Artificial intelligence (AI) is expected to cause radical transformations in the oil industry, similar to other industries. Artificial intelligence is expected to influence the operational processes of the oil industry, i.e. drilling, exploration, production and distribution. Analysts argued that there are three ways through which AI can help the oil industry with, and they are: employing robots, big data analysis and virtual assistance.

To keep up with AI technology, some oil companies have begun cooperating with large and emerging tech companies to study how they can utilize and expand its usage in the future. Other oil companies have begun employing AI technologies on a small scale. In the future, expanding the use of AI is expected to enhance the efficiency of all operations saving billions of dollars. On the contrary, this will result in the loss of thousands of jobs.

Different Applications

The global oil and natural gas industry, like other industries, look forward to the rapid developments of AI and which, according to several practical and scientific evidence, are expected to impose radical transformations on several levels. Such levels include production techniques, customer service and employment rates. These AI developments are further expected to influence all phases of the oil industry, exploration, production, refining and distribution. 

These transformations come amid the difficult circumstances, which the oil industry has been witnessing for more than two years due to the decline of oil prices to half of its original price. The price of the barrel has now reached USD 60. This pushed many oil companies to greatly decrease their capital expenditure until the situation of the global oil market improves. Meanwhile, some companies used technologies that extract oil more efficiently and at a lesser cost. Some of these companies include American shale oil companies, which are still working on developing the hydraulic fracturing technology in hopes of decreasing the production cost of barrels. 

So far, major researches of AI technologies have revealed three major uses which the oil industry can employ and they include: employing robots, big data analysis and virtual assistance. 

First, concerning robots, oil companies can depend on them in the future for operational processes that include drilling, production, extending oil pipelines or transmitting oil. Robots would, thus, be an efficient alternative to field workers. 

Second, big data analysis refers to processing a large number of variables based on the algorithms of superpower computers in order to analyze data, conclude accurate result. Thus, this process enables more mature decision-making in production processes or oil investment operations. For example, the results of drilling oil wells can be improved based on the algorithms of AI, as they can process large amounts of organized and unorganized data related to the characteristics of the wells, such as seismic vibrations, temperature and permeability of oil well layers. This is in addition to processing traditional data like pressure and other natural factors, so oil companies can avoid random or failed drilling operations and exploration-related risks, while searching for new resources.

Employing AI technologies are not limited to exploration and production, but can be employed by oil companies to improve the efficiency of facilities’ infrastructure and equipment used in production and refinement. This can be done by making use of the predictive analysis, which accurately concludes the possible exhaustion rates of financial assets based on current production rates.

AI algorithms may also help make more mature investment decisions in the fields of exploration and production as companies can establish accurate predictive economic and financial models that take into considerations hundreds of variables. The variables include oil prices, economic circumstances, reserves and weather conditions. Afterwards, the value of capitals, which must be carefully invested, can be specified. This in addition to specifying the possible economically efficient production rates.

Third, virtual assistance is a technology that resembles Apple’s virtual assistant Siri as people can make written inquires through chat windows on oil companies’ websites. The virtual assistant provides technical advice and support. This tool is important to oil and lubricant oils distribution companies, as it helps answer complicated technical inquires by using the companies’ database accurately and quickly, in a manner that better satisfies agents.

Global Readiness

Using AI technologies in the oil industry is still limited to a short number of companies worldwide. This is logical given that AI technologies are still developing. Many large companies are still exploring how AI technologies can contribute to their businesses and activities.

An example of AI’s current uses in global oil companies is what the Italian company Eni did in the end of 2017 when they used a super computer. According to the company’s CEO Claudio Descalzi, the super computer can improve the accuracy of seismic imaging and geological models and eventually improve the results of drilling and production. Similarly, the American Pioneer Natural Resources plans to use technologies that analyze large data to improve the efficiency of well drillings.

In terms of big data analysis, the American Apache Corporation, in cooperation with a company called Ayata that specializes in artificial intelligence, resorted to AI technologies in the past few months and used algorithmic to make predictive analyses of the success or failure rates of pumping techniques used in drilling and production. The Royal Dutch Shell has been using virtual assistance since 2015 on its websites. The tool answers customers’ inquires on their purchases from the companies, particularly on lubricant oils.

Given the innovative solutions provided by AI for the oil industry, some American and European companies recently sought to improve their cooperation with large and emerging technological companies so they can analyze how AI affects their activities. These companies include the French Total, which is holding talks with American tech companies like Google and Microsoft to help develop the use of artificial intelligence in exploration and production in the oil and gas industry.

Other oil companies have voiced interest in employing AI technologies, such as the American Exxon Mobil company, which is currently cooperating with MIT to develop smart robots that work in oil exploration in the deep sea and in deep areas. The Spanish Repsol company is also holding talks with several technological companies to supply big data analysis to improve drilling operations.

Within this context to keep up with AI developments, some oil companies have in the past phase acquired some emerging companies that work in the field of AI. In June 2017, the British Petroleum company acquired Beyond Limits, which is based in California, for USD 20 million. Beyond Limits has made technological precedents in the use of smart robots. Oil companies’ orientations to use AI motivated the American Intel company to buy Nervana Systems, which specializes in AI technologies for the oil industry in 2016.

Future Implications

AI technologies will certainly have several positive implications on the oil industry. These effects include improving the efficiency of operations processes, and the production and refinement of oil. It will further assist in saving money at a time when oil companies’ capital expenditures are expected to decrease by around USD 1 trillion by 2020 after oil prices decreased worldwide. AI technologies may provide beneficial tools to improve operational and financial performance of companies in the future.