If you want to bet on the growth of any particular industry for the next 50 to 100 years and you want to invest a lot of money and time into that industry knowing that it will only grow then only one industry comes to mind.
The oil and gas industry.
This is one of the most stable industries in the world and the fossil fuels industry is so stable in fact that countries depend on it for their entire GDP.
When it comes to investing and when it comes to investing in technology for industries, investors do not really look for industries that have sudden very high growth rates, they look for industries that have very stable growth rates and in fact so stable that they can even be predicted with a fair amount of accuracy.
And if the industry generates revenue of $5.3 trillion in global revenue as of 2024 then it is icing on the cake for the investors.
If you look at this statistic mentioned above then you can exactly predict oil production and even look at the dip between 2019 and 2021 during the times of the pandemic.
That means if there was no pandemic then this would have been probably the most stable growth rate in the world of any industry.
A large contributor to this stable oil production rate is also attributed to a very stable demand for crude oil. In fact, it is so similar let if you overlay oil production and demand then you are going to see quite the reflection.
The Problem with The Oil and Gas Industry
If you look at the data about the demand for crude oil chart closely then you can notice a drop between 2019 and 202 which is of course recovering gradually and is even going past the 2018 growth rates if we look at 2023 and 2024 data.
Something like that drop in demand for crude oil can only be caused by global events like the Covid-19 pandemic, global wars or a financial crisis and things like this are impossible to predict with current technology.
This helps us understand the fact that there are still flaws with this huge trillion-dollar industry, one of the obvious things is the unpredictability of the world and there are also other issues with efficiency and much more.
If an industry as huge as this can get affected by global events then the solution to this industry can only be possible with something that has never been tried before.
Something that can predict future events and something that can improve the efficiency of the entire oil and gas industry such that no global events can disrupt the demand and supply of oil.
That something is Artificial Intelligence (AI).
AI Solutions to Current Issues with The Oil and Gas Industry
Oil Exploration
The first and most influential area of AI utilisation in the oil and gas industry is definitely in the area of oil exploration.
The task of locating oil reservoirs is quite difficult and companies need to invest huge sums of capital into trying out new areas for potential oil and gas reservoirs.
However, the best thing about Artificial Intelligence (AI) and Machine Learning (ML) is that they can be utilized for reservoir exploration with the help of neural networks as well as machine learning algorithms and Generative AI along with Edge AI.
Oil exploration involves multiple steps of understanding the volume of the oil field as well as the dimensions of the faults i.e., the analysis of terabytes of data contextually.
Artificial Intelligence (AI) has the capacity to completely automate this process and it can even be used to provide you with a 3D diagram of detected reservoirs.
Automated Drilling
Drilling can be a very complicated and time-consuming process because you need people with decades of experience in operating hammer drilling equipment.
There are also significant risk factors involved when it comes to precarious drilling operations such as offshore drilling.
You need to analyse a lot of factors when it comes to the aspect of drilling from the soil type to the size of the reservoirs to the gas pressures and so much more.
That is why Artificial Intelligence (AI) can be excellent in this regard when it comes to minimising drilling costs and automating the entire drilling process making it much more cost-effective and faster.
That can be the help of AI predictive analytics. We are also looking at decision tree utilisation as well as digital twins to get the job done.
Equipment Failure Prevention
Equipment failure is something unavoidable for this industry because of the nature of operations, there are just no predictive systems in place that can factor in historical records and enable automated fault detection systems.
Equipment failure costs the oil and gas industry billions of dollars each year because dealing equipment is expensive and drilling and the operation of rigs is the most cost-intensive process of the entire oil and gas industry.
What AI can bring to the table is completely remarkable in this regard because AI can utilise predictive analysis in order to predict when equipment might experience failure so that particular pieces of equipment can be replaced without damaging the entire system.
We are also looking at AI utilisation in the form of computer vision and convolution neural networks in order to make automatic fault detection quite easy.
Regulatory Compliance
If you are associated with the oil and gas industry then you know already know how difficult regulatory compliance is.
Every country out there has different laws when it comes to drilling and the operation of oil rigs. Then comes the issue of new laws that get enacted every single week or month somewhere around the world.
This makes it quite difficult for international companies to stay within regulation and the risk of non-compliance is huge penalties at a minimum and even the possibility of the shutting down of operations.
Oil and gas companies cannot simply afford to have their operations shut down even for a small amount of time and it can result in huge losses.
Artificial Intelligence (AI) can analyse huge amounts of data in order to make sure that your operations are always in compliance with local regulations.
The most important factor in this is that AI will not only be able to predict if your operations ever go out of regulation but it can also be automated to take care of certain aspects of compliance.
Price Fluctuations
Price volatility can be a very real concern for the global oil export market because while the demand for oil is quite stable as well as the production of oil is also very stable as we have seen in the statistics, the price of oil is another whole new story.
The thing with price fluctuation is that global events determine the price of oil and when we talk about global events things like conflicts have a very bad effect on oil prices.
For example, if you check out the graph mentioned above then you are going to see the drastic changes in market prices for oil simply because of the Russia-Ukraine conflict.
The only solution to this is Artificial Intelligence (AI) and Machine Learning (ML) coupled with Generative AI. Predictive analysis is the only solution in the world capable of factoring in millions of variables in order to predict oil prices.
Artificial Intelligence (AI) is the only system in the world capable of taking in every global event and basically predicting the future. Training such a model is going to be difficult but it is definitely possible.
Improving Safety
Every industry out there needs to follow safety protocols but when it comes to the oil and gas industry safety is something that can never be compromised.
Safety is important in this industry because of the number of dangers that have the potential to get triggered at any time whether it is during the drilling process or whether it is during the daily oil extraction.
While oil rigs have complex safety systems in place comprising Industrial Internet of Things (IIoT) multiple sensors and systems, it is not really very much integrated and it does not have any Machine Learning (ML) integration.
Having an intelligence system in place that can automatically monitor multiple operations all at once and analyse data in order to provide early warnings that can eliminate dangers altogether is the best answer.
This kind of Machine Learning(ML) based safety system can adapt to the type of drilling operation and can be a universal solution for safety integrated with IoT devices.
This can be revolutionary for all kinds of oil and gas extraction operations, especially offshore ones.
Environmental Protection
We all can agree on the fact that the environment comes first when it comes to any kind of industry, especially the oil and gas industry.
Oil spills can destroy entire oceanic ecosystems and hydrocarbon leaks can even destroy the oxygen-producing capacity of the ocean thereby choking the lungs of Earth.
This can be avoided with the help of Artificial Intelligence (AI) by combining and analysing sensor data in order to prevent equipment failure and oil leaks.
Generative AI has amazing pattern recognition capability and this can be utilised to analyse satellite imagery in order to find out oil spill patterns of low and prevent it from damaging more ecosystems.
Supply Chain Management
The supply chain management of any oil and gas company is much more complicated than the supply chain management of any other kind of manufacturing and goods production company.
When it comes to the supply chain of the oil and gas industry, inefficiencies can cost billions.
The problem with traditional systems is that they are isolated which means the supply chain system operating the oil imports logistics to the logistics from and to the refinery can be completely different.
Within that, we have to include the systems of refinery storage as well as coordinate them with supply tankers and tanker trains.
Managing all that can be quite difficult without a centralised system that can keep track of everything and that is only possible with the help of optimisation algorithms and Generative AI.
Robotic Process Automation (RPA)
Every industry, especially the oil and gas industry has multiple back-office tasks in the form of data entry, report generation and much more.
While these are not as significant as the other challenges and solutions on the list, they can never be ignored.
One of the problems with the current completely manual system is that people always need to be employed to carry on these tasks and if you add the numbers up then this can lead to a lot of capital drain.
The solution to this is of course AI because it has the capacity to do mundane and repetitive tasks very effectively.
The process of operating oil and gas companies can be quite complicated and since this is one of the largest industries in the world, any small mistake can get amplified in the billions of dollars.
That is why companies should be investing in Artificial Intelligence (AI) to improve the entire process of oil and gas company management and efficiency improvement.
Saudi’s Aramco Leading the AI Revolution in The Oil and Gas Industry
When we consider some of the biggest names in the oil and gas industry Aramco is the first name that comes to our mind simply because it is the largest in the world.
The best thing about this company is that they are also leading in terms of utilising Artificial Intelligence (AI) for oil exploration.
They have already invested around $3.5 billion in research and development in 2022 and the numbers are only going to rise.
They are utilising everything from AI drones to automated electric vehicles and robotics that are all integrated with AI to improve operational efficiencies.
Here are a few examples of their AI and Big Data applications.
Reservoir Modelling
Oil and gas companies need to have a constantly updated understanding of their reservoirs and that is why Aramco likes to visualise and model its reservoirs with the help of AI.
They even have their own reservoir and basin simulator systems that simulate entire hydrocarbon systems of the Arabian Peninsula.
This lets them keep track of new drilling and production data with the help of their custom models.
Flare Monitoring
Flaring is one of the most important tasks for any oil and gas company and it is the combustion of hydrocarbon gases that are usually caused because pressure has been built up in the pipelines.
It is much safer to burn away that gas instead of releasing it directly into the atmosphere.
Aramco uses 18,000 data sources in order to monitor and forecast flaring operations making the process much more environmentally friendly and this helps them reduce the flaring operation by at least 50%
Camera-Based Well Space Out system
Aramco uses Industrial Internet of Things (IIoT) tech coupled with AI and ML in order to automatically space out drillstring assemblies.
This is a complex system of smart and waterproof high-resolution wireless cameras and other sensors that automates the placement of drillstring assemblies in the drilling of new hydrocarbon wells.
This is a very crucial step in oil and gas drilling and extraction and this automation saves time and makes the entire setup much more efficient.
Additionally, Aramco heavily utilises Artificial Intelligence (AI) Machine Learning (ML) and Big Data for the operations of their Khurais Oil Field and Abqaiq Plant and many more operations.
We hope this blog gives you a better idea about the utilisations and applications of Artificial Intelligence (AI) in the oil and gas industry.
The potential of Artificial Intelligence (AI) in oil and gas is tremendous and can not only be beneficial for the companies but also beneficial to the end-consumers in the form of reduced oil and gas prices because of better efficiencies and even reduced impact on the environment.
And if you are someone who is directly or indirectly associated with the oil and gas industry and you would like custom Artificial Intelligence (AI) integration solutions then we are here to help you.
We are Think To Share IT solutions and we are among the pioneers when it comes to AI innovation and custom AI integration solutions. We would love to help custom-create AI solutions for all your needs.
We welcome you to visit our website and check out everything we do.
