AI In Downstream Oil and Gas Sector

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September 16, 2022


AI / Oil & Gas


AI In Downstream Oil and Gas Sector

The oil industry is an entity that seems to be powerful and on the cutting edge of technology. In fact big oil companies have been known to have used advanced AI algorithms to predict the future trends involving oil and gas production for years. Yet some aspects of the oil and gas despite being powerful have only recently begun using AI’s to their fullest.

When it comes to downstream operations most companies they’ve done their best to take advantage of machine learning systems, data collecting and similar low key AI algorithms, but are reluctant to use full AI programs. They have implemented AI’s in the past, just not as often as other aspects of their own industries.

For a quick recap downstream operations are processes involved in converting oil and gas into the finished product. These include refining crude oil into gasoline, natural gas liquids, diesel, and a variety of other energy sources. They are the ones who are creating fuel sources and figuring out where it goes and for how much.

There was even a study by The Journal of Petroleum Exploration and Production Technology about big data, a form of AI assistance that stated, it stated “International Data Corporation Energy took one survey in 2012, based on that about 70% of US oil companies were unaware from big data and its applications in oil and gas industry.” In general AI isn’t used as often as other sectors. This isn’t necessarily a bad thing, if companies don’t need to adopt AI in full capacity they don’t have to, that however has changed.

Why the Sudden Need For AI

Oftentimes when there is a crisis that requires big changes in downstream operation most companies turn to human experts rather than machines. Normally when experts make decisions they would turn to conventional models of data. How much product is available right now, who is demanding it, the volatility of the market? These are all classic ways of doing business. They are usually done so without too much AI involvement.

It makes some amount of sense when you have got sick you want a doctor not a computer program, when your plane hits turbulence you want a veteran pilot not the autopilot. In the past when there was an economic downturn or any severely negative aspect that affected downstream operations experts could take the time they needed to fix the situation.

Unfortunately one of the biggest factors for change in the world right now is Covid-19, and there really isn’t a veteran expert on how to get through these times. There hasn’t ever been a world affecting virus combined with an economic downturn with the addition of a major populous that is housebound, a lock down of countries and a strong renewable resources industry at once. This is where AI can help experts rather than outright replace them.

Giving All The Data

One of the first things AI’s can do is sift through huge amounts of information and are able to get the right data to the right leaders at the times when it is necessary. These programs are essentially evidence gathering for higher ups, just at an unprecedented speed and accuracy not known to humans. When an expert has all the data in front of them quickly it can give them a much needed advantage when making decisions, especially in dire times.

Giving Option To Experts

The other big thing AI’s are doing is focusing on as many specific regions as possible. The idea behind this is to get small scale solutions to many different areas and oftentimes the solutions are time sensitive. An example of this is lowering the price of oil in a smaller region the economy is weaker. The AI shows to an expert and lets them make a decision on whether lowering said price in one area for a short time is worth the risk to make small gains. If yes the decision is made and an expert is given another area, if no they are given another possible solution or the decisions to leave that area along entirely.

These ideas and practices aren’t new or game changing, but AI’s are helping experts continuously monitor and access these time sensitive situations with enough speed to do something. It gives experts a chance to implement unique solutions to these very unique times.

What it boils down to is that AI’s are showing different plans for much smaller areas. Rather than have larger generic complex plans to save downstream operations across the globe AI’s are presenting unique two or three point plans across many smaller regions that need to be done quickly to be profitable.

Both of these options can be done together and neither is better or worse than the other, but with AI’s help there are more options instead of less. It should be remembered that the human experts are not obsolete in this equation, there is no situation that doesn’t involve them. Humans still need to program and in many cases reprogram these algorithms to get them the data to make these calls, it just shows that AI’s are presenting alternatives that can still make money, while lightening the load a bit.

Something To Consider

What’s worth looking at here is that downstream operations have had access to AI but never really needed to utilize them to their full extent. It literally took a global pandemic for a major oil and gas sector to use AI’s to the best of their ability. That being said artificial intelligence has proven that it is still the most powerful when combined with experts that know what they are doing.

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