Artificial intelligence (AI) may still be a nascent digital technology, especially for the oil and gas industry, but its use holds promise for upstream operations, according to the International Energy Agency (IEA).

“AI could be used to analyze well performance, troubleshoot underperforming fields, suggest corrective actions and even deploy robots to carry out tasks,” the IEA said. “It could also enhance reservoir modelling, and thus aid operations by rapidly detecting and correcting suboptimal production behavior.”

The thoughts were shared in the IEA’s Digitalization & Energy report, the agency’s first report that tackles the intersection of digital technologies and energy. The Nov. 5 release of the 188-page report, which covered several areas of the energy sector, was delivered as the oil and gas industry’s increases its uptake in digital technologies in search of uncovering further efficiency and cost gains.

“Energy companies with whom we work very closely—oil, gas, electricity, technology companies—are increasing their investment in digital technologies,” Fatih Birol, executive director for the IEA, said during a Nov. 6 webcast on the report’s release. “Our numbers show that the investment in digital infrastructure has increased by 20% each year over the past couple of years.”

The IEA found that use of digital technologies such as those associated with enhanced reservoir modeling, advanced seismic data processing and sensors throughout the oil and gas industry could lead to a 10% to 20% drop in production costs.

Laura Cozzi, head of the IEA’s Energy Demand Outlook Division, said unconventional oil and gas could benefit the most.

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Further gains could be seen in the amount of technically recoverable oil and gas resources, which could increase by about 5% globally with use of existing and emerging digital technologies. This is based on improvements such better reservoir simulations with high-resolution images, which could steer operators toward better well spacing, lateral lengths and proppant amounts.

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The IEA noted that the oil and gas industry is “accustomed to pushing the boundaries of technology,” despite once being known for its slow uptake of new technology—a characteristic the industry shed when lower commodity prices prompted it to focus more on ways to become more efficient.

The sector has already gone deeper below the seafloor; ventured into harsher, remote environments; used real-time monitoring and sensors to optimize drilling; steered drillbits remotely; and processed massive amounts of seismic data—all feats that would have been impossible without digital technologies, according to the IEA.

However, the upstream sector still has room to grow when it comes to digitalization, defined by the IEA as the interaction and convergence between the physical and digital worlds that is rooted in data, analytics and connectivity.

Initially, the focus will be on making the existing digital applications better, the IEA said. The agency used, for example, expanding the use of sensors, which have fallen in price. Today sensors are used to collect an abundance of data, which are used for various purposes including optimizing techniques to boost production. “Such sensors could also be employed to measure environmental performance such as the efficiency or emissions intensity of operations,” the IEA said, mentioning automated drilling rigs and using robots for inspections, repairs and monitoring—all of which are already being done.

But the IEA pointed out that as these technologies are used more often in the industry, costs will fall. “This should lead to increased safety, lower labor costs and increased equipment reliability (due to more frequent inspections and more effective preventative maintenance).”

There are also opportunities for further digitalization in the areas of analysis and processing of large, unstructured datasets such as those generated by seismic surveys, according to the IEA.

“Rapid analysis of data can lead to faster decisions and increase the operating time of drilling rigs, wells and facilities, thereby reducing delays when executing new projects. As a result, this should also lead to lower costs and the more efficient use of capital. The use of more sophisticated processing algorithms could also assist with the finding of new oil and gas fields, the generation of development plans, and the ranking of exploration portfolio options for upstream operators.”

But digitalization also has challenges. Cybersecurity, privacy concerns and potential economic disruptions such as job losses are among them for the entire energy sector. For oil and gas in particular, IEA’s list of potential barriers to further digitalization included the timing of some large, capital-intensive projects being outpaced by quickly evolving technology, aging infrastructure’s inability to accommodate new digital technologies and the costs of retrofits, the industry’s fragmented supply chain, a conservative management culture and needs for a well-developed IT infrastructure and well-trained workforce.

The IEA also presented policy recommendations as the industry moves deeper into digitalization. Dave Turk, acting head of sustainability, technology and outlooks directorate for the IEA, highlighted some of them on the webcast:

  • Build digital expertise within staff;
  • Build flexibility into policies to accommodate new technologies and developments;
  • Experiment by carrying out pilot programs;
  • Monitor energy impacts of digitalization on overall energy demand to find emerging trends;
  • Incorporate digital resilience by design into R&D and product manufacturing; and
  • Learn from others, including positive and cautionary tales.

“The energy system is on the cusp of a new digital era,” Turk said, adding the IEA hopes the report helps decision-makers mitigate challenges associated with digitalization. But given uncertainties concerning technology, policy and behavior, the impacts are difficult to predict, he said. “So much more work needs to be done, including by the IEA itself.”

The IEA plans to focus on “high impact, high uncertainty areas.” These include automation, connectivity and electrification of transport; electricity and smart energy systems; and digitalization and decarbonization.

Velda Addison can be reached at