*What’s The Future
I was asked to give a short talk at the UpstreamIntel Conference in Aberdeen earlier this week. The topic for the talk was suitably forward thinking: “What will the Digital Oil and Gas Industry look like in 2030?”
The challenge for any technologist in making predictions is that often these predictions tend to be about things that are abstract for most people. The technology industry has been fantastic at making predictions about how things like processing power and available storage will increase over the long term but we have assumed it to be almost self-evident the impact that such changes would have.
For this talk I wanted to shift the focus away from the pure technological towards what the potential outcomes could be. As I was constrained in time I focused on the 3 key areas: Sharing; Robotics; and Artificial Intelligence (AI), looking at how these are likely to affect society in general and then reflect this through to the Oil and Gas Industry.
Over the last few years the Sharing or Gig Economy has become a disruptive force in many industries. Companies such as Uber and AirBnB have taken traditional business models and turned them on their heads: Uber is now the largest Taxi company on the planet yet owns no vehicles; AirBnB is the largest hotel company despite owning no hotels. Perhaps the most interesting statistics I have read recently about how this kind of sharing is likely to impact our everyday lives is how this will affect car ownership. Many analysts now believe that car ownership is likely to decrease dramatically over the next decade with some predicting that it will drop 80% of current levels in the US . Here in the UK I believe it is possible that as little as 5% of us will own a car by 2030.
For the Oil and Gas industry this means that sharing resources and services, something that is not always commonplace, is likely to become second nature. Only by sharing resources and collaborating en masse can the industry hope to achieve the sorts of cost reductions necessary to see the aging UKCS basin retain any kind of competitive place in the global oil market. I believe that through better sharing and other technological advances the Oil and Gas industry may be able to reduce its operating costs to less than $5/boe.
The capabilities of robots are advancing rapidly on the back of advances in both computing and sensor technology. A study conducted by academics at Oxford University in how susceptible today’s jobs are to automation suggested that 47% of jobs in the UK economy have a high probably of being automated due to advances in technology. As a country the speed at which this automation is likely to occur may have a dramatic effect on unemployment rates and I believe that unemployment rates will spike and we may see as many as 35% of workers in the UK out of a job.
For the Oil and Gas industry this may have a dramatic effect. Given the traditionally competing pressures of improving safety whilst reducing costs the shift towards automation and particularly advanced robotics is likely to come even quicker in the industry than elsewhere. I believe this may have a disruptive effect on the Oil and Gas and the employee numbers could be decimated by 2030 with the industry employing as few as 10,000 people in 2030.
The final area of change will be driven through advances in AI or more specifically Machine Learning. A decade ago autonomous vehicles were almost science fiction, today it’s possible to walk into a showroom and buy a vehicle that has some form of self-driving capability. Some car makers are already claiming to have achieved full self-driving capability, posting videos to support their claims.
Where AI differs from other advances in technology is that it is already having a disruptive impact on the traditional professions. AI is already being applied to do much of the work undertaken traditionally by accountants, lawyers and even doctors. This automation of intelligence has no bounds. A recent World Economic Forum report suggested that by 2030 we will have seen the first AI join the board of an American stock market S&P 500 Index business.
For my part I believe that this will happen but perhaps more interestingly I believe that the UK Government is likely to have its first AI cabinet member.
The Oil and Gas Industry has only just started to scratch the surface on AI and the impact it will have will be huge. Whilst it will almost certainly have a negative impact on jobs it may yield tremendous advances in exploration success rates and operational efficiencies. I believe by using AI it may be possible to achieve commercial success rates of 90% in the UKCS in 2030.
In this talk I covered 3 areas where technology is advancing rapidly and where the impact of this advancement is likely to be striking. The predictions I made are just that, predictions, but I do believe that each of them will occur. We stand on the verge of a new industrial revolution and the changes we will see over the next decade will have a huge impact on all our daily lives. The Oil and Gas industry will, like all of us, need to understand the changes coming and where possible embrace them.
Neil Logan is the chief executive officer of Incremental Group.