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Technology and the oil industry

Automation, machine learning, artificial intelligence and other new technologies could transform the oil industry

The digital oilfield has been a buzzword bouncing around the industry for at least a decade but its time might finally be arriving in the oil patch. Technological advances are coinciding with one of the most severe disruptions the oil industry has seen in generations, which has left companies looking for new answers to a seminal question: how to cope with what may be years of lower prices.

The renewed enthusiasm for all things tech was on display at this year's CERAWeek conference in Houston, the US' biggest industry confab. Views on prices and policies from executives and ministers drew the usual headlines, but the more lasting and transformational story may have been taking place in the halls of the annual conference, where digital pioneers showed off their latest wares.

ABB, which develops new industrial technologies, let visitors slip on a virtual-reality headset that transported them to a simulated Mars base camp. There, autonomous vehicles and robots beavered away, a microgrid supplied power, and advanced sensors monitored the action, allowing the whole operation to be operated remotely-all technologies that exist today. No one is going to be drilling for oil on Mars anytime soon, but it's not hard to see how a similar suite of technologies couldn't run a project more efficiently and safely in forbidding Arctic or offshore environs. Or even in a less hostile setting like West Texas' shale fields.

Honeywell put virtual reality to work as well, showing how the technology could be used to more effectively train staff by bringing companies' facilities to life in the virtual world. CyPhy Works had a drone that, unlike hobby models, is tethered to a power supply and data-collecting base so it can be deployed to continuously monitor refineries, offshore installations or tank farms. Maana, a data and analytics firm, showed how it was using machine learning to help companies pull vast amounts of disparate data together to help petroleum engineers squeeze more crude from each of their wells.

A new technology-focused side forum called Agora was also launched this year at CERAWeek. It was a hit. Sessions named artificial intelligence, machine learning and energy: an explosive combination and Agile, additive, autonomous-Technology and the reshaping of the energy supply chain drew overflow crowds, even if some in the audience seemed slightly bewildered about what it could all mean for their businesses.

It pointed to a collective sense from the execs that their industry is missing out on the wonders of 21st century technologies like automation, big-data analytics and artificial intelligence that have transformed so many other industries, but have barely touched the oil and gas industry. "We are way behind Silicon Valley," Anadarko's president Al Walker lamented, echoing a refrain running throughout the conference. Pointing to his own company's struggles to make the most of its vast flow of data, Walker said his company "was collecting terabytes and terabytes of data, but only using maybe 5% of it".

It isn't just Silicon Valley-the oil and gas industry has fallen behind most industries in taking up new digital technologies, argued Lisa Davis, the head of Siemens's global energy business. "We do business in automotive, trains and mobility, healthcare, food and beverage and elsewhere and you see a lot more advancements in other industries than you do in oil and gas," said Davis. The mining industry, for instance, faced in recent years with a supply glut and low prices-an experience like the oil business' own-has been embracing technology such as autonomously driven vehicles and robotic drilling to save cash.

The relatively slow uptake from the industry means there is still huge scope to transform the ways oil and gas is produced, transported, refined and, ultimately, consumed. And as companies look to the technologies available, the shape of the industry's digital future is becoming clearer.

Take shale drilling, for instance. A full embrace of drones, robotics, automation, artificial intelligence and remote operations could revolutionise the way companies go about developing their fields. At the well site, much of the repetitive and heavy lifting tasks could be done by robots running nearly fully automated rigs. Downhole sensors would track goings on below ground while drones monitor the site from above, both sending real-time information back to a central operations centre, where engineers are able to manage multiple projects simultaneously. The rigs would be able to move themselves from site to site. At the same time, artificial-intelligence platforms would analyse the vast streams of data arriving from the wellsite and store it in the company's cloud to help engineers decide on everything from well siting, to completion formulas, to optimal artificial-lift equipment, constantly pulling in technical and economic data to help perfect field development. Soon, petroleum engineers could be asking Siri where they should drill their next well.

The robots are coming

Much of the technology already exists, or is being developed. Robotic Drilling Systems, for instance, is working with Energid Technologies and Odfjell Drilling on a fully automated drill floor, replacing roughnecks with robots. Schlumberger's "rig of the future" initiative is aiming to pull together all these features into a complete suite of services it can sell to producers. GE's takeover of Baker Hughes signals an attempt to move the industry in this direction.

In data and analytics, Repsol is working with IBM's Watson, famous for trouncing its human opponents in the US quiz show Jeopardy, to help it manage oil reservoirs and decide on where to bid on oilfields. Other companies, especially in the midstream and downstream, are using the data from their facilities to predict when failures and breakdowns are likely to occur. Apache is using predictive analytics to monitor thousands of downhole pumps across its operations to minimise production losses due to failing equipment.

Advances in the sensors that collect all this data are also crucial. BP has deployed tiny, yet highly resilient, specialised sensors that can be sent deep into a well to detect encroaching water that can damage the reservoir and halt output. The developer, Silicon Microgravity, says the sensors can lift yields from conventional reservoirs by 2%. This may not sound like a significant amount but it could potentially unlock billions of barrels of oil.

"The industry is starting to embrace things like big data and analytics," ConocoPhillips's boss Ryan Lance said at CERAWeek. "Big data," he added "is changing the way we understand the shale plays."

Still, a digital revolution feels far off. The current patchwork of mostly incompatible sensors and platforms used to collect, process and analyse data have not been standardised across the industry in a way that allows the sort of sharing that makes the most of things like machine learning and artificial intelligence. Silicon Valley's ethos of open-source development, which has helped accelerate innovation, is anathema to most oil and gas companies. The industry has always held on to information tightly, and been reluctant to share data with suppliers and contractors, for fear it might end up in a competitor's hands.

The industry also remains conservative and resistant to new technologies-sometimes for good reason. The cost of failure in the oil and gas business is far higher than in most industries, especially around Silicon Valley. A well blow out or oil spill is far more serious than a buggy app rollout. But the industry, especially the majors, could be much more embracing of new technology. George Mitchell transformed the sector by taking an incredible financial and reputational risk in pioneering the use of horizontal drilling and fracking on oil- and gas-rich shale formations. He failed repeatedly before cracking the code.

Accenture, a consultancy, said in a recent report that more than $1 trillion in value could be unlocked across the energy sector over the next decade alone if digital tools were widely adopted.

That's an opportunity which is too great to ignore, especially as the industry enters an era when companies are fighting for survival. Gaining an edge on costs could make or break them.

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