How American big oil came to embrace Silicon Valley

Perhaps nothing symbolizes the oil fields of America more than the nodding donkey endlessly pumping oil from the ground. This workhorse of the oil industry remained largely unchanged for a century. After all, when you can sell as much oil as you can produce for $100 a barrel, there is little incentive to invest in efficiency improvements.

The recent crash has changed attitudes, however. Even with the recent oil price recovery following the OPEC-led production cuts, producers need to be comfortable with selling oil at $50/barrel. Given the tentative nature of the recovery, though, it may be wiser to work on the basis of a $40/barrel breakeven price. Technology is no longer about a marginal improvement in profitability—it’s a matter of survival for the industry.

This is why the formerly conservative oil producers of North America are finally turning to the digital world. Rather than resorting to brute force approaches like pumping in more sand or drilling deeper, the data from oil fields can be analysed by computer and used to inform drilling decisions. For example, Biota Technology is helping several companies to identify bankable parcels by comparing the microbes in rock samples to those found in locally extracted oil. This then enables them to map out the best drainage spots, which can substantially improve a well’s output.

According to General Electric Co., only 3 – 5% of oil and gas assets are digitally connected. This includes the wells and the necessary equipment to drill, frack, and maintain production. As for the data that’s collected, 97% is generally neglected. In contrast, EOG Resources Inc., the second largest independent U.S. oil explorer, has embraced data analysis to the point that it has created its own iPhone app to help its field crews work out how hard to frack a particular stretch.

Oil giant ExxonMobil, which produces the circulating oil Mobil DTE Light, is also targeting part of its billion-dollar-a-year research budget at high-performance computing. According to the company’s corporate website, advanced algorithms enable it to analyse vast volumes of data from multiple source and identify key trends and relationships. The output can then be used to determine which choices will deliver the best outcome when dealing with some of the world’s most challenging resource opportunities.

Thanks to its research and development efforts, ExxonMobil was included in the list of the “Top Global 100 Innovators” by Thomson Reuters in 2015.