Oil & Gas Industry Turns to Artificial Intelligence for Billions in Savings


Jordan Blum – Houston ChronicleThe oil and natural gas industry is turning to artificial intelligence technology to save billions of dollars in maintenance and production costs.

Houston oilfield services company Baker Hughes, tech giant Microsoft and Silicon Valley artificial intelligence company have signed an agreement to develop and deploy the technology for industry customers around the globe, the companies said Tuesday.

In the oil field, artificial intelligence technology is being used to compile massive amounts of data transmitted by sensors and so-called smart equipment, look for patterns, make predictions and inform decisions by operators.

“Companies that adopt this technology will be the next Amazon, and those that don’t adopt will be the next Sears,” Tom Siebel, founder and CEO, said in an interview.

Baker Hughes and launched a joint venture in June to deploy artificial intelligence in the oil patch. The two will augment the technology using Microsoft’s cloud computing platform Azure.

“The combination of and Baker Hughes is one of the most interesting joint ventures I have seen around digital transformation,” said Kevin Prouty, a group vice president for the Boston energy technology consulting firm IDC Energy. “Taking the artificial intelligence framework from C3 and applying it to the use cases from Baker Hughes is relatively unique.”

Many in the industry believe that artificial intelligence will allow oil and natural gas companies to improve oversight of equipment and develop better maintenance schedules that prevent failures in the field. So far, artificial intelligence remains a tool used by large companies with pipelines and plants and it has yet to be deployed at a large scale by the industry. But many analysts and industry officials believe the potential is there for wider adoption.

“There are literally billions of dollars at stake in savings just from improving equipment and asset uptime,” Prouty said.

Baker Hughes earns roughly one-tenth of its $23 billion in annual revenue from digital products. It is investing into artificial intelligence and other technologies ahead of a global energy transition in which natural gas and tech-dependent renewables such as wind and solar will make up a larger percentage of the power generation mix.

That transition is also taking place at the same time that the energy industry is adopting more digital services and technology. Baker Hughes CEO Lorenzo Simonelli said the agreement with and Microsoft allows each company to tap into the industry’s digital transformation while focusing on individual areas of expertise.

“It’s very tough for an industrial company to be a software company and it’s very tough for a software company to have the experience of an industrial company, and it’s very tough to be at the cutting edge of artificial intelligence,” Simonelli said. “When you bring together these three companies, you get a capability that helps our customers be successful. That’s what is so powerful about this combination.”

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