Most Complex Challenges in Upstream Oil & Gas Industry

The adoption of artificial intelligence is changing the world vigorously as system process automation has become the first priority of multinational companies.

U.S. Bureau of Economic Analysis Quoted– In 2020, the United States spent over $708 billion in the research and development sector, whereas $532 billion of investment came from the private sector. In short, the United States’ investment in the R & D sector was 4% of the country’s GDP.

Now, if we talk about the oil and gas industry, almost 35% of the total research and development cost was invested in this sector by O&G enterprises. The O&G extraction process starts from the upstream oil & gas industry then ends up downstream. But let’s discuss what role the upstream oil & gas industry plays and the challenges in oil and gas industry.

What Is Upstream?

The upstream is an initial stage of oil and gas with exploration, drilling, extraction, and production of petrochemicals and gases. It includes the process as well as a methodology of geological survey and finding locations for natural reservoirs of crude oil and natural gas. The O&G companies find new opportunities to invest in hydrocarbon fields and also trade bi-products extracted in the upstream phase. Moreover, the upstream is also called exploration and production.

The explorations and production phase involves extracting raw materials from wells and mines. Almost every stage in E&P has some challenges associated with it. The addition of artificial intelligence and machine learning is overcoming these challenges in oil and gas industry.

Challenges in Upstream Oil & Gas Industry

The upstream oil and gas industry is an initial stage in O&G production. It’s also typical to streamline the initial stage due to high costs, expensive equipment, and some other challenges associated with it. In the meantime, let’s elaborate on some challenges in the upstream oil and gas industry.

High Exploration and Drilling Costs

The upstream starts from exploration and drilling, where geological surveys are conducted to check the existence of fossil fuels. After finding some traces, these fields are explored through the manual process and techniques of field exploration.

The drilling costs depend upon the depth of the well and the daily rig rate. Onshore exploration and drilling may cost $100,000/day while offshore drilling (deepwater, seashore, and more) may cost up to $800,000/day depending upon the morphology of the exploration field.

Furthermore, onsite drilling encompasses for extraction of oil and gas, which requires human labor, manually operating machinery and some meteorological equipment. Thus, conventionally, it’s the most complex process overall without Artificial Intelligence and Machine Learning.

Delays in Automatic Production Plants

If you’re not putting your efforts in the right direction, you are exhausting your resources instead of recasting them into leads. Here we have some proven experiences where automatic production plants result in delays.

  • Inefficient integration of IoT devices or sensors for tracking resources may delay automatic production plans.
  • Inaccurate deployed automatic plants due to outdated technology.
  • Manual system maintenance and refineries installations.
  • Untrained labor to handle raw materials.
  • The manual process of crude oil and gas management.

Increased Environmental Pressures & Regulations

As the world is growing, the consumption of fossil fuels is also increasing, resulting in global warming. According to the Environmental Protection Agency (EPA) of the United States, CO2 emission has increased by 90% due to the combustion of fossil fuels since 1970, from which 78% of pollution is from industries.

So, the US Environmental Protection Agency (EPA) has imposed restrictions on Oil & Gas companies with heavy taxes and penalties to efficiently extract fossil fuels while keeping demand/consumption in balance.

Unreliable & Manual Operations

The manual process upstream leads to delays in regular operations. It includes a bundle of responsibilities in day-to-day routines that includes overheads in the whole process from exploration to extraction of crude products. The upstream oil & gas industry faces the following issues due to unreliable and manual processes.

  • Repetitive Tasks
  • Costly Process
  • Time Consuming
  • Reporting Difficulties
  • Iterative Documentation

Costly Equipment Failures and Maintenance

Among other challenges, the oil and gas industry also encounters huge maintenance issues and heavy costs in outsourcing equipment and drillings to extract raw products. For instance, the exploration field includes geographical surveys, quality inspections, and the availability of raw materials. During the whole process, a lot of machinery is used, which results in massive maintenance costs & high probability of equipment failure.

Engineering and Construction

The upstream oil & gas industry requires a lot of resources, including metallurgical engineering and civil engineering teams, to check the exploration, drilling, and extraction process. The civil engineering teams construct hurdles, temporary concrete reservoirs, and bridges.
On the other hand, metallurgy teams inspect onsite Well positions and the availability of raw fossil fuels. It’s also a headache for higher management to keep everything on track to keep the budget and company resources in balance.

In the meantime, robotics and artificial intelligence are taking these overheads away through process automation. Robotics will lessen human power involvement and result in more accurate operations and decision-making. On the other hand, artificial intelligence will automate data collected throughout the whole upstream process.

Delayed Offshore and Onshore Drilling

It’s between the significant challenges to oil and gas industry where onshore and offshore drilling are delayed due to external factors. In onshore and offshore drilling, hydraulic fracturing ensures the availability of water. So, digital transformation using process-generated data makes drilling accurate and fast using data analytics, data forecasting & visualization of trends and outliers.

Odyssey Analytics as Upstream Oil & Gas Partner: One
Solution to All Challenges

As a data forecasting and time series analytics company, we assist energy, commodity, oil, and gas companies with the challenges they face during regular operations to get a flexible solution to their problems. Odyssey Analytics provides answers to upstream oil and gas companies in their everyday operations through data analytics generated by the respective machinery and IoT sensors.

  • Digital transformation from conventional infrastructure.
  • Data-driven approach towards increasing ROI.
  • Integration of computer vision to monitor activities.
  • Risk prediction towards drilling or extraction process.
  • Corrosion Detection With Deep Learning Models.

Furthermore, Odyssey Analytics enables companies to predict future instances based on historical data analysis using forecasting tools and techniques and benefits oil and gas companies by diminishing the above-discussed changes with the following facilities.

Production Forecasting

Upstream oil and gas companies use forecasting to predict the production of their wells and fields.

Exploration Forecasting

Businesses use forecasting to predict the likelihood of finding new reserves.

Reservoir Forecasting

Businesses use forecasting to predict the behavior of reservoirs and the extraction of fossil fuels.

Market Forecasting

Upstream oil and gas companies use forecasting to predict the future demand and prices of fossil fuels i.e Oil and Gas, Natural gas & more.

We help oil and gas companies through data to streamline the regular & novel problems they face from upstream to downstream. Do you have any revolutionary ideas to facilitate your business? Drop us an email here ✉️⠀ or visit our website 🌐

Frequently Asked Questions

What are the sectors of the Oil and Gas Industry?

The oil and gas industry is segmented into upstream, midstream, and downstream phases. Every stage has its predefined operations and regulations. The extraction and production process is handled under the upstream phase. Raw O&G processing, storing, and transporting is operated under the midstream, while the downstream phase includes refining and oil sourcing processes.

What are the best upstream companies in oil and gas using artificial intelligence?

The best upstream companies in oil and gas are practicing artificial intelligence in their regular operations. These companies are the world’s leading O&G brand which generates billions of dollars in return through the petrochemicals trade.

  • ExxonMobil
  • Saudi Aramco
  • Shell plc
  • Chevron Corporation
  • PetroChina
  • Sinopec

What are the challenges in oil and gas industry?

The oil and gas industry has some challenges associated with it. These disputes put oil and gas companies at risk of losing business gains. Here we have some challenges in oil and gas industry that O&G companies are witnessing.

  • High Cost of Exploration and Drilling
  • Delays in Automatic Production Plants
  • Unreliable & Manual Operations
  • Costly Equipment Failures and Maintenance
  • Delayed Offshore and Onshore Drilling