In the face of sliding oil prices, oil and gas companies are increasingly embracing new data tools to help cut costs and manage resources more efficiently, according to a new report.
The slide in oil prices —from over $100 last year to $38 earlier this month— might be good for drivers. But the price drop is shaking up the U.S. oil industry by depressing profits and causing companies to cut jobs.
BP’s CEO Bob Dudley said earlier this year that the oil industry had been living in a “world of luxury” for the last few years as prices remained above $100 a barrel. BP itself posted a $6.3 billion loss in the most recent quarter and warned of more layoffs ahead.
In this new world of low and volatile oil prices, energy companies are turning to data tools — sensor networks, algorithms, mobile tech, and computing — to help lower costs and to eek out as much efficiency as possible from oil infrastructure, according to Lux Research, which published the report about the energy industry’s increasing use of data.
BP is working with GE GE, and its software Predix, to make BP’s oil wells smarter. By the end of the year, BP says it will have 650 wells connected, with each well dumping roughly half a million data points every 15 seconds into GE’s software.
Previously, BP had built its own software to handle the data from its wells. BP also has what it calls the world’s largest supercomputer for commercial research that has 2.2 petaflops of computing power (a measure of a computer’s processing speed). BP says the facility handles enough data to “fill 30 miles worth of 1 gigabyte memory sticks lined up end to end.”
The growing market for oil data is also a boon for startups. Silicon Valley startup Tachyus has developed data models that the company says are being used at 6,000 oil wells, helping oil operators increase oil production by an average of 20% to 30%.
Tachyus’ software can determine how best to stimulate a specific oil well, can calculate the optimal water injection rate to stimulate the well, and can predict if there might be equipment mechanical failures at wells across an oil field. The company recently closed funding from Founders Fund, the venture capital firm created by former PayPal founders including Peter Thiel.
All of these data tools are meant to help oil companies cut costs or manage their oil assets more efficiently. Natural gas companies are using the same types of tools to manage gas wells, identify new gas wells, and cut gas leaks on pipes.