5 !{ArticleDetails-ReadTime} 30 Sep 2019
Oil refinery industry plant aerial view night

How AI can be the tool that transforms oil and gas for the future

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Jeff Williams

EY Global Oil & Gas Advisory Leader

Global energy executive. Passionate technologist. People developer. Husband and father. Outdoors enthusiast.

5 !{ArticleDetails-ReadTime} 30 Sep 2019

When implemented well, AI can transform oil and gas companies, help realize new value, and engage new generations of workers. 

Although oil and gas companies have plenty of computing power, they have been hesitant to apply this might to artificial intelligence (AI) – until now.

Today, the industry is navigating a challenging environment, shaped by ever tightening margins, uncertain demand, price volatility and eroding social license to operate. It is also having a hard time attracting talent to replace retiring engineers and senior executives – 62% of the digital-savvy Generation Z say a career in oil and gas is unappealing.

However, AI and the various applications underpinning the technology provide a pathway to manage some of these issues by optimizing processes and helping the industry do more with less.

To fully realize the potential of AI, and its capacity to automate processes and uncover deep operational insights – such as more accurate well-drilling analytics – the industry needs to create an environment in which tomorrow’s digitally focused professionals really want to work. It’s an ambitious undertaking requiring a full business transformation.

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Chapter 1

Instilling a culture of innovation

By embracing AI, oil and gas companies can refocus employees on new ways of thinking and working.

At their core, oil and gas companies are process-driven. From upstream to downstream, every step of the value chain is organized by rules and regulations designed to achieve a safe and efficient working environment.

We can see this reflected in the kind of cultural inflexibility that poses a major obstacle to effective transformation in the sector. When asked in a recent EY survey what the greatest strategic challenge was in adopting digital technologies in the sector, 41% of respondents indicated difficulties in aligning digital roadmaps with the executive team and the board.

What is needed is a new generation of leaders and decision-makers who actually move the needle on progress. However, the industry will need to devise new ways of thinking to accommodate advanced ways of doing business.

However, disruptive thinking does not necessarily come naturally to large, process-driven companies. Because of this, a new approach like introducing AI is bound to cause growing pains, especially among veteran workers.

Company-wide training that provides employees with a better understanding of the technology and its benefits can help mitigate some of these initial concerns. Indeed, our survey found that 81% of oil and gas executives agree that the industry needs to work on developing a digital-first workforce over the next 10 years.

Appropriate training should reassure workers that as AI increasingly automates certain tasks, workers instead will get to focus on more rewarding activities or take up more sophisticated, problem-solving roles. Intelligent machines can go beyond just optimizing existing jobs to creating new ones. In fact, they could create more jobs than they eliminate.

Breaking down data siloes to create value

Oil and gas companies, especially large integrated ones, generate reams of data. Much of this data gets siloed within different business lines, geographies, or even in single operating units.

By not consolidating this data, AI-enabled solutions will fail to deliver maximum value.Fortunately, however, many companies are looking to break down data silos. For example, last year, some oil and gas companies expanded their collaboration with technology companies to consolidate data on custom AI platforms.

These data hubs hold, process, and analyze reams of structured and unstructured data. Such capacity can open up data silos and provide the rich, holistic data sets that AI needs to succeed. One major oil and gas company has a “data lake” that will hold data emanating from its entire downstream portfolio. The data won’t be siloed off but will be easily accessible and sharable.

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Chapter 2

Three steps to successful AI implementation

AI can help with some short-term challenges, but a successful strategy will look beyond the now to the next – and beyond.

AI implementation is not a sprint but a marathon, shaped by significant milestones, including buy-in from employees and openness to a new cultural paradigm that can attract a new generation of digital workers. Implementation can be mapped out via three key steps:

1. Data exploration and consolidation

As a starting point, oil and gas companies should explore and consolidate exciting and exploitable data assets, which can be turned into quick, actionable wins. For example, AI could automate back office administrative tasks, such as accounting for jointly-owned upstream assets, or payout management to production partners. This “low-hanging fruit” strategy can help generate employee buy-in and foster a better understanding of the benefits of AI. Company-wide training can complement this.

2. Intelligent automation

Companies can audit tasks to identify those that are suitable for automation. Rule-based robotic process automation (RPA) to cognitive RPA could handle tedious, cumbersome, error-prone, or massively time-consuming activities, such as those carried out in the back-office or that support fieldwork like drilling and completion operations.

3. Using AI solutions to translate human experience

AI is fed data that is generated by an oil and gas company’s refinery, petrochemical plant or production wells. But that’s just part of the equation; there’s also human intelligence, particularly the insights held by veteran oil and gas workers. This should be captured, using AI solutions that can ease knowledge sharing.

The real promise of AI is genuinely transformational. By employing a robust approach to AI implementation, the industry can drive improvements now, while preparing organizations for the next challenges facing the sector – and even prepare for the unknown future that comes beyond the next few decades of disruptive change.

AI will not be able to address all the industry’s challenges – but implemented effectively, it can provide a measure of flexibility and agility that oil and gas companies have previously rarely enjoyed. This could just be the edge that they need in this Transformative Age.

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AI and digital technologies are poised to transform the oil and gas sector, unlocking new insights and breathing new life into old processes. Realizing this value, though, will mean answering key questions around data, talent and culture.

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Jeff Williams

EY Global Oil & Gas Advisory Leader

Global energy executive. Passionate technologist. People developer. Husband and father. Outdoors enthusiast.