The service companies that map underground pockets of oil, drill the wells and lift crude from miles below are generating new amounts of data they never before realized could be valuable.
“There’s no doubt to me, we are producing two resources: the oil and gas, and the data,” said Philippe Herve, a Schlumberger Ltd. veteran who now helps oil companies use artificial intelligence at SparkCognition. “The oil and gas is very clear: it belongs to the operator. But who owns the data?”
Answering that question will mean real money for a global industry that is climbing out of a crude crash. An industry that only uses about 1 percent of the data it generates, according to Baker Hughes, is trying to harness it to see where to pump more oil faster for less money. Transforming to a digital oil field could add almost $1 trillion to the world’s economy by 2025, according to a 2015 study by Oxford Economics and Cisco Consulting Services.
Oil companies have for years bought relatively straightforward data such as seismic files or drilling logs that contractors gather for their customers. The newer, larger batch yet to be harnessed is coming straight off the oil-field equipment itself — the rigs, pipes, pumps and valves.
Estimated spending on digital technology amounts to less than 10 percent of the $8 million average cost of an onshore well in the U.S., said James West, an analyst at Evercore ISI. But that’s expected to climb. More than 7 out of 10 industry executives surveyed by Accenture and Microsoft said they plan to spend more or significantly more on digital technology over the next three to five years. Nearly 40 percent said they’re worried about falling behind peers if they don’t continue to invest in it.
Source/Image courtesy of Bloomberg News