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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Big Tech Is Under Pressure To Turn Its Back On Big Oil

  • Big Tech has come under fire for helping Big Oil produce more oil, a move that appears to go counter to the promises tech companies have made about reducing emissions.
  • In reality, however, Big Tech is helping to reduce both the danger associated with oil extraction and the energy waste that comes from drilling dry wells.
  • The world needs cheap energy more than ever, and the global tech giants have an important role to play in making energy extraction cheaper and more efficient.

Businesses these days need to be extra-careful in their dealings with other industries - especially the oil industry. Guilt by association is instantaneous for anyone that does business with the pariahs of the corporate world. And now Big Tech is in the spotlight.

Microsoft, Amazon, and their peers have been working with the oil industry for years - ever since the oil industry realized that entering the digital age might not be such a bad idea.

Big Tech’s software has been essential for optimizing oil and gas exploration and production, making the industry crucial for Big Oil’s recent financial success, along with oil prices.

Bloomberg recently noted in an article on Big Oil and Big Tech how Big Tech had been making transition commitments, but in the meantime, it has been helping Big Oil increase production, which has prompted criticism.

According to the article, Big Tech is justifying its continued work with the oil industry by arguing that its work is actually helping to bring about the transition to a lower-carbon energy future. Some critics, however, are not convinced. The report cited a former Microsoft engineer who noted, “if you do anything more efficiently, it gets done more.” 

This appears to be a problem for those who advocate for oil staying in the ground.

Indeed, efficiency enhances output. But judging by the oil market balance forecast, Big Oil has not exactly been in an all-out production growth mode recently. Big Oil has been itself in a transition mode, very much like Big Tech, advertising its acquisitions in the wind and solar space, promoting its emission-cutting efforts, and in Shell’s case, urgently selling assets to comply with a court ruling that ordered it to slash emissions by 45 percent from 2019 levels by 2030.

The critic cited by Bloomberg above quit Microsoft because of its continued work with oil supermajors. Employee activism is a well-documented phenomenon in the Big Tech sphere: employees from Amazon and Google, for example, staged protests and pressured management to stop its dealings with Big Oil because of the climate before the pandemic.

At Microsoft, some workers challenged the company’s continued business dealings with Big Oil at a meeting in 2019, suggesting it was unethical. According to a USA Today report about that meeting, chief executive Satya Nadella defended Big Oil, saying these companies were investing heavily in sustainable production research and development.

“There’s no fossil fuel CEO who sits there and says, ‘You know, I’m just gonna deny climate change,‘” Nadella said, according to a transcript provided by Microsoft workers who were at the meeting. “If anything, they’re all saying, ‘Let us have, in fact, the regulation, the pricing mechanisms that get us to this future.’”

Critics insist that Big Tech’s affair with Big Oil contributes to more emissions. Yet the truth of the matter is that the increased efficiency that this affair actually saves energy - because it saves effort.

A big part of what Big Tech does for Big Oil is crunching massive amounts of data generated during exploration activities. This data analysis helps the oil company pick the optimal drilling spot, reducing the danger of a well coming up dry. The fewer wells you need to drill, the less energy you use. This will not be enough for critics who want all oil production to stop, but this is not happening anytime soon.

That’s not all, either. Technology is helping the oil industry become safer. Smart tech for oil field workers and site inspectors and drone deployment for pipeline monitoring are but a couple of the ways in which technology can be good not just for the oil industry but for the environment.

Those exclusively focused on carbon emissions, however, are not happy. Big Tech’s cloud computing services are boosting Big Oil’s output. This is bad for Big Tech’s own emission-cutting targets. But blaming it all on Big Oil would be taking it too far.

Amazon, for instance, reported an 18-percent annual increase in its emissions for 2021 because of its booming business during the pandemic. Compared to 2019, when the company first reported emissions, its footprint was 40 percent higher. This had nothing to do with its doing business with Big Oil. It had to do with the need for more planes and trucks to deliver products to customers amid a pandemic that kept millions at home for months on end.

In 2019, Big Oil’s investments in cloud computing were estimated at some $20 billion. While Google is out of this market after employees won the pressure game they played against the company’s management, the world still needs more oil than it is getting right now. The world desperately needs cheap energy, and Big Tech is helping Big Oil to provide it.

By Irina Slav for Oilprice.com

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