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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 Still Loves The Oil Business

When Google earlier this year announced that it would stop making AI products for the oil and gas industry, prompted by a revelatory report by Greenpeace, it was a signal that, like banks, Big Tech may start distancing itself from the fossil fuel industry. But not everyone has been so suggestible: IBM just announced a partnership with Schlumberger in cloud computing. Tech and oil may still have a future together, and that might be good for everyone, even Greenpeace. The IBM-Schlumberger partnership, which also includes Red Hat, is focused on cloud services and aims to accelerate the oil industry's shift to a more digital mode of operation.

"The energy industry is transforming as organizations look for efficient new ways to power their operations, adopt digital technologies to create a competitive advantage, and innovate and integrate workflows to make faster and better decisions," the chief executive of Red Hat said in the press release announcing the tie-up.

Indeed, the energy industry is transforming, and the pandemic has been a sort of a kick in the backside to accelerate this transformation. As Covid-19 cases sent platform and field workers packing and emptied offices, many day-to-day operations in the industry went remote. This was possible thanks to digital technology, including cloud. In fact, some of the trends that the pandemic created may become long-term as they save costs at a time where every dollar matters.

It seems that oil and tech go pretty well together. IBM is not the only tech giant to team up with an oil major recently. Just a month ago, Microsoft opened up its cloud platform to Petrobras. The Brazilian company had been testing the platform even before the crisis, but when it struck, and the company had to have staff work from home, it fast-tracked the deployment of the platform, an industry executive told Bloomberg in August.

What these partnerships basically do for oil is they make exploration drilling a lot more accurate and production much more efficient. This is, of course, good for the industry because it ultimately saves costs. But accurate exploration drilling and efficient production is also good from an environmental standpoint: it means less drilling and cleaner drilling.

Microsoft was also a target of Greenpeace criticism in May when the organization published its "How Tech Companies are Helping Big Oil Profit from Climate Destruction" report that led to Google's—partial—pullout from the oil and gas industry. Unlike it, Microsoft stood its ground.

Related: Citi Bank Sees $60 Oil In 2021

"The significance and complexity of the task ahead is incredible and will require contributions from every person and organization on the planet," the tech giant said in a blog post in January this year, in which it pledged to become carbon negative by 2030.

"That's why we are committed to continuing to work with all our customers, including those in the oil and gas business, to help them meet today's business demands while innovating together to achieve the business needs of a net zero carbon future. Continued improvement in standards of living around the world will require more energy, not less. It's imperative that we enable energy companies to transition, including to renewable energy and to the development and use of negative emission technologies like carbon capture and storage and direct air capture."

Some might say this is simply a justification for Microsoft's continued business with the oil industry, but the company certainly has a point: global energy demand, despite the pandemic, will continue rising over the long term. Every authority on energy, including the IEA, agrees that this demand will be impossible to satisfy with solar and wind farms alone. It makes sense, then, to help oil and gas companies become cleaner.

The IBM-Schlumberger partnership promises "seamless access to a hybrid cloud platform in all countries across the globe for deployment in any basin, for any operator," according to Schlumberger CEO Olivier Le Peuch. This would certainly help streamline many operations, and streamlining operations tends to reduce carbon emissions by its very definition. And there are other things with which Big Tech can help Big Oil: carbon trackers, for example, are all the rage now that investors are pressuring oil companies into making their carbon footprint public.

Greenpeace applauded Google's decision to stop making AI products for Big Oil. But the move meant Google willingly gave up Big Oil's business. The company is large enough to not feel any negative effect from this, perhaps. Still, it appears that at least two of Google's peers are of a more pragmatic bend. The industry's shift to a lower-carbon footprint hinges on digital technology. Some of it Schlumberger and the rest of the majors can develop on their own, but it's always better—and things happen faster—if you have help. The marriage of Big Oil and Big Tech has the potential to benefit everyone, not just the two industries involved in it.

By Irina Slav for Oilprice.com

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