The impact of artificial intelligence in the Oil & Gas industry 


The oil and gas industry has long been known for its complexity and challenging operational environments. With facilities spread across the globe, managing them all effectively has become a daunting task. However, the integration of Artificial Intelligence (AI) has brought about a significant change in the industry. According to market research conducted by Mordor intelligence*, the AI in oil and gas market is expected to register a CAGR of 10.81% during the forecast period of 2022 to 2027. Large oil and gas firms are now able to access all their locations’ data in one spot thanks to AI, enabling them to manage and monitor all their plants remotely. This allows them to make more informed decisions and optimize their operations for maximum efficiency. Moreover, digitizing and evaluating data records is crucial before using them as incomplete records can be a significant issue in the industry. The impact of AI on the oil and gas industry is clear, and it’s revolutionizing the way this complex industry operates.

In this article, we have highlighted some key points from the study to provide insights into how AI is transforming the oil and gas industry.

Market Overview

  • As the costs of IoT sensors decrease, more and more large-scale oil and gas organizations are required to start integrating these sensors into their production, processing and distribution operations, as well as AI-based predictive analysis.
  • Oil and gas are key commodities for the energy industry. However, in recent years, oil and gas companies have faced significant challenges, including declining profits due to fluctuations in oil prices since 2014. For this reason, these companies have started to focus more on efficiency and reducing downtime. At the same time, growing awareness of the environmental impacts of energy production and consumption has pushed oil and gas companies to look for innovative approaches to reconcile their business objectives with a reduction in their environmental impact.
  • Oil and gas companies faced a 40.6% drop in oil prices between March and April 2020, raising concerns about their profitability, according to the International Energy Agency (IEA). To improve efficiency and boost revenues, these companies are turning to modern technologies. The application of artificial intelligence in oil and gas operations allows the design of algorithms to guide drilling on the landmass and ocean floor.
  • The UK has had the first national oil and gas data repository (NDR) since March 2019, managed by the Oil and Gas Authority (OGA). To interpret this data, the OGA also uses artificial intelligence in a parallel way. This approach allows the OGA to identify new oil and gas projections as well as maximise production from existing infrastructure.
  • The COVID-19 pandemic and containment measures have led to reduced demand in the oil and gas industry. In the US, for example, oil prices have fallen by a record 50% since January 2020. According to the International Energy Agency, oil demand fell by 29 million barrels per day in April 2020, and this decline is expected to continue with a projected decrease of 23.1 million barrels per day by the second quarter of 2020.

Key market trends

  • Organisations around the world are competing to improve the efficiency and optimisation of exploration and production processes. In the oil and gas sector, AI is widely used to improve these operations. AI tools are helping companies to digitise records, automate the analysis of data and geological maps, and potentially identify problems such as pipeline corrosion or excessive equipment use. The possibilities are endless for companies that choose to adopt this revolutionary technology.
  • The integration of AI software can provide vital information to improve the business results of oil and gas companies in their upstream processes. This process can involve collecting and feeding recorded data from various sources such as structured documents, PDF files, handwritten notes, audio or video files into the AI software. Companies can then use this data to make informed decisions, optimise operations and improve long-term results. With AI, the possibilities for data collection and analysis are endless, offering a significant competitive advantage to companies that choose to adopt this technology.
  • Energy companies, such as BP and Royal Dutch Shell, have made commitments to achieve carbon neutrality by 2050 and are under increasing pressure to reduce their carbon footprint in line with the Paris Agreement. In order to meet these commitments, Shell has embraced the use of AI for predictive maintenance, whether at the equipment or whole system level, with the aim of reducing its carbon footprint. With this technology, companies are able to anticipate and manage potential equipment failures before they occur, helping to reduce greenhouse gas emissions.
  • In November 2021, a strategic collaboration was announced between Baker Hughes, an energy technology company, and AIQ, the artificial intelligence (AI) joint venture of ADNOC, Abu Dhabi’s national oil company, and Group 42 (G42). The aim of the collaboration is to create advanced analytical solutions to meet the needs of the global oil and gas industry.
  • The use of AI in the oil and gas industry is diverse, ranging from optimising production by analysing seismic and subsurface data in computer vision, to predictive maintenance to reduce downtime and maintenance costs of oil and gas equipment, to modelling and predicting oil corrosion risks. In addition, the massive investment by technology giants in this market has had a significant impact.

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North America is expected to have a significant market share

  • Owing to the increasing adoption of AI technologies by oilfield operators and service providers, as well as the strong presence of leading AI software and systems providers, the North American segment is expected to hold the leading position in terms of AI market share in the oil & gas sector during the forecast period.
  • The oil and gas sector is expected to see strong demand for AI technologies in the region, driven by factors such as a strong economy, increasing adoption of AI technologies by oilfield operators and service providers, a strong presence of leading AI software and systems providers, as well as combined investments from government and private organisations to drive development and growth in research and development activities.
  • ExxonMobil, a leader in the oil industry, recently declared its goal to increase production in the Permian Basin of West Texas, targeting production of one million barrels of oil equivalent per day by 2024. This would represent an increase of almost 80% over its current production capacity.
  • Oil and gas industry professionals in the United States recognise the importance of computerised automation in meeting the unique challenges of their sector. For example, a company like Baker Hughes uses technologies such as the InForce surface control system, which combines hydraulic technologies to activate downhole tools with control logic to manage an intelligent well system. Through the use of PLC, the system can perform remote operations via an existing SCADA for complex completion configurations.
  • AI is expected to emerge as a key technology for the region’s oil and gas sector. It can be used to optimise safety at service stations and to anticipate preventive maintenance needs, particularly in the face of the increasing number of service station fires in North America.

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Competitive landscape

The oil and gas Artificial Intelligence sector is a dynamic market with intense competition dominated by a few large companies. Companies are constantly relying on acquisitions to enhance, improve and diversify their product and service offerings, acquire new customers and certified professionals, and facilitate the growth of their sales channels.

  • In August 2021, Aramco, one of the world’s leading energy and chemical production companies, implemented computer vision solutions based on the FogHorn Lightning Edge AI platform at several of its sites to improve safety, equipment failure monitoring and automation of drilling equipment and processes. FogHorn Lightning Edge AI was selected by Aramco to create an effective infrastructure for future automation, digitisation and standardisation initiatives across various sites. FogHorn’s technology is suitable for system integrators, OEMs and end customers from a variety of sectors including oil and gas, manufacturing, renewables, power and water.
  • In November 2021, Infosys announced its collaboration with Shell and the launch of its first product for customers in the energy sector. This innovative solution is based on artificial intelligence and allows companies to optimise stock levels in their warehouses based on their consumption history. Through improved demand planning, this solution significantly reduces the time and labour required for maintenance operations, while reducing operating costs. This collaboration between Infosys and Shell illustrates the growing importance of AI in the energy sector and the willingness of companies to adopt innovative technologies to improve efficiency and profitability.

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In conclusion, the study conducted by Modor Intelligence showed that the AI market in the oil and gas industry is expected to grow significantly over the next few years, from USD 2,034.9 million in 2021 to USD 3,669.8 million by 2027. The integration of AI in this industry enables companies to address the challenges they face, such as declining oil prices and the environmental impact of energy production. AI is also helping companies to improve the efficiency and optimisation of exploration and production processes, by automating the analysis of geological data and maps, and identifying problems such as pipeline corrosion or excessive equipment use. Organisations can also use AI to improve business outcomes through better collection and use of recorded data from a variety of sources. If you are interested in learning more about this study, you can visit the Modor Intelligence website to access the full report.

* Mordor Intelligence is a global market research consulting firm

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