AI revolutionizes oil industry, accelerating drilling and cutting costs

The oil and gas industry is leveraging artificial intelligence (AI) to enhance drilling efficiency and increase recovery rates, marking a significant shift towards digital technology adoption.

The oil industry, often criticized for being slow to adopt new technology, has recently made significant strides in embracing digital technology and artificial intelligence (AI). Over the past decade, there has been a noticeable shift towards digitalization and automation in the energy sector, leading to increased efficiency and cost savings.

One area where AI is making a significant impact is in improving drilling techniques in the shale patch and enhancing the recovery rates of fracked wells. This marks a significant shift in the industry’s approach, which previously focused on using computers for tasks like seismic surveys and pipeline monitoring.


A 2018 KPMG survey revealed that many oil and gas companies were already using or planning to adopt AI, particularly in areas such as predictive analytics and machine learning. These technologies have proven instrumental in improving rig safety, dispatching crews faster, and identifying system failures before they occur.

The U.S. shale patch has emerged as an early adopter of digital technology, as production costs in this region tend to be higher than in conventional drilling. Thanks to AI, drilling times have shortened, leading to cost savings. For example, technology has helped shale drillers reduce the average period for drilling a new well by a day and the period for fracking by three days.

According to Evercore ISI, AI and other technologies could reduce costs in the shale patch by double digits this year. These cost savings could enable higher production, although oil and gas companies are likely to prioritize shareholder returns and capital discipline.

Digital technology adoption is expected to intensify as it can help companies meet climate-related targets. Methane emission tracking and monitoring have become a priority, and AI can play a crucial role in this area. Additionally, AI can improve operational efficiency, such as predicting equipment failure and remote drilling and monitoring.

The integration of AI and digital technology is attracting a new pool of talent to the oil and gas industry. While fewer college-age individuals are opting for careers in oil and gas due to climate concerns and the industry’s cyclical nature, the allure of working in an office environment with cutting-edge technology is changing the industry’s reputation for the better. This shift is not only reshaping the industry but also addressing its talent shortage problem.