(Bloomberg) – From a dark Houston control room, Rafael Guedes watched on a monitor as a robot took charge of a drilling rig in a North Dakota oil field, locking out the human operator.
Glowing red boxes lit up the screen as an artificial intelligence program took over the distant Nabors Industries Ltd. rig, beaming instructions by satellite and making split-second decisions to drill through the rock as smoothly as possible. Guedes, the company’s director of performance tools, estimates the program from Corva LLC will save the human operator about 5,000 commands while drilling the well and increase the speed by at least 30%.
“This is all automated — the driller doesn’t have to press anything,” said Guedes, as a green line on screen tracked the drill bit’s path underground. “Now you can use your brain power for something else.”
The oil and gas industry has long mostly relegated artificial intelligence to back-office tasks like evaluating seismic surveys, while keeping drilling and hydraulic fracturing firmly in human hands. Now companies are increasingly using AI, machine learning and remote operations to drill faster, suggest better ways to frac and predict when active well pumps will fail.
The goal is for the emerging technology to cut costs and help squeeze more oil from the ground, threatening to undermine efforts by the Organization of the Petroleum Exporting Countries to rein in global oil production and boost prices.
“A shale well gets an 8% recovery rate,” said Subodh Saxena, senior vice president at Nabors. “If that can be improved, the size of the prize is phenomenal.”
Advanced AI is gaining a foothold in the oil field as drillers and producers are relentlessly focused on improving efficiency. While the technology is being tested around the globe, the U.S. is perhaps the most important spot to watch.
The shale basins of Texas, North Dakota and other states have long been laboratories for discovering faster and cheaper ways to pump oil, turning the U.S. into the world’s top producer.
Over the past five years, contractors have shaved a day off the roughly two weeks it takes to drill a well and three days off the 11-day average for fracing one, according to industry data provider Kimberlite International Oilfield Research.
They’ve done it with a broad mix of new technologies and techniques, including drilling horizontal wells up to 3 miles long. Now AI holds the promise of even greater gains.
Improved efficiency should bring lower costs. James West, an analyst with Evercore ISI, expects companies to start touting their cost savings from AI in the next few fiscal quarters. “There’ll be significant cost savings, at a minimum double digits, but probably in the 25% to 50% of cost savings in certain scenarios,” he said.
With deployment just getting underway, it’s too soon to know the potential impact on jobs. But the technology may help companies overcome worker shortages they’ve experienced in recent years. Energy workers worldwide recently surveyed by Airswift Holdings Ltd., an oil-field headhunting firm, indicated an openness to AI, with most saying it could boost their job satisfaction and productivity.
The technology is being tested not just in shale formations but in offshore oil fields. SLB, the world’s biggest oil-services provider, announced in January that it autonomously drilled sections of five wells off the coast of Brazil, leading to a 60% faster drilling time.
Lead image (Credit: World Oil)
