A Blog by Jonathan Low


Apr 13, 2018

Big Oil Companies Competing With Tech For Digital Talent To Improve Exploration and Production

Every business is a tech business. And as carbon-based energy is increasingly challenged by alternatives, the competition for digital solutions and the people who make them more productive is becoming more intense. JL

Sarah Kent and Christopher Matthews report in the Wall Street Journal:

Big oil companies were early adapters of supercomputers, have poured hundreds of millions into upgrades, and now possess some of the most powerful computers on the planet. The efforts are part of a digital arms race among energy companies, embracing technology to produce fossil fuels more cheaply and efficiently. The companies are seeking to compete with Silicon Valley firms for top data and computer scientists.
Xukai Shen, a geophysicist working at BP BP -0.21% Plc, had a hunch he could solve a riddle that had vexed the company: whether there was a lot of oil hidden beneath a salt dome 7,000 feet underwater in the Gulf of Mexico. So he asked to use the company’s supercomputer exclusively for two weeks to check it out.
Using an algorithm, the 33-year-old with a Stanford PhD harnessed the computer’s massive power last year to produce a clearer seismic image of what lay beneath. The result: a potentially massive oil find. With a clearer picture of the area, BP estimated 200 million barrels of crude lay hidden in the Atlantis oil field, a region the company had been plumbing for decades.
“Basically we found a field within a field,” said Ahmed Hashmi, BP’s head of technology for exploration and production, during a recent tour of the company’s Houston supercomputer, as the machine hummed nearby.
BP is now in love with beefy computer power—and it’s far from the only one in the oil patch. Italy’s Eni E +0.42% SpA has built a computing facility the size of a soccer field outside of Milan, crediting its help in all its most recent oil and gas discoveries. France’s Total SA recently upgraded its Pangea supercomputer, nearly tripling its computing power.
While big oil companies were early adapters of supercomputers, some have poured hundreds of millions into upgrades, and now possess some of the most powerful commercially owned computers on the planet.
The efforts are part of a larger digital arms race among energy companies, which are embracing technology in newfound ways to produce fossil fuels more cheaply and efficiently. Earlier mechanical advances enabling the boom in U.S. oil and gas production and lowering prices have added to the pressure on companies to innovate even further.

Crude Power

Oil companies have some of the most powerful commercially owned supercomputers on the planet.

Top commercial supercomputers
By company and location
The computers are costly, but can reduce the oil exploration process by months and save companies tens of millions of dollars by avoiding misplaced wells. To harness their potential, the companies are increasingly seeking to compete with Silicon Valley firms for top data and computer scientists.
“We’re going all in,” said Bernard Looney, BP’s head of exploration and production. “We’re only scratching the surface today of what’s possible.”
BP is in the middle of a five-year, $100 million investment in its Houston supercomputer. It’s built a 15,000-square-foot room in a 3-story, flood-proof building to house the titan, which currently takes up about 50% of the space and has the computing power of around 50,000 iPhone 7s.
BP claimed it was the most powerful commercial research computer in the world in December. Within a month, however, it was overtaken by Eni’s supercomputer. BP said it has room to expand its computer further.
Not everyone can take BP’s build-your-own approach. Like high-cost deepwater oil projects, in-house supercomputing remains largely the domain of only the world’s biggest oil companies. But smaller players are finding creative ways to take advantage of technological advances.
Devon Energy Corp. , one of the largest U.S. shale oil producers, is putting its data in the cloud so it can use the virtual computing power Microsoft Corp.
“It costs me hundreds of thousands of dollars versus tens of millions,” said Benjamin Williams, Devon’s chief information officer. “You have to decide, am I going to use this giant capacity enough to justify the investment versus the premium I may pay from a cloud provider.”
Mr. Williams said many high performance computing centers are idle 80% of the time, while Devon only pays for supercomputing when it needs it. Devon has a small innovation lab in its Oklahoma City headquarters, where its computer and data scientists can experiment on high-end computers and virtual reality platforms. The company developed three-dimensional visualization tools there that its geologists use to “get inside” Devon’s oil reservoirs.
Exxon Mobil Corp. , the world’s biggest non-state-backed oil company, also outsources its demand for computing power to analyze seismic data and map the rocks it’s planning to drill. Even BP uses outside computers for regular seismic analysis, reserving its giant facility in Texas for cutting-edge research.
How much the digital revolution really changes the century-old oil and gas industry remains to be seen. Some executives and analysts are already warning that companies have unrealistic expectations about the speed of adoption.
John Gibson, who heads the digital innovation team at energy investment bank Tudor Pickering Holt & Co, said most energy companies gutted their research and development funding during the past commodity price crashes, and hasn’t recovered.
“Most of the horizontal drilling and fracking techniques we’re using today were from research dollars that were spent in the early 90s,” Mr. Gibson said. “There is basic research that the industry needs and we rely on academia for it right now.”
BP says it’s already reaping the benefits of experiments with advanced technology.
In Alaska, the company said it crunched 40 years of data on its operations, weather patterns and pipeline corrosion and found ways to maintain its 1,300 miles of pipelines in the state more efficiently by reducing on-site inspections.
The physical inspections—as many as 100,000 locations a year—only found issues 2.5% of the time, and were difficult to perform in a state where temperatures can get so cold that workers can only be in the elements for minutes at a time. With the analysis, BP has managed to reduce inspections 25% and better predict corrosion, Mr. Looney said.


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