The oil and gas sector is in the midst of a technological revolution, with artificial intelligence (AI) at the forefront of the industry’s evolution. AI is rapidly being integrated to improve both operational efficiency and the decision-making process. Many industry leaders are exploring how AI can be implemented in a way that not only benefits the companies themselves but also positively impacts the broader economy.
One of the leading companies in this effort is Enverus, “one of the oil and gas industry’s biggest providers of SAAS-based data analytics and consulting” which has already begun implementing AI through its tool, Instant Analyst (Blackmon 2024). This AI tool is a game-changer in terms of time efficiency and accuracy, as it can sift through thousands of documents, extract relevant data, and ensure its accuracy. The automation provided by Instant Analyst not only saves time but also supports critical decision-making, allowing companies to be more agile and responsive to market conditions. Moreover, one of the Unique benefits of AI is its ability to help new hires adapt to the industry faster, reducing the need for extensive and costly training programs.
Beyond internal logistics and efficiencies, AI is expected to have a profound effect on the oil and gas industry in relation to supply and demand. As AI becomes more ubiquitous and energy-intensive, the demand for oil may outpace supply, causing disruptions in the industry. However, analysts suggest otherwise. The AI boom could allow for the industry to supply more oil at a cheaper price to meet the demand that the technology will require. This is due to AI’s capacity to optimize production processes, making it easier to supply oil and potentially driving down prices. For example, an oil company in North Dakota has already reported a 30% reduction in drilling time due to AI integration.
Moreover, AI could significantly increase recoverable resources. According to analysts, AI could lead to a “10%-20% jump in recovering US shale, which could increase oil reserves by 8%-20%, or up to 30 billion barrels” (Cloonan 2024). This increase in supply would likely outweigh the boost in demand caused by AI’s energy needs, leading to more stable prices in the long term.
Another major development in AI integration is drilling efficiency. With the cost of drilling expected to drop between 25% and 50%, this could revolutionize the financial landscape of the oil and gas industry. SLB, the world’s largest oil services provider, recently announced that “it autonomously drilled sections of five wells off the coast of Brazil, leading to 60% faster drilling time” (Wethe 2024). This kind of efficiency shows the potential for AI to not only meet the growing demand for energy but also help companies meet their climate goals. With 15% of wells expected to be AI controlled, the integration of AI could assist the transition toward renewable energy by integrating wind and solar energy into oil production processes.
AI’s potential to revolutionize the oil and gas industry is vast. From improving operational logistics to increasing supply efficiency, the technology is poised to cut costs, reduce production time, and boost recoverable resources. Furthermore, the integration of AI into oil production could contribute to achieving sustainability goals by accelerating the shift to renewable energy sources. While some fear that AI’s energy demands will strain the industry, many experts argue that AI will actually help meet those demands while driving down costs and prices.
Sources
Blackmon, David. “How Will AI Be Applied to Oil and Gas? One Company Has Some Answers.” Forbes, Forbes Magazine, 27 Aug. 2024, www.forbes.com/sites/davidblackmon/2024/05/07/how-will-ai-be-applied-to-oil--gas-one-company-has-some-answers/.
Cloonan, Kelly. “Why Ai Could Weigh down Oil Prices in the next Decade, According to Goldman Sachs.” Business Insider, Business Insider, 4 Sept. 2024, markets.businessinsider.com/news/commodities/ai-oil-prices-productivity-logistics-supply-demand-energy-goldman-sachs-2024-9#:~:text=1%20The%20AI%20boom%20could%20make%20oil%20supply,demand%20from%20AI%27s%20power%20needs%2C%20the%20analysts%20say.
Wethe, David. “AI Promises Faster Oil Drilling and Even More US Crude Supply.” Bloomberg.Com, Bloomberg, 14 Mar. 2024, www.bloomberg.com/news/articles/2024-03-14/ai-promises-faster-oil-drilling-and-even-more-us-crude-supply.
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