In today's newsletter, we'll talk about why Google, Amazon, and Microsoft are getting into the oil business.


The Story

Back in the ’50s, global oil consumption was booming. So much so that experts believed that we would run out of the exhaustible resource. But that didn’t happen. What happened was that countries started investing in technology that made extracting oil from hard-to-access places easier. And so it kept flowing.

Over years of operations, oil and gas companies collected valuable information about their own activities as they mapped the earth’s crust. Their data repository is quite impressive. The problem is, they have no idea what to do with it. Their scientists used to dedicate endless hours to staring at computer screens, trying to glean meaningful insights from data that was simply too much to handle. But now the industry is adopting advanced analytics, automation and Machine Learning to make data interpretation less time consuming and more efficient.

And guess who's leading this technological revolution? Big Tech companies like Google, Microsoft, and Amazon.

We know what you're thinking- Google and Microsoft have always been very vocal about the growing need for clean energy. They have even gone green with their internal operations and paraded their initiatives around for the world to see.

Google has huge, sophisticated data centres that need a lot of energy. In the year 2012, a mere 34% of that energy came from renewable sources. But Google decided to tap into its strengths and harnessed the power of Artificial Intelligence (AI) and Machine Learning (ML) to revamp their energy consumption. By 2018, their data centres were completely powered by clean energy. But good things are rarely left alone, and the company soon realised that it could use similar technology to revolutionise the fossil fuel industry. And that's where they struck oil.

Google, Microsoft, and Amazon have entered into agreements worth billions of dollars to provide automation, cloud, and AI services to prominent oil companies. These contracts aim to streamline oil and gas operations in order to make plundering these pollutants more profitable than ever.

Think about it this way. Big tech companies possess the ability to analyze vast amounts of data quickly, and as we mentioned before, oil companies have huge amounts of data. So tech companies are using technology to provide new insights on drilling strategies, equipment monitoring, well planning and reservoir exploration. AI can use data to figure out the best places to drill. And once the companies start drilling, it can figure out how to streamline operations in order to cut costs and make the whole endeavour more profitable. ML will make sure that this exercise just gets better and more efficient with every attempt. It can also automate tedious tasks.

For example, Shell’s CTO said the company’s ML technology can process seismic data to find geologic faults in two hours at the nominal cost of about $20. Previously, the same task used to take months and tens of thousands of dollars. That is incredible.

Companies can also increase efficiency by using cloud computing to store all their data in one centralized location, so that teams in different parts of the world can access it easily.

Estimates from Accenture revealed that a digital transformation of the oil and gas industry could generate $1.6 trillion of added value for the industry and customers it serves. Clearly the likes of Google, Amazon, and Microsoft are vying for a bite of that value. But maybe they should be calculating the cost to the planet as well?


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