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Huge changes are under way in oil and gas. The industry is starting to adopt a new wave of innovations in digital technologies which can help boost output and cut costs. A new report suggests technological advances in the exploration and production sector could save $75bn a year by 2023.
Oil companies have, for decades, used powerful computers to analyse seismic data so they can target wells more precisely in oil-bearing rocks. That technology is continuing to advance. Today, only about one in three exploration wells finds usable volumes of oil or gas. But increasingly sophisticated models of the rocks and fluids below ground level or under the seabed can raise that hit rate of successful wells to one and two, analysts say.
The spread of intelligent and connected devices has allowed automation to make operations safer, more efficient, and cheaper. Norway's Equinor, for example, has estimated that automation will enable it to drill wells 15 to 20 per cent faster by 2020. The oil industry generates large volumes of data. Till recently, much of that data went unused. But the rise of cloud computing services is making it possible to store and analyse these huge amounts of data at a relatively low cost.
The cost of sensors for collecting more data is also falling, but their sophistication is rising. The expansion of Chevron's Tengiz oilfield in Kazakhstan, which is scheduled to start production in 2022, will include about 1m sensors. Advanced reservoir models will also allow production to be optimised to squeeze more crude out of the fields at a lower cost.
A 1 per cent increase in output from every conventional oil and gas field worldwide would add about 1.3m barrels of oil equivalent per day into the market. That's about the same as the total output from Libya. That increase production made possible by these innovations will put downward pressure on oil prices.
Adopting the new digital technologies will help oil and gas fight back against the growing threat they face from renewable energy, from battery storage, and from electric vehicles.
