Many technology analysts blame the oil industry for being too slow in adopting new technologies. However, the industry itself has been the source of many technological advances within its narrow specialty.
But over the past decade, oil and gas has begun to open its doors to digital technology and automation. In fact, the energy industry is embracing all things digital and AI. And now, thanks to these technologies, we can produce more oil and gas for less cost.
Bloomberg recently reported that the oil industry is leveraging artificial intelligence to improve drilling in shale regions and increase recovery rates for fracked wells. This is a very important step for the industry. Until recently, the industry seemed to prefer harnessing the power of computers for things like seismic surveys and pipeline monitoring.
Back in 2018, a KPMG study found that many oil and gas companies have already implemented artificial intelligence or are planning to do so soon. Of course, at the time, “artificial intelligence” generally referred to technologies like predictive analytics and machine learning, but it still proved useful enough to merit the attention of oil company executives.
“Technology is disrupting the status quo in the oil and gas industry. AI and robotics solutions are improving rig safety, quickly dispatching workers, and identifying system failures before they occur. “This will help build models that more accurately predict the future of global economic growth,” one of the study’s authors, KPMG’s global head of U.S. energy and natural resources, said at the time, commenting on the findings. Related article: U.S. oil and gas activity recovers, but the year gets off to a slow start
All of this is still true, and digital technologies are being used more widely in the energy industry than ever before. U.S. shale patches generally tend to be more expensive to produce than conventional oil and gas drilling, making them natural early adopters. But thanks to technology, these costs are coming down as drilling times become shorter and accuracy increases.
In a recent report, Bloomberg noted that shale drillers have reduced the average time it takes to drill a new oil well by a full day and fracked that well by three days thanks to technology. If you save a day, you save a day. Additionally, there is the drilling of longer horizontal wells, which contributed significantly to better-than-expected well productivity in the shale region last year. And that would not have been possible without digital technology.
According to Evercore ISI, AI and other technologies could reduce the cost of shale patches by double orders of magnitude as early as this year. “We’re looking at significant cost savings, at least double digits, but probably 25% to 50% in certain scenarios,” Evercore analyst James West told Bloomberg.
Indeed, these are significant cost savings. And if that happens, higher production will definitely be possible if the industry develops the appetite for it. This used to be a natural progression. When drillers found cheaper ways to drill, that led to increased production.
Times are a little different now. Oil and gas companies have plans to increase production, but within that range as they continue to prioritize shareholder returns and capital discipline. However, the adoption of digital technology will likely be strengthened. Because digital technology can clearly help oil and gas companies meet their climate-related goals.
The movement against methane emissions is currently gaining momentum. It was an afterthought a few years ago when everyone was focused on his CO2, but methane has now become the public climate enemy in its own right due to the more powerful but shorter-lasting greenhouse effect. .
Tracking, monitoring, and ultimately reducing methane emissions is becoming a priority area for the energy industry. This is one area where digital technologies can definitely help, especially since they are already being used for surveillance and risk assessment.
AI and other technologies can also help improve operational efficiency. Remote drilling and monitoring is a huge growth area, as is failure prediction for critical equipment in this industry. For example, Baker Hughes boasts that it can predict equipment failures in 65% of its customers’ wells in the Permian. The company wants to increase this to 70% and will likely do so before too long.
But perhaps most importantly, AI and what we collectively refer to as digital technologies could help solve the oil and gas talent shortage problem. Fewer and fewer college students are choosing careers in oil and gas. This is largely a result of the concerted efforts of climate change NGOs to discourage people from choosing such occupations, and partly due to the long-term uncertainty of such occupations. be. It is famous for its circular industry. Many young people also seem to dislike manual labor in oil fields.
But the growing connection between oil and gas and digital technology is attracting a new breed of talent who don’t mind working in the oil and gas industry, as long as the work is done in an office rather than on-site. The introduction of AI, automation, predictive analytics, and more is changing the reputation of oil and gas, and this time for the better. And it’s changing the industry itself.
Written by Irina Slav for Oilprice.com
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