Application of structural equation modeling in petroleum science and technology research

Abstract

This work intends to optimize research and development performance processes in the field of oil and gas academia/industry derived from a case study, based on theoretical framework on the principles of structural equation modelling (SEM). We define the basis of the model by six different structural constructs derived from literature and the ir interdependence in the form of hypotheses. The constructs consist of one latent exogenous variable and five latent endogenous variables. Furthermore, five independent operational variables were established with respect to the latent exogenous variable while 20 dependent operational variables were also established with respect to the latent endogenous variables. The evidence of interdependence among the constructs and their respective operational variables were provided by five different hypotheses carried out on the path diagrams. As a result, the interaction between each construct and its variables defines its individual measurement model, which translates into some sets of linear equations. Having obtained the measurement for each construct, the interaction can then be applied to define other sets of linear equations that represent the behaviour of the organisation of the entire process which is expected to yield the proposed research and development programme. The developed model can easily be adopted by interested parties for application on similar projects.