The AI in oil and gas market was valued at USD 2,034.9 million in 2021, and it is expected to reach a value of USD 3,669.8 million by 2027, registering a CAGR of 10.81% during the forecast period (2022-2027).
- As the cost of IoT sensors declines, more major oil and gas organizations are bound to start integrating these sensors into their upstream, midstream, and downstream operations, along with AI-enabled predictive analytics.
- Oil and gas remain one of the most highly valued commodities in the energy sector. In recent years, there has been an increased focus on improving efficiency and reducing downtime for the oil and gas companies, as their profits have slashed since 2014 due to fluctuating oil prices. However, as concerns over the environmental impact of energy production and consumption persist, oil and gas companies are actively seeking innovative approaches to achieve their business goals while reducing environmental impact.
- Additionally, according to the International Energy Agency (IEA), in the OECD countries, the oil price declined by 40.6% from March to April 2020, nurturing concerns for oil and gas firms. Hence, companies in the oil and gas sector experiment with contemporary technologies to increase efficiency and revenue. By leveraging AI in oil and gas operations, corporations can design algorithms to guide drills on the landmass and ocean floors.
- In addition, the Oil and Gas Authority (OGA) is making use of AI in parallel ways, owing to the United Kingdom’s first oil and gas National Data Repository (NDR), launched in March 2019. It uses AI to interpret data, which, according to the OGA anticipations, may assist in discovering new oil and gas projections and permitting more production from existing infrastructures.
- Due to the COVID-19 pandemic and lockdowns, the oil and gas industry observed a slump in demand. For instance, oil prices have decreased by 50% since January 2020, with the US market observing a record low. The International Energy Agency reported that oil demand decreased by 29 million barrels per day during April 2020. It was projected to decrease by 23.1 million barrels per day by Q2 2020.
Key Market Trends
Upstream Operations to Witness Significant Growth
- Organizations worldwide are trying to make the exploration and production processes more efficient and optimized. The operations in this field are the major factors driving the usage of AI in oil and gas companies. The AI tools can help oil and gas companies in digitizing records and automate the analysis of the gathered geological data and charts, which can lead to the potential identification of issues, such as pipeline corrosion or increased equipment usage.
- Oil and gas companies can potentially gain crucial insights to improve their business outcomes in their upstream processes with the integration of AI software. This process may involve the feeding of curated data records and information from data sources to the software, including structured documents, PDFs, handwritten notes, audio, or video files.
- Companies like BP and Royal Dutch Shell, which have pledged to achieve net-zero carbon emissions by 2050, are under increasing pressure to minimize their carbon footprint in compliance with the Paris Agreement. Shell is employing AI technology to do predictive maintenance of individual pieces of equipment or entire systems to reduce its carbon footprint. This factor allows the corporations to foresee and handle probable equipment faults before they occur.
- In November 2021, Baker Hughes, an energy technology business, and AIQ, the Abu Dhabi National Oil Company's (ADNOC) artificial intelligence (AI) joint venture with Group 42 (G42), announced a strategic collaboration agreement to create advanced analytics solutions for the global oil and gas industry.
- AI has multiple applications in the oil and gas industry, such as production optimization with computer vision to analyze seismic and subsurface data faster, downtime minimizing for predictive maintenance for oil and gas equipment, reservoir understanding, and modeling for predicting oil corrosion risks to reduce maintenance costs. Moreover, the market has been witnessing many investments by big players in technology.
North America is Expected to Hold a Significant Market Share
- Owing to the increasing adoption of AI technologies across the oilfield operators and service providers and the robust presence of prominent AI software and system suppliers, especially in the United States and Canada, the North American segment is anticipated to account for the largest share of the AI in oil and gas market over the forecast period.
- Factors such as the strong economy, the high adoption rate of AI technologies across the oilfield operators and service providers, a robust presence of prominent AI software and system suppliers, and combined investment by government and private organizations for the development and growth of R&D activities are projected to drive the demand for AI in the oil and gas sector in the region.
- ExxonMobil, one of the leading oil producers in the country, announced its plans to increase the production activity in the Permian Basin of West Texas by producing more than 1 million barrels per day (BPD) of oil equivalent by as early as 2024. This capacity is equivalent to an increase of nearly 80% compared to the present production capacity.
- In addition, owners and operators in the United States recognize how IT-based automation can productively address the unique challenges of the upstream oil and gas sector. For instance, Baker Hughes uses the InForce surface control system, which combines the hydraulic power to activate downhole tools and the control logic to govern an intelligent well system. PLC controls system functions for more complex completion configurations. It is primarily used where remote operations must be done through existing SCADA.
- Among all the enabling technologies, AI is projected to play a significant role in the oil and gas industry in the region. It has also been used to increase the safety of gas stations for preventive maintenance due to the growing number of fire incidences at gas stations in North America.
The AI in oil and gas market is moderately competitive and consists of a few major players holding the market share. The companies are continuously capitalizing on acquisitions to broaden, complement, and enhance their product and service offerings, add new customers and certified personnel, and help expand sales channels.
- August 2021 - Aramco, one of the world's leading integrated energy and chemicals companies, deployed edge-powered computer vision solutions built on the FogHorn Lightning Edge AI platform at multiple sites to improve safety, provide proactive monitoring for equipment failure, and enable automation of drilling equipment and processes. Aramco chose the FogHorn Lightning Edge AI Platform to create an effective framework for future automation, digitalization, and standardization initiatives across several sites. FogHorn's technology is excellent for systems integrators, OEMs, and end customers in various industries, including oil and gas, manufacturing, renewable energy, and electricity and water.
- November 2021 - Infosys collaborated with Shell and launched its first product for its energy customers. The solution leverages artificial intelligence that enables companies to optimize warehouse inventory levels based on historical consumption. By improving demand planning, this innovative solution reduces the time and labor required to complete maintenance operations and brings down the cost of operation.
- The market estimate (ME) sheet in Excel format
- 3 months of analyst support
This product will be delivered within 2 business days.
1.2 Scope of the Study
4.2 Industry Attractiveness - Porter's Five Forces Analysis
4.2.1 Threat of New Entrants
4.2.2 Bargaining Power of Buyers
4.2.3 Bargaining Power of Suppliers
4.2.4 Threat of Substitute Products
4.2.5 Intensity of Competitive Rivalry
4.3 Technology Snapshot - By Application
4.3.1 Quality Control
4.3.2 Production Planning
4.3.3 Predictive Maintenance
4.3.4 Other Applications
4.4 Assessment of the Impact of COVID-19 on the Market Ecosystem
5.1.1 Increasing Focus to Easily Process Big Data
5.1.2 Rising Trend to Reduce Production Cost
5.2 Market Restraints
5.2.1 High Cost of Installation
5.2.2 Lack of Skilled Professionals Across the Oil and Gas Industry
6.2 Service Type
6.2.1 Professional Services
6.2.2 Managed Services
6.3.1 North America
6.3.4 Latin America
6.3.5 Middle-East and Africa
7.1.1 Google LLC
7.1.2 IBM Corporation
7.1.3 FuGenX Technologies Pvt. Ltd
7.1.5 Microsoft Corporation
7.1.6 Intel Corporation
7.1.7 Royal Dutch Shell PLC
7.1.8 PJSC Gazprom Neft
7.1.9 Huawei Technologies Co. Ltd
7.1.10 NVIDIA Corp.
7.1.11 Infosys Limited
A selection of companies mentioned in this report includes:
- Google LLC
- IBM Corporation
- FuGenX Technologies Pvt. Ltd
- Microsoft Corporation
- Intel Corporation
- Royal Dutch Shell PLC
- PJSC Gazprom Neft
- Huawei Technologies Co. Ltd
- NVIDIA Corp.
- Infosys Limited