In the International Energy Agency’s “Net Zero by 2050” report, which outlines a comprehensive pathway for a global transition to zero emissions by mid-century, states that much of the technology needed to make a timely transition has not yet been developed.
“Most of the global reductions in CO2 emissions between now and 2030 in the net zero pathway come from technologies readily available today,” the May 2021 report states. Yet in 2050, “almost half of reductions come from technologies that are currently only at the demonstration or prototype phase.”
Emerging technologies, such as improved battery storage, low-carbon hydrogen production and carbon capture utilization and storage, show “encouraging” progress, but the world significantly lags behind in power generation and end-use sectors, specifically industry, buildings and transport, the IEA reports. Regarding industry, the agency said more progress is needed on material and energy efficiency, the uptake of renewable fuels and development of low-carbon processes.
For the oil and gas industry and other subsurface sectors – including geothermal, carbon storage and critical minerals – new technology will play a vital role in lowering operational emissions and developing cleaner energy resources.
Artificial intelligence, machine learning and big data analytics, in particular, are making significant inroads into the oil and gas industry, and many see them as critical catalysts for the industry to adapt and thrive through the energy transition.
Reinvent, or Get Left Behind
Energy technology experts at the 2021 International Meeting for Applied Geoscience and Energy in Denver late last year revealed how new technologies are changing the way the industry is doing business and what companies risk if they fail to adopt this technology quickly.
“As we look forward at the industry, we feel like we are at the precipice of the biggest dislocation in our industry’s history,” said Sean Ebert, a partner with Altira Group, an energy technology venture capital firm in Denver. As the industry emerges from the impacts of COVID and negative oil prices, it has an opportunity to embrace a new era of technology to “reinvent itself,” he said. Noting how the right combination of hydraulic fracturing and horizontal drilling unleashed the shale revolution, Ebert said the oil and gas industry can transform itself again using the right technologies.
In addition to AI and machine learning, other technologies infiltrating the oil and gas industry at a rapid rate include the Internet of Things, robotics and animation, 3-D modeling and visualization, cloud computing, predictive maintenance and blockchain.
Kim Padeletti, head of energy data platforms at Amazon Web Services, said now is an ideal time to be a geoscientist in the industry.
“You’ve got access to some of the most amazing technology. Last year, we had hundreds of products and services released. You’ve got this at your fingertips now. You’re able to use SageMaker, AI, machine learning, and run algorithms on seismic data. You’ve got access to open-data platforms through OSDU (Open Subsurface Data Universe) to collate your workflows. Your partners and your vendors are coming together to form a better customer experience for you,” she said. “This is going to be really exciting to see what everyone does to take it to the next level over the next couple of years.”
With so many new technologies rolling out to advance efficient and clean energy production, the experts stressed that the industry must incorporate them into their workflows and practices or they risk being left behind.
“We need to learn how to get better and quicker at adopting new technologies or we really risk being taken over by this pace of change,” said John Thurmond, principal adviser for emerging technologies and geosciences for Hess Corporation. “No matter when your net zero target is, you either must develop technologies faster for a faster transition, or you have a bigger-than-expected resource gap to fill that will also require new technology. Both sides require rapid technology development to get there, and 20 or 30 years is not a lot of time.”
Historically, the industry has been slow to adopt new technology, but meeting the ambitious goal of net zero by 2050 will require a radically new mindset.
“As much as companies say they want cutting-edge stuff, if you don’t have five year’s proof, then it’s really hard to get into the adoption cycle,” said David Thul, former geologist and co-founder of Geolumina, a start-up company focused on machine learning and advanced analytics. “But five years of proven technology isn’t cutting edge. It’s actually 10 years old, and this is a common thread across our industry – this hesitancy to adopt and change, to cycle quickly, to fail fast.”
Yet, oil and gas companies conceivably should be more willing to try new things and fail, Thul said. “We do it 80 percent of the time when we drill a well. All of those failures have an ROI, and we need to approach our industry technology in the same way,” he explained. “We need to think of E&P companies as digital science and technology companies that make oil or hydrogen or geothermal resources. It doesn’t matter what your end product is, but the mindshift approach is absolutely fundamental to making step changes that we need in our industry.”
As it stands, environment, social and governance criteria are the major drivers for the adoption of new technology, Ebert said, noting that such criteria are steering investors toward companies that can demonstrate their commitment to the environment.
“It’s an opportunity for the energy industry to absolutely lead this energy transition,” he said.
The path, however, is not expected to be smooth.
“The industry, I expect, will go through a long period of volatility with fewer resources than ever, and leveraging these technologies will give your different subject matter experts veritable superpowers where they can deal with the variability in demand. The industry is positioned to take very novel approaches,” he added. “I think there is a set of ESG technologies – things that are very aligned with the core business. There are also some transition-type plays that are going to be very interesting to see – like hydrogen and CCUS coming down their learning curves. And there are the classic plays, things like wind, solar and biofuels. We think we are at an absolute golden age of technology for energy technology.”
Investing in Start-Ups
As oil and gas companies explore new technologies, looking outside the box and casting a wide net will be crucial to success.
A lot of key innovations may not occur directly in our ecosystem, and innovations are often found in the edges of disciplines.
“We actively seek out uncommon partnerships to tap into their ideas and find ways to get them working on our problems,” Thurmond said. “It’s really through an absolutely relentless pace of ‘experiment, learn and adopt’ that we can both keep up with the pace of change and really deliver what the world needs into the energy transition and beyond.”
Amy Henry, CEO of Eunique Ventures, an energy hybrid technology accelerator, looks for new technologies both inside and outside of the industry – including areas of biotech, aerospace and healthcare – for a common “connection point” to oil and gas. She is working to fill the gap between where the world needs to be in 2050 and the technology needed to get there across the entire value chain.
Through an open innovation model backed by industry partners, Henry helps extend the runway for start-ups so that new technology can be scaled up and more readily available to industry. This is done by developing business-use cases and utilizing trials, pilots and proofs of concept to move them forward. She also works with energy companies to facilitate the adoption of new technology.
Much of the new technology being developed today is occurring in pockets around the globe.
“A lot of companies are going to be looking for a connection with North America, which creates a lot of opportunities for various start-ups,” she said.
As emerging technology companies pitch their products to the industry, Thul urges energy companies to dispose of technology that does not suit their business needs. Referring to Google’s decisions to eliminate popular products because they no longer generate advertising revenue, Thul said the energy industry must view subsurface work in a similar way.
“If you don’t make money on the subsurface product, you need to … switch to a different one,” he said. “The really critical gap is between, say, the hydrogen world. It’s actually a subsurface product because it doesn’t become carbon net zero until you have somewhere to put the CO2. So, if you’re not doing subsurface work to support your hydrogen team, you’re in trouble. It’s the same for carbon capture.”
Accelerated Data Management
To many energy technology experts, deep learning – a subset of machine learning – and artificial intelligence are the most critical technologies in the oil and gas industry today, as they have accelerated the way people work and improved their ability to interpret data.
“We are in the midst of a revolution in how people can work with data and information, and a lot of that is fueled by really complex natural datasets,” Thurmond said.
While Henry agrees that advancements in machine learning have been transformative, for the industry to succeed into the future, the mindsets of management toward new technology must change. Management must incentivize and reward people for forward thinking, and “that’s got a long way to go because we haven’t begun to address that,” she said.
Philippe Hervé, senior vice president of energy and sustainability at SparkCognition in Austin, believes AI sits at the top of the list of new technology that can advance the industry.
“AI is here to augment everything we do,” he said. “AI has been here for a long time. There is nothing new fundamentally in what it brings to you. But it’s doing things better, quicker and faster with more confidence and more accuracy.”
The advantage humans have over AI is creativity.
“If I were to create a new business today, I’d make sure it’s a creative one,” he said.
With so much new technology coming on board, companies now need a “triage” to have a competitive edge, Hervé said.
“Projects should be run by automated tools when possible and a data science team for very complex problems not yet handled by data science tools,” he said, adding that subject matter experts must be a part of the team.
While data science tools that don’t require a knowledge of coding are available to small and medium enterprises, Hervé stressed that many data scientists do not fully understand the domain knowledge.
“Hang on to your subject matter experts,” he encouraged.
Yet, many believe that subject matter experts are disappearing, to the detriment of the industry.
Jim Grant, vice president of subsurface at Chesapeake Energy, believes a lack of subject matter experts – people trained in the foundational elements of their respective disciplines – is a current threat.
“Whether it’s storage or geothermal, you need that foundational subject matter expertise to be a focus, and I’m seeing universities shift away from the bread-and-butter content to the flavor of the day,” he said. “I worry that this will lead to a lack of subject matter experts being developed in the pipeline coming forward.”
In the eyes of Thurmond, taking advantage of new technology will allow subject matter experts to focus on their areas of specialization.
“I’m trying to accelerate the way people work and allow them to spend time doing the things they were trained to do that they specialize in. Your competitive advantage is the knowledge of the people you have and how they can put their pieces together to understand what’s going on. If it takes them 10 times longer to do that than a competitor, then that’s a problem.”
He added, “We need to keep pushing boundaries and trying new things and do it faster. That is hard for people. Change is hard. We are going to face new challenges. There are going to be new ways of working. There are going to be new technologies we have to use at a faster and faster pace, so the real skill beyond the fundamentals is the ability to adapt to that kind of change.”
An Accumulation of ‘Micro Impacts’
When looking at all the new tools available, Thul said it is not one over another that will advance the industry but rather the “democratization” of new technologies and the “micro impacts” they will make.
“Whether you are writing code to solve your own problem or you’re creating an AI tool … that is the type of technology availability that is going to allow the next level of innovation. It’s akin to when a bunch of people set out on their own to drill wildcat wells and prove new play concepts. It’s the exact same thing that drove the shale revolution: a bunch of people thinking differently and solving miniature problems in order to get that play.”
Thul believes the industry will see innovation across engineering, geoscience, subsurface and new energy technology.
“It’s the proliferation of all these tools and abilities and skills across a bunch of different people who want to make an impact. You can have a laser-value focus as being two people in a room with a computer and a 3-D printer. You can change the world,” he said. “That is the thing I am most fired up about and I think has the most upside to our business.”
Hervé recalled the demise of companies such as Blockbuster video and Kodak for spurning the digital technology advancing during their time. Both companies were quickly displaced by streaming video services and digital photography.
Yet Domino’s Pizza turned itself into a digital company that makes pizza, Hervé said, noting that digital technology ultimately allowed the company to control 50 percent of the pizza delivery market in the United States.
He believes the oil and gas industry can also be a success story with an openness to new ideas.
“The future is bright,” he said. “I am looking forward to it.”