ExxonMobil and Chevron Share, and Hint at, Benefits of Advanced Technologies

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Written by John Egan for IIR News Intelligence (Sugar Land, Texas)

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Summary

As Corporate America continues to search for high-return use cases that justify rising investments in automation and advanced technologies such as artificial intelligence (AI), oil giants ExxonMobil and Chevron offer some clues about the benefits, and timelines, for technology payoffs.

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Oil & Gas Industry Has Always Been a Technology Industry

Technology has been at the heart of oil and gas company operations since crude oil was discovered at Spindletop 125 years ago. Whether in production, pipelines or refining, finding the right mix of labor and technology has been an ongoing challenge with no one-size-fits-all solution.

In recent years, in an effort to attract younger, more tech-savvy job applicants, oil and gas companies have sought to repackage themselves as sleek, fast-moving tech disrupters, very different from earlier generations of slow-moving, old-economy oil behemoths.

But as companies across Corporate America accelerate their investments in advanced technologies, including artificial intelligence (AI), they may want to approach integrated supermajor oil companies Exxon Mobil Corporation and Chevron Corporation to learn more about the costs, benefits, use cases and payoff periods for investments in advanced technologies.

Transcripts from ExxonMobil's and Chevron's second-quarter earnings calls with analysts offer some specifics and a glimpse of how advanced technologies could transform the industry.

Both supermajors, and others in the Oil Patch, are using advanced technology like AI, machine-learning, 4-D seismology, enterprise resource planning (ERP) tools and voice-recognition software to better characterize reservoirs, extract more from each well with less capital outlays, extend asset lives, break down internal silos, improve worker safety, shorten process times, lower emissions and automate, often remotely, a variety of operations.

For an industry that recovers only about 10% of the oil in a reservoir on first drilling, increasing production while continuing to return capital to shareholders without breaking the bank are corner-office challenges for oil and gas company leaders.

Lenders in the industry are starting to look more carefully at companies' digital maturity, according to a report earlier this summer from the trade outlet Offshore: "Digital maturity is emerging as a risk indicator: Predictive analytics, real-time optimization and data assurance are beginning to influence how lenders and partners gauge operational predictability and project bankability."

What Chevron Said

On July 31, Chevron Chair and Chief Executive Officer Mike Wirth told analysts, "In the Bakken, we're leveraging best practices from our shale and tight business to drive performance improvement, drilling laterals that are on average 28% longer, optimizing workovers and applying advanced chemicals. And we're also maintaining similar production with one less rig."

"When you're leaving 90% of the molecules in the ground, there's a huge incentive to figure out how to unlock all of that," Wirth continued. "And so as we work these technology levers and see performance improvements, it changes your options."

The Chevron chief said advanced technologies improve the company's goal of capital discipline.

"We're already seeing some results" from greater deployment of advanced technologies. "Over the last year and a half or so, we've had five different discoveries or successful appraisal wells in the Gulf of Mexico, in the Partition Zone (between Saudi Arabia and Kuwait), in West Africa and the Eastern Mediterranean. We're already seeing the early signs of this portfolio yielding different outcomes."

During the second quarter, Chevron's production rose about 200,000 barrels per day of oil equivalent (BOE/d) at the low end of the company's capex budget of US$18-US$19 billion. Much of that gain came from the company's US$53 billion acquisition of Hess Incorporated last year, but Chief Financial Officer Eimear Bonner added that an estimated 70% of the company's US$3 billion in structural cost reductions over the last 12 months came from what he called efficiency gains, including a wide-ranging reorganization. But as much as US$1 billion of those savings stemmed from deployment of advanced technologies.

Technology-enabled predictive maintenance on assets detect anomalies faster and minimize lost production. More rigorous benchmarking, again aided by advanced technologies, is optimizing turnarounds.

Bonner added that the company is spending 25% less to extract each barrel of oil now compared to 2025. He credited the gains, elliptically, to "drilling and completion efficiencies, optimizing artificial lift and real-time facility optimization."

By the Numbers

• 10: Current percentage of oil and gas in a reservoir that is recovered
• 40+: Number of new technologies ExxonMobil has either deployed in the field, or is developing, to achieve a corporate goal of doubling recovery rates from oil and gas wells
• 200,000: Increased production in barrels of oil equivalent increase in the Permian Basin reported by Chevron in the second quarter, driven in part by advanced technologies

What ExxonMobil Said

Last December, ExxonMobil leaders told analysts and investors that "accelerating deployment of proprietary technology in a variety of products and markets" was critical to achieving long-term profitable growth and boosting shareholder value. They also detailed efforts to "establish new foundations for high-value growth by discovering, developing, and deploying game-changing solutions."

Company officials said ExxonMobil had deployed "lightweight proppant, technologies to drill extended-reach (20-000-plus feet in length) laterals, surfactant enhanced oil recovery (EOR), AI/machine learning in development planning and enhanced reservoir simulation."

In last December's analyst day presentation, the company said its proprietary lightweight proppant technology alone is responsible for a 20% increase in recovery rates.

Another set of new technologies designed to support the corporate goal of doubling rates of recovery from 2018 rates included "new technologies focused on improving fractures, mobilizing hydrocarbons, reenergizing reservoirs and optimizing development design." Technologies nearing commercial deployment included "AI-enabled frac operations, next-generation surfactants and advanced AI optimization."

These technologies, plus properties acquired by buying Pioneer Natural Resources in 2024, are expected to lower drilling and completion (D&C) costs in the Permian Basin 40% by 2030 and boost production there about 200,000 BOE/d, to 2.5 million BOE/d, by 2030, at a savings of about $5 per barrel compared to an earlier plan.

In announcing its second-quarter earnings on July 31, ExxonMobil Chairman and Chief Executive Officer Darren Woods said the company set another quarterly production record of over 1.8 million BOE/d. "We continue to improve recovery and lower capital costs through new technologies deployed at scale."

The company is using advanced technology to drill more longer laterals -- over 80 four-mile-long laterals were drilled during the first six months of the year -- supported by its Houston-based remote operations center and the use of real-time data that he said helped "ensure safe, efficient, and effective execution."

What Woods called "advanced modeling, fleet reallocations, product reformulations and alternate supply sources" is helping the company avoid approximately US$750 million in annual disruption costs created by tight logistics, and constrained supply chains.

"We've really put a lot of effort into artificial intelligence and training models based on what we've found already (in Guyana), all the drilling that we've done, the characterization of that subsurface, and have unleashed that in the rest of the block and have four new discovery opportunities above and beyond what we thought were opportunities."

Speaking more broadly, the ExxonMobil chief said leading-edge technologies are helping the company reach final investment decisions (FIDs) faster because 4-D seismic technology and big data analysis have uncovered more recoverable oil and gas reserves than were previously thought to exist.

ExxonMobil Senior Vice President and Chief Financial Officer Neil Hansen said that the company's floating production, storage, and offloading (FPSOs) vessels are running at over 98% reliability, producing over 100,000 barrels of oil per day above previous estimates and shortening by two years its projected recovery timeframe, even without higher crude oil prices. Greater use of advanced technologies will help ExxonMobil double its free cash flow from Guyana in 2030 compared to 2025.

Hansen added, "If you look at (our) the extended reach laterals, (use of) surfactants and AI machine learning, all of that is contributing to very strong performance, even before we start to deploy some of these other technologies."

Key Takeaway

• ExxonMobil and Chevron are deploying a variety of advanced technologies throughout their businesses to boost reservoir recovery rates, shorten the amount of time it takes to make a final investment decision (FID) on new projects, boost production, optimize processes and improve worker safety while maintaining capital discipline.

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