This year, the name of Amazon Web Service’s annual Sales Kick-Off event was “Positioning for Success in Oil & Gas.” It was hardly the only tech giant making this move: Google likewise started an oil, gas, and energy division, for which it hired Darryl Willis, a veteran of BP. Meanwhile, even Microsoft has entered the game: it sold its machine vision software to Shell, helped BP build an AI tool, and is helping a subsidiary of Exxon, “to gain new insights into well operations and future drilling possibilities.” While the tech giants have kept these efforts regularly quiet, it is not particularly surprising that they are targeting the industry: the oil and gas industry is ripe for tech optimization that could improve margins, safety, exploration, and production.
So how are the tech giants positioning for oil and gas? And what benefits do they believe they can bring to the volatile and often controversial industry? To find out, NewtonX conducted ten consultations with top executives at the biggest oil and gas conglomerates in the world, including Shell, BP, ExxonMobil, and Chevron. The results of these consultations yielded the data, insights, and conclusions drawn in this article.
Not Enough Energy for Too Many People: What the Tech Industry Is Doing About It
By 2040, the world will need nearly a third more energy than it currently produces to support nearly 2B people. Meanwhile, oil and gas companies are under fire for practices such as fracking, even as governments and companies alike commit to reducing emissions by 50% by 2040. These two competing forces — environmental concerns and the need for increased energy production — have created an industry-wide urgency for improved efficiency and extraction processes.
AWS, Google, and Microsoft want to provide those services. The companies each offer slightly different value propositions, but the core are three things:
- Cloud storage and data processing
- Precision drilling based on machine learning algorithms
- Remote site data transportation through IoT
These three additions to the oil and gas industry aim to help companies identify success wells, automate aspects of drilling, and make extraction as efficient and high-yield as possible. Through improving efficiency, companies intend to lower unnecessary environmental impact — but perhaps more importantly for them, they intend to produce more and lower operational costs.
The Optics: Despite Negative Press, Tech Giants Are Moving Forward Full-Speed
A few weeks ago, ExxonMobil and Microsoft announced that they are partnering in the “largest-ever oil and gas” deal involving cloud computing. The corporations estimate that the partnership will boost production up to 50,000 barrels of oil per day by 2025.
However, while partnerships such as these are mutually beneficial and do contribute to meeting the world’s growing energy needs, tech giants are coming under fire for going back on their supposed commitment to mitigating environmental damage. As one article quipped, “So much for Google’s slogan, ‘Don’t be evil.’” Google has now made deals with oil giants like Anadarko Petroleum and France’s Total. AWS now provides services to dozens of fossil fuel companies, including Mitsui Coal Holdings, Gulfmark Offshore, SEAOil, and Pacific Inter-Link Group. These partnerships come after the companies (Microsoft in particular) made public commitments to powering data warehouses with green energy (notably, however, Amazon’s last commitment was made in 2016, and the company quietly derailed plans for a wind farm in 2017). Many customers and journalists alike see a discrepancy in these promises and the companies’ partnerships with an industry that is responsible for much of the world’s environmental havoc.
Regardless of public scrutiny, however, the three tech giants’ stakes in the oil and gas industry are likely to grow. The need for tech in the industry is massive, and the market opportunity for tech giants is equally appealing. While tech’s involvement with oil and gas companies will end up helping them compete with clean energy alternatives, they will also likely reduce environmental disasters such as spills and low-yield fracking.