Transforming the Energy Sector: AI Insights from Baker Hughes

Current AI applications in the energy sector

Current AI applications in the energy sector focus on enhancing efficiency and demand forecasting. Companies like Baker Hughes and Schlumberger leverage AI for production optimization and advanced data integration, while Chevron explores new technologies to address industry challenges, indicating a significant shift towards AI-driven solutions.

"Therefore, the notable rise in generative AI could provide upside to our current expectations for natural gas demand to increase by almost 20% between now and 2040." --- (BKR, earning call, 2024/Q2)

"We have many solutions to help customers access resource to our production system and reservoir performance division, and this is showing up in the strong results these divisions are achieving. As this market continues to evolve, we expect to strengthen our portfolio to fully capture this growing opportunity through our pending acquisition of ChampionX. Finally, underpinning nearly everything we do is the power of digital and AI." --- (SLB, earning call, 2024/Q2)

"What we're doing in our venture investing is trying to develop these new technologies, new materials, new novel ways to integrate AI and other kinds of technology systems to help solve some of these problems." --- (CVX, earning call, 2024/Q1)

"We continue to make great progress with our Leucipa production optimization solution in OFSE and drive greater efficiencies and reliability with our Cordant solutions platform in IET, which both leverage AI. The efficiency and productivity benefits of AI will be" --- (BKR, earning call, 2024/Q1)

"New platform accelerates advanced data and AI capabilities at scale for SLB's customers across the energy industry Global energy technology company SLB (NYSE:SLB) today launched the Lumi™ data and AI platform, which integrates advanced artificial intelligence (AI) capabilities—including generative AI—with workflows across the energy value chain." --- (SLB, press release, 2024/09/17)

AI's role in operational efficiency and sustainability

AI is pivotal in enhancing operational efficiency and sustainability in the energy sector, as evidenced by Baker Hughes' deployment of artificial lift services to optimize Petrobras' onshore operations. Additionally, advancements in data technology are driving significant improvements in asset productivity and safety across the industry.

"The second contract will help Petrobras optimize efficiency, reliability and sustainability of its onshore operations in the Bahia-Terra cluster, where artificial lift services will be deployed across 450 wells." --- (BKR, press release, 2024/04/23)

"I think we have been -- as we prepared our core strategy a few years back, we identified that production recovery in particular production chemicals, reservoir chemicals, and lift solutions will be a domain where we need to invest in technology, and we need to explore opportunity to accelerate our market participation because we believe two things: we believe first, that this market will benefit from further innovation, from further integration, from further disruption, and hence create through OpEx, the efficiency gains into production operations, into recovery." --- (SLB, earning call, 2024/Q1)

"For instance, the breakthroughs we’re seeing in data technology offer significant opportunities for both efficiency, asset productivity, improved safety and other performance." --- (CVX, earning call, 2024/Q2)

"This paradigm shift towards simultaneous growth and transformation across our sector positions us well to keep making investments in renewables, storage, and transmission, where we expect to deploy capital not only to realize long term stable cash flows, but at superior returns and delivering adjusted earnings and adjusted earnings per share growth." --- (NEE, Investor Day, 2024/06/11)

"Structural Cost Savings Structural Cost Savings describes decreases in cash opex excluding energy and production taxes as a result of operational efficiencies, workforce reductions, divestment-related reductions, and other cost-savings measures that are expected to be sustainable compared to 2019 levels." --- (XOM, sec filing, 2024/Q1)

Competitive landscape of AI in energy

The competitive landscape of AI in the energy sector is evolving, with companies like BP noting AI's dual impact on electricity demand and operational efficiency. While AI may initially increase demand, it could ultimately lead to reduced energy consumption and enhanced performance, showcasing both challenges and opportunities in the sector.

"Together, we can build a resilient and secure energy ecosystem that meets the challenges of tomorrow." About Palo Alto NetworksPalo Alto Networks is the global cybersecurity leader, committed to making each day safer than the one before with industry-leading, AI-powered solutions in network security, cloud security and security operations." --- (SLB, press release, 2024/08/19)

"And trying to guess and estimate how much that will be is obviously incredibly difficult thing to do, but at least you can sort of form a view about that and that we have tried to build in an impact of that into our outlook.Just to give you a sense of that, that increase in electricity demand or power demand going to data centers because of AI does make a significant impact in some in the growth of electricity in some markets." --- (BP, event transcript, 2024/07/10)

"How much so the net impact of AI, I think, is going to be less than the numbers you see at the moment, which only look at the positive side. And in some sense, there are many commentators out there that actually think that in the medium term, the net impact of AI will be to reduce energy demand, helping the world become more and more efficient and not and more than offsetting that positive impact." --- (BP, event transcript, 2024/07/10)

"It also offers tremendous opportunity to increase yields to drive better performance inside the plants, because it can be modernized significantly over time with very little investment." --- (BP, earning call, 2024/Q2)

"The places that we're seeing tremendous results on our coding. We need 70% less coders from third parties to code as the AI handles most of the coding." --- (BP, earning call, 2024/Q1)

Partnerships driving AI innovation in energy

Partnerships are crucial for driving AI innovation in the energy sector, as highlighted by leaders like Sergio Merchan from Iberdrola, who emphasizes AI's role in advancing smart grids and renewables. Lorenzo Simonelli of Baker Hughes notes their collaboration with Aramco to decarbonize industries, while Microsoft showcases partnerships to enhance renewable energy integration through AI.

""We see AI playing a central role in helping us to deliver the smart grid, renewables, and storage technology that will drive the energy transition forward," said Sergio Merchan, global CIO at Iberdrola." --- (IBERDROLA, press release, 2024/08/14)

"So it's even more critical that companies like Microsoft and our partners that we really remain steadfast in our commitment to drive and accelerate the sustainability progress in our supply chain and value chain to help those around the world accelerate their progress as well." --- (MSFT, event transcript, 2024/08/05)

"Their technologies have been used for Phase 1 and 2 of the Master Gas System, and we look forward to continuing our work together to decarbonize critical industries across Saudi Arabia. 'For over 30 years, Baker Hughes has been a trusted partner in natural gas operations, and our long-standing partnership with Aramco is helping to reduce emissions by transitioning to gas,' said Lorenzo Simonelli." --- (BKR, press release, 2024/04/23)

"We're partnering super closely to build a giant AI infrastructure for them to build their own models and to run their own test cases inside of AWS because they realize that we have the best operating environment and the best performance in order to run their own servers." --- (AMZN, conference, 2024/09/09)

"Noah was talking about the build and to be ready to operate. One of the key areas that we've been seeing progress with AI is how AI is actually helping existing transmission lines bring on new renewable energy capacity at a speed and scale that's much faster." --- (MSFT, Fireside Chat, 2024/08/05)

Future trends in AI for the energy sector

Future trends in AI for the energy sector are centered on leveraging AI and machine learning for enhanced forecasting, optimization, and user-friendly energy management. Companies like Enphase Energy are innovating to address market complexities and improve homeowner economics through sophisticated energy management systems.

"Our software is rapidly evolving to handle the growing complexity of energy markets by using AI and ML for forecasting and optimization." --- (ENPH, earning call, 2024/Q2)

"And if you have a very sophisticated home energy management system, which like we do with all the AI and ML work that we are doing, you can really do some very, very fine optimization and deliver the best economics for the homeowner, a combination of solar, battery, EV charger, and heat pump." --- (ENPH, earning call, 2024/Q1)

"Our software is evolving to manage the increased complexity in energy markets by leveraging AI and ML for forecasting and optimization." --- (ENPH, earning call, 2024/Q1)

"Innovation drives our culture, and we believe in making every aspect of #energymanagement seamless and user-friendly for homeowners, both now and in the future." --- (ENPH, Twitter, 2024/06/26)

"There are problems, but once we know, we solve the problems quickly. I think what you're seeing is this transformation from solar to energy, and I think you should expect this trend to continue." --- (ENPH, earning call, 2024/Q2)

Regulatory challenges for AI in energy

Regulatory challenges for AI in the energy sector include the need for effective translation of legislation into actionable regulations, as highlighted by ExxonMobil's focus on carbon intensity. Duke Energy's legal challenges against EPA regulations further illustrate the complexities that hinder AI implementation, emphasizing the critical role of regulatory frameworks in advancing clean energy technologies.

"In 2023, we worked with a broad range stakeholders to help advance regulatory mechanisms and policies at the state and federal levels that we need to be successful as we advance our clean energy transition." --- (DUK, event transcript, 2024/05/09)

"The challenge is taking the IRA, which I believe rightly focused on carbon intensity and incentivizing carbon intensity, translating that legislation into regulation, and if the regulation reflects the intent of that legislation and writes the rules focused on carbon intensity, that will be enough to justify and to incentivize and give us a return on this investment." --- (XOM, earning call, 2024/Q1)

"I've read all the documents, but just to get your sort of view. We've got a shareholder vote in May that we go in limbo pending regulatory issues, but obviously, importantly, the arbitration." --- (CVX, earning call, 2024/Q1)

"Duke Energy is participating in legal challenges to EPA Rule 111 as a member of Electric Generators for a Sensible Transition, a coalition of similarly affected utilities, and as a member of a utility trade group." --- (DUK, sec filing, 2024/Q2)

"So that's, I think, one of the challenges in that space. But I think my comment was more generally that there is a lot of optimism around the low carbon solution – low carbon businesses in general." --- (XOM, earning call, 2024/Q2)

Impact of AI on workforce dynamics in energy

AI is reshaping workforce dynamics in the energy sector by enhancing productivity and innovation. Companies like ExxonMobil emphasize leveraging their existing workforce for new technologies, while Schlumberger and Halliburton highlight the acceleration of digital tools and AI integration, driving efficiency and operational improvements.

"Our company plans on investing over more than $20,000,000,000 through 2027 on carbon capture and storage, hydrogen and biofuels, ExxonMobil claims it will rely heavily on its existing workforce to execute these changes." --- (XOM, event transcript, 2024/05/29)

"And we have seen that by accelerating accessing this digital portfolio, we will only accelerate this vision of comprehensive digital oilfield, comprehensive digitally enabled pollution optimization. That's where we're aiming, and I believe that this will only accelerate and expand." --- (SLB, event transcript, 2024/04/02)

"I am confident that Landmark's DecisionSpace 365 will expand and add to our customers' productivity and innovation journey.Next, Halliburton's artificial lift product line is growing in the international markets at double the rate of our overall international business." --- (HAL, earning call, 2024/Q2)