify an energy company’s “pain point” is key when it comes to getting it to buy into something new.

“If Michael had built a system that was focused only on reactive security then it would have been a much harder sell. But because it does things like monitor equipment and send alerts to people proactively and cut down on reasons why people would have to travel to a site for maintenance, it’s a much easier sell.”

And here’s the kicker: sometimes, all you have to do is ask a potential customer where it hurts the most. “They’re certainly happy to talk about what their challenges are, and give you pretty specific information in terms of how you can make their job easier.”

Those pain points don’t have to be particularly big ones, either. Ian MacGillivray, director of events and conferences for JuneWarren-Nickle’s Energy Group, said most companies will pursue even a marginal reduction in operating costs.

“They’re always trying to drive their costs down. You have to remember the oil and gas industry is a production business. You can’t set the price of oil, so the only way they make more profit is by getting a barrel of oil out of the ground cheaper,” MacGillivray said.

And because these companies have such big operational budgets, pennies saved on the cost side can translate into plenty of additional profits.

“These companies are so huge. If you can find some sort of efficiency through software or hard technology that cuts a small little fraction out of one process, that could save them millions and millions of dollars. So they’re always looking for things like that – and I think that’s the opportunity for technology.”

Canada 3.0 is part of this year’s Canadian Energy Supply Chain Forum in Calgary, Oct. 28-30. Early bird is on sale until Sept 26. Register now!