Cyclical volatility in the commodity market, supply and demand permutations, operational risks, resource management and capital planning are routine challenges that occupy hearts and minds at energy companies. But their response to the age-old need for making smarter and more efficient decisions in the energy transition era now involves a new age tool – Artificial Intelligence (AI).
From traditional to renewable, AI is reshaping the sector and revolutionizing how energy is produced, distributed, managed and ultimately consumed. More than 90% of all oil and gas companies have invested in AI, according to EY. And those that haven’t so far plan to do so imminently.
Power generation companies have incrementally turned to it for their next-generation systems too and were in many ways early adopters of AI within the energy sphere. Driving deployment is the rising clamor for improved throughput, operational efficiencies and sustainability.
AI As A Service
Usage of AI, and by extension that of quantum computing, machine learning, robotics and advanced data analytics as well as the industrial internet of things (IIoT) is not new in the energy sector. I recollect having such conversations with energy executives nearly a decade ago. What is new is the proliferation of AI and the myriad use cases the industry is discovering for it.
Take traditional energy to begin with. Oil and gas companies are using digital tools for advanced surface analysis and geological assessments, to optimize exploration including better mapping techniques for recoverable volumes from discovered reservoirs, drilling and well designs, and to monitor and adjust well output, flow rate and pressure in real-time.
Integrated oil and gas firms are turning to AI for refinery optimization and making their downstream assets more responsive to changing demand permutations by adjusting output and feedstock requirements, and emissions detection and monitoring. In particular, AI-based imaging technology has come up in leaps and bounds to identify methane plumes and quantify emissions volumes.
Away from traditional energy, renewables and power generation segments are deploying AI for grid management, energy storage, smart residential and commercial real estate power supply, renewable energy supply and demand forecasting, nuclear power plant monitoring, carbon capture, utilization, and storage (CCUS) and more.
Both segments of the energy sphere deploy AI and extended digital tools for reducing downtime, asset tracking and maintenance via using ‘digital twins’, detect defects, health and safety training and management, inventory management and efficient procurement, optimized logistics, back-office process optimization and last but certainly not the least – one of the most critical operational considerations of the modern industrial age – cybersecurity.
While no cybersecurity solution is a 100% foolproof, the sector is rapidly recognizing how AI-led ones could help identify and resolve security breaches real-time and pinpoint vulnerabilities to minimize breaches occurring in the first place.
AI based tools are also bringing about profound changes in the sector’s approach to both brownfield as well as greenfield projects, by providing optimal designs and building solutions, faster project turnarounds and more productive end facilities.
Things Can Only Get Bigger
Based on examples of deployed solutions and anecdotal evidence provided by nearly 30 companies, I believe currently there are at least 75 potential use cases for AI within the energy complex. The opportunity is growing bigger by the year.
According to the International Energy Agency (IEA), the market for AI in the energy sector could be worth $13 billion, while Mordor Intelligence puts oil and gas sector’s spending alone at just over $3 billion for 2024.
Lending weight to such industry projections is this year’s ADIPEC conference and exhibition in Abu Dhabi, United Arab Emirates. The event, often regarded as the world’s largest energy conference and exhibition of its kind attracting nearly 200,000 attendees every year, has allocated a record-breaking 20,000 square feet of exhibition space specifically dedicated to energy AI for its latest round due to be held from November 4 to 7.
“As creators and curators of industry dialog, we see the adoption of AI in the energy sector as a clear market reality. Our new groundbreaking exhibition recognizes this industry trend. It is something we have been working to incorporate in our program for ADIPEC in increments for nearly a decade,” says Christopher Hudson, President of dmg events, the company organizing the event.
The exhibition will highlight the impact AI can have on the energy value chain, while also revealing AI’s impending demand on global energy systems. It will also draw leaders from the energy, technology and government sectors to develop a “strategic roadmap for further integration of AI into the energy landscape,” Hudson added.
That’s after the IEA described energy and AI as the new “power couple”, doubtless with every pun under the sun intended.
Ultimately, as the think-tank notes, AI has the power to give the energy sector much needed agility and flexibility in the transition era and address the vexing business problem of improving predictions of supply and demand. Simply put, energy AI has moved on from being a nascent industry to a multi-billion dollar opportunity.