The digital capabilities of organizations have evolved at a rapid pace over the past fifteen years. Businesses need to keep up with popular trends and technology to stay competitive. The COVID-19 pandemic has accelerated digital transformation and technology in general, changing the landscapes of almost every organization. Industries like healthcare and hospitality have been completely changed and will be forever. That said, other industries that have been indirectly impacted by the pandemic have also been pushed past the tipping point and sent into technological evolution.
One industry where digital strategies have lagged is upstream oil and gas. Many companies have been hesitant to implement the latest wave of digital transformation and have fallen behind other industries. Decision makers now face a digital deluge as solutions and platforms continually flood the landscape. A few of the technologies include:
- Artificial Intelligence (AI) and Machine Learning (ML)
- quantum computing
- Predictive analytics
- internet of things
With so many options, many executives struggle to decide which technologies to invest in. They must be asking themselves what technology will best serve an organization’s growth objective? A great place to start is with data. Cisco estimates that the average oil rig generates up to 2 TB data every day, leaving mountains of data for engineers and operators to manage. The problem is that E&P companies generally lack the communication, storage and analysis capabilities to make this data useful. Engineers and operators face months of meticulous analytical work just to extract value from the vast ocean of data. To make this insight actionable in real time, organizations will need the support of a unified data model. A unified data model uses AI and ML technology to connect and cleanse all of this data to create a unified view of key business metrics and standardized analytics for all users.
AI/ML in Oil & Gas
The potential for AI/ML in upstream oil and gas is enormous. E&P companies can help unlock the full potential of wells and rigs by integrating AI/ML capabilities into their operations. With AI/ML-powered processes, operators and engineers can work with complete flexibility while increasing productivity.
Many organizations across multiple industries have implemented some form of AI/ML, with a McKinsey survey reporting that 56% of respondents have implemented AI adoption in at least one function. With a 50% jump in 2020, it is clear that digital transformation and the rate of AI/ML implementation will only increase. E&P companies must be prepared to jump on the trend or risk falling behind. With benefits ranging from optimized well selection to predictive analytics, the power of AI/ML cannot be ignored in the oil and gas industry.
The predictive power of AI/ML
AI/ML-powered analysis enabled predictive capabilities superior to most physical models. The demand for more drilling continues to grow as soaring gas prices and Russian energy embargoes have left Americans paying an arm and a leg to fill their gas tanks. More drilling will inevitably lead to more oil rigs in the field, which in turn will lead to more maintenance and potential downtime. Wear and tear is inevitable, leaders who take steps to implement predictive maintenance will have a key advantage in reducing operational costs. Over time, the technology will continue to develop and become easier to use as its ability to handle large arrays of data improves.
Exploration powered by technology
By implementing a unified data model, E&P companies can automate their exploration efforts to improve new well placement and better identify workover candidates. Companies can develop and implement automated evaluation processes that can quickly help determine which wells will produce the highest estimated production. Instead of a manual screening process that can take months, E&P companies need to invest in AI/ML-powered digital capabilities that automate processes to best identify new candidate wells. Operators can reduce project time and increase CAPEX efficiency by automating processes through the power of AI/ML.
Digital transformation and the use of AI not only support exploration, they can also help revitalize old and abandoned wells. Just as in exploration, digital tools are helping to revive brownfield sites by standardizing and automating the process of selecting candidates for redevelopment. Each year, tens of thousands of wells remain closed waiting to be abandoned or revitalized. Machine learning capabilities scour hundreds of brownfield sites to best identify a list of revitalization candidates that will improve CAPEX and reduce risk. Not only can AI/ML support new businesses, it can also identify the best wells to reactivate, saving time and money.
Ultimately, digital transformation in oil and gas is more of a transformation issue than a digital issue. Many leaders are hesitant to invest heavily in digital transformation, but continue to be hampered by the cost of poor quality. To improve processes and workflows, they must turn to solutions like AI and ML to transform their operations. Extracting value from the piles of data collected by E&P companies will be a crucial step in the digital transformation of any company. Any organization’s digital journey will be defined by its level of investment and commitment to redesigning workflows and streamlining processes.
Peter Bernard is president and CEO of the Houston-based company Dating. He is a decades-long veteran of the oil and gas industry, having held various management positions before joining Datagration in 2020. Peter earned his BS in Petroleum Engineering from the University of Louisiana at Lafayette. Datagration provides oil and gas companies around the world with the tools they need to integrate and model data into meaningful insights and decisions every day.