Aramco Leads Oil Industry Investment in AI
Saudi Aramco is the biggest investor in artificial intelligence in the oil industry. The fact was recently revealed in a report by GlobalData, which also showed the Saudi state major was investing heavily in all sorts of cutting-edge technology. Because this is where competition will be in the future.
Saudi Aramco spent $3.5 billion on research and development last year, GlobalData said in its report, noting the company was active in as many as 250 areas of innovation including, besides AI, drone technology, robotics, and electric vehicles.
As for AI itself, the technology was deployed in areas such as oil exploration, fault monitoring, and cyber threat detection. On the one hand, this adds to evidence about the versatility of artificial intelligence that is driving its growing popularity in the information technology sector and elsewhere. On the other, the information suggests Aramco is actively working on attaining a new sort of competitive edge: a tech-driven one.
The Saudi company is not alone in this, of course. Oil and gas, while traditionally slow to adopt emerging technology, has moved quite fast recently. Bloomberg reported earlier this year that U.S. shale drillers were deploying artificial intelligence to improve drilling efficiency and increase well recovery rates.
The U.S. shale patch is a natural early adopter of such technology because production costs there tend to be generally higher than they are in conventional oil and gas drilling, motivating a higher appetite for new solutions. Now, thanks to tech, these costs are coming down as drilling times accelerate—and accuracy is improving too.
Aramco, on the other hand, is as traditional as oil companies come, at least on the face of it. Below this face, the company appears to be—if not an early, then an eager—adopter of cutting-edge tech to improve its operations, even in lean years like 2023. It also seems Aramco is open to more adventures in tech.
GlobalData reports that Aramco has set up a digital innovation ecosystem dubbed SAIL, or Saudi Accelerated Innovation Laboratory, to partner with other entities, including government agencies and startups, “to foster the development of digital innovation products,” per the report.
“Aramco is also betting on futuristic technologies. The company is closely monitoring the startup ecosystem and has in the recent past invested in several companies such as Pragmatic, which develops flexible semiconductor chips, and Sunrate, a fintech company,” said Sourabh Nyalkalkar, practice head of innovation at GlobalData.
It sounds like Aramco specifically and Saudi Arabia generally are trying to do what the UAE did with construction as a diversification strategy to reduce its almost exclusive income reliance on crude oil. That artificial intelligence, robots, and the rest of the new tech coming out of startups and the Big Tech field, can be used to boost oil production as well must be a very welcome bonus.
According to Evercore ISI, AI and other tech could bring costs in the shale patch down by double digits as soon as this year. “There’ll be significant cost savings, at a minimum double digits, but probably in the 25% to 50% of cost savings in certain scenarios,” Evercore analyst James West told Bloomberg in March.
If it can bring costs down for shale drillers, AI could certainly bring them down for everyone else as well, even for the lowest-cost producers in the world – the Saudis. But cost reduction is only one of what seems like a lot of benefits that the oil industry stands to gain from using the technology such as more productive wells, more accurate exploration, and better threat detection, including not just cybersecurity but spills and leaks. Best of all, the industry has the commodities needed to power the use of electricity-thirsty AI.
Oilprice.com
