Gllobal economic losses caused by climate change could cost US$ 23 trillion if no steps are taken to mitigate the climate change, this has been predicted by a global group of 415 investors managing US$ 32 trillion in assets. These investors in their combined statement have said that the gap between real-world emissions and levels required to keep global warming below 2 degrees must be closed by 2030.
Artificial Intelligence Business Director of Zyfra Dmitry Lukovkin makes a case for AI and say that it can help in reducing the polluted emissions by about 20 per cent. “AI-driven solutions implementation for heavy industries have proven effect of 5-30 per cent reduction depending on the industry. The United States with Saudi Arabia and Russia together occupy over 40 per cent of global hydrocarbon production and carbon emission. Annual industry losses due to wellbore instability are estimated to be more than US$ 14 billion,” Lukovkin added.
According to Lukokvin, application of the AI-based drilling optimisation solution alone allows to increase oil production up to 20 per cent and decrease non-productive time by 5-7 per cent, while cutting the losses up to 35 per cent. “Some estimates show that more than 94 per cent of the wells globally will require artificial lifts at some point of time in their asset life cycle. The raw estimation of how much AI solutions could save to global economy could reach US$ 5 trillion by 2030 due to a reduced carbon emission,” the Zyfra’s AI Business Director added.
According to a research study conducted by Infosys, in India 48 per cent of the respondents from energy, oil, gas and utility industries consider AI to be a fundamental driving force behind their organisation’s success, whereas 46 per cent state that their organisations are incorporating AI into the “company ethos”. AI can coordinate and optimise the use of energy resources as well as IoT. The Infosys research study further stresses that data leveraged by AI will be a primary “driver of a future sustainable energy ecosystem that includes an appropriate mix of fossil fuels and renewables.”
In fact, India has risen in the Global Innovation Index rankings for the second year in 2017 and the reason behind it are companies working in the sector of AI and Machine Learning. Both these sectors are being touted as one of the biggest enablers of human civilisations that will help in its transition to a 100 per cent renewables powered grid.
Indian firm Tech Mahindra has also committed itself to create a sustainable future and mitigate the impact of climate change by harnessing next AI.
Also, AI can help oil sector from volatile prices. The world oil sector has been in a turmoil. International Brent crude oil futures fell below US$ 60 per barrel in early trade, but firmed to US$ 60.17 a barrel by 1041 GMT, up 11 cents from the close. Oil and gas giants have declared trillions in losses just a day after the OPEC+ meeting. Russia agreed to cut its supply by 200,000 barrels a day in order to keep prices stable. But that is a temporary measure. In the long-term, the market should face further decline in prices.
United States Geological Survey (USGS) assessed the amount of oil and gas in Texas and New Mexico’s Delaware Basin, the largest assessment it has ever conducted. It is estimated to have 46.3 billion barrels of oil and 281 trillion cubic feet of natural gas.
“What could really save oil companies from crisis is the technological advancement. Companies should cut the supply and enhance efficiency at the same time. Here is where new digital optimisation solution, which uses a wide set of geological and drilling data, comes into play,” Lukokvin opined.
So far China has been unable to overtake leading oil exporters like the US, Russia and Saudi Arabia. Now with the help of AI, China is getting ready to storm the global energy market and undermine the positions of major exporters to become the number 1 oil exporter in the world.
Being a major world energy consumer, Chinese approach towards digitalisation of the Oil and gas industry could dramatically increase the efficiency of its energy sector and help it surge ahead of the current leaders. The studies show that the present leaders in the energy sector will fail to catch-up with China’s use of digital technologies in the coming 5 years.
Digitalisation is inevitable for oil and gas companies to remain competitive in the market structure. The leaders in the market of digitalisation are obvious. As an earlier research by Zyfra showed that China held second place behind the US in terms of AI development, while taking the first in capitals and monetisation. Some 48 per cent of global AI venture funding went to China. Businesses and the Chinese Government have collaborated under a sweeping plan to make the country the world’s primary AI innovation centre by 2030.
When AI technologies will go for actual application, China will benefit from its engineers, entrepreneurs as well as foreign and vast domestic market. The US has shared almost all of its top AI research with Canada and the UK, but China has the advantages that can enable it to eventually leapfrog them.
In petroleum industry as well, China is taking giant strides. Asia Pacific (APAC) is by far the largest region in terms of global refining capacity, with China accounting for approximately 12 per cent of total global capacity in 2018. In the next five years growth will be driven by projects in China and India, as they strive to meet rising demand for oil from the growing economies.
The US capacity has remained constant last year, with no major new refineries. Ageing facilities in Western Europe and Russia have faced tougher competition from newer and complex facilities in APAC and the Middle East that can process lower quality and thus cheaper feed-stocks. Now the primary motivation for investment in digitalisation in oil and gas sector is to improve efficiency. According to Gartner, the “smart oil deposit” concept development could help oil companies to cut cost by 5 per cent and to enhance production volume by 2 per cent. The Chartered Enterprise Risk Actuary (CERA) estimates “smart oil and gas deposit” to cut production cost by 1–6 per cent, while shrinking oil-well downtime by 1–4 per cent and to lower labour intensity up to 25 per cent.
Chinese petroleum -giants have already announced a number of projects under the “smart” concept. China National Offshore Oil Corporation (CNOOC) has signed a production sharing contract (PSC) with Roc Oil and Smart Oil for Weizhou 10-3W oilfield and Block 22/04 (contract area) in the South China Sea. In a bid to align with smart shipping and innovation, Dalian Shipbuilding Industry Co (DSIC) is currently developing China’s first smart crude oil carrier that will be designed to incorporate technology to assist the Captain in operation.
Last year Huawei also announced that it will manufacture the Mobile Edge Computing (MEC) network system for the Ningbo Zhenhai smart refinery. The smart industrial facility venture is a noteworthy development as it undertakes data improvement.
Moreover, China welcomed numerous world-leading digital companies to create for its petroleum -industry and among them are Wison Engineering Ltd, Honeywell and Zyfra Group.
According to Price Waterhouse Cooper (PwC), global GDP is set to increase by 14 per cent because of AI. The technology’s deployment in the decade ahead will add US$ 15.7 trillion to global GDP, with China predicted to take US$ 7 trillion and North America US$ 3.7 trillion, according to the PwC estimates.
In comparison, the AI technologies in India are data oriented. According to an independent research convened by Infosys Utilities companies are implementing AI technologies around big data automation (71 per cent), predictive or prescriptive analytics (57 per cent) and machine learning (52 per cent). Currently, the IT department is the leading user of AI technologies (60 per cent), followed by operations (39 per cent) and business development (33 per cent).