Blue Ocean Strategy
for Support activities for petroleum and natural gas extraction (ISIC 910)
Given the 'red ocean' characteristics of chronic price pressure (MD07), structural market saturation (MD08), and significant market obsolescence risk (MD01) due to the energy transition, Blue Ocean Strategy is not just relevant but critical for long-term survival and growth. The industry's technical...
Strategic Overview
The 'Support activities for petroleum and natural gas extraction' industry faces significant 'red ocean' conditions, characterized by chronic price pressure (MD07), limited organic growth (MD08), and intense competition for existing demand. The energy transition further exacerbates these challenges, necessitating a strategic pivot beyond traditional market boundaries. Blue Ocean Strategy offers a compelling path for companies to escape this brutal competition by creating new market space through value innovation, making existing competition irrelevant.
This involves looking beyond conventional oil and gas support to identify untapped opportunities, such as services for emerging energy sectors or re-imagining existing capabilities for non-traditional applications. For instance, advanced drilling expertise developed for hydrocarbon extraction could be repurposed for geothermal energy, carbon capture and storage (CCUS) well construction, or even underground hydrogen storage. By focusing on creating new demand and delivering exceptional value where none existed before, companies can overcome challenges like long-term capital access issues (MD01) and the pressure for diversification (MD08), securing a sustainable future in a rapidly evolving energy landscape.
4 strategic insights for this industry
Repurposing Core Capabilities for the Energy Transition
The industry possesses highly specialized capabilities in subsurface engineering, drilling, well construction, and project logistics (PM02). These can be strategically repurposed for 'blue oceans' in renewable energy support, such as geothermal drilling, site preparation for offshore wind foundations, or well development for carbon capture, utilization, and storage (CCUS). This directly addresses MD01 (Diversification Pressure & Innovation Lag).
Creating New Demand in Adjacent or Non-Traditional Sectors
Instead of competing for existing O&G contracts, companies can identify unserved 'jobs' in adjacent industries. For example, applying advanced seismic imaging and subsurface data analytics for critical mineral exploration, underground waste disposal site characterization, or even urban infrastructure development (e.g., complex tunneling projects). This opens up new revenue streams beyond traditional O&G.
Value Innovation in Decommissioning and Abandonment
While decommissioning is an existing need, the 'blue ocean' lies in creating highly efficient, environmentally superior, and cost-effective methods for well and platform abandonment that set new industry standards. This could involve robotics, advanced materials, and comprehensive project management that eliminates current environmental liabilities and reduces long-term costs for operators, thus creating new value and demand.
Developing Digital-First, Predictive Support Services
Leveraging existing operational data and digital twin technology, a 'blue ocean' could involve offering predictive maintenance and operational optimization as a subscription service across different energy infrastructure types (not just O&G). This shifts the focus from reactive repairs to proactive asset management, creating a new category of highly integrated, data-driven support.
Prioritized actions for this industry
Conduct an 'Eliminate-Reduce-Raise-Create' (ERRC) grid analysis on current service offerings, both within traditional O&G and potential new sectors, to identify elements to jettison or innovate.
The ERRC grid is central to Blue Ocean Strategy, helping to systematically identify how to differentiate and lower costs simultaneously, leading to value innovation and the creation of new market space by challenging industry norms.
Establish a dedicated 'New Energy Ventures' unit or innovation lab tasked with exploring and piloting services for emerging energy markets (e.g., geothermal, CCUS, offshore wind, hydrogen storage).
This provides a focused structure for diversification, enabling dedicated R&D and market entry strategies without disrupting core operations. It addresses MD01 by actively seeking new growth avenues.
Form strategic alliances and joint ventures with companies in adjacent industries or renewable energy sectors to co-create 'blue ocean' solutions and share market entry risks.
Leveraging external expertise and existing market access can significantly reduce the cost and risk of entering new markets, accelerating the creation of new demand. This also helps overcome challenges like limited access to capital (MD01) for large-scale innovation.
Invest in upskilling and cross-training the existing workforce to transfer specialized oil & gas technical knowledge (e.g., drilling, reservoir engineering) to new energy applications.
Retaining valuable talent (MD01) and repurposing their skills is more cost-effective than hiring entirely new teams. This leverages internal assets for new market opportunities, creating a flexible and adaptable workforce.
From quick wins to long-term transformation
- Conduct brainstorming sessions using the Four Actions Framework (Eliminate, Reduce, Raise, Create) with cross-functional teams to identify immediate 'blue ocean' opportunities.
- Perform market scanning and trend analysis to identify emerging energy sectors or unserved client needs where existing capabilities could be applied.
- Engage with key clients to understand their long-term energy transition strategies and identify potential joint innovation areas.
- Develop pilot projects or minimum viable products (MVPs) for identified 'blue ocean' opportunities in new sectors.
- Establish formal strategic partnerships or joint ventures to share investment and expertise for new market entries.
- Launch internal training programs to re-skill existing employees for roles in new energy support services.
- Integrate blue ocean thinking into the strategic planning process, making it a continuous effort to seek new value curves.
- Restructure organizational units and resource allocation to support a diversified portfolio that includes 'blue ocean' ventures.
- Influence policy and regulatory frameworks to support the development and commercialization of new energy support services.
- Cultivate a culture of continuous innovation and risk-taking to foster blue ocean creation.
- Failing to challenge industry conventions and getting stuck in 'red ocean' thinking.
- Underestimating the investment required for R&D and market development in new areas.
- Lack of strong internal leadership and communication to drive the blue ocean initiative.
- Attempting to simply diversify into existing adjacent 'red oceans' rather than creating genuinely new market space.
- Neglecting the core business while pursuing new opportunities, leading to decline in existing revenue streams.
Measuring strategic progress
| Metric | Description | Target Benchmark |
|---|---|---|
| Revenue from New Market Segments | Percentage of total revenue derived from services provided to non-traditional petroleum and natural gas extraction markets (e.g., geothermal, CCUS, offshore wind support). | Achieve 15% of total revenue from new segments within 5 years |
| Number of Strategic Partnerships in New Energy | Count of active collaborations or joint ventures with companies outside traditional O&G support, specifically targeting emerging energy markets. | Establish 3-5 strategic partnerships within 3 years |
| Market Share in New Blue Ocean Niches | Percentage of market penetration in newly created or uncontested market spaces, where competition is minimal or non-existent. | Achieve >20% market share in targeted 'blue ocean' niches within 5 years |
| Innovation Index (Blue Ocean Focus) | A composite score reflecting R&D investment in new energy solutions, number of new patents, and employee engagement in diversification efforts. | 10% year-over-year increase in Blue Ocean Innovation Index |
Other strategy analyses for Support activities for petroleum and natural gas extraction
Also see: Blue Ocean Strategy Framework