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(Bloomberg) — It’s been a summer for Big Oil. ExxonMobil Corp. and Chevron Corp. posted record profits as energy prices rose. The new US climate law includes concessions for oil and gas companies.
There are other silent users: Microsoft Corporation, Amazon.com Inc. And other cloud services companies are increasingly turning to the computing horsepower behind the oil giants’ efforts to find and extract more oil and natural gas.
Among other things, Microsoft enabled Exxon to analyze oil field data. Amazon is helping drillers run simulations to simulate how much oil they can extract from existing wells.
It’s an uncomfortable sight for companies that have pledged to reduce their own emissions. Microsoft in 2010 Amazon has pledged to remove more carbon from the atmosphere than it emits by 2030, while Amazon has committed to eliminating greenhouse gases from its operations by 2040.
Both companies secure their contracts with the oil industry by pledging to accelerate the transition from fossil fuels to sources that emit little or no carbon dioxide. And each is quick to offer examples of how they can help the oil industry’s journey to a greener future. Microsoft and Chevron are working on a project to turn agricultural waste into fuel; Amazon Web Services software helps Marathon Petroleum Corporation identify and eliminate methane leaks. At the same time, Microsoft and Amazon have said that making oil companies more efficient is part of their sustainability efforts, helping their customers avoid unnecessary emissions from old data centers and beyond, including error-prone software.
But neither company has provided evidence that these projects are succeeding or that they offset the environmental damage caused by increased oil and gas production from their largest customers. ASS Energy chief Arno van den Haack said his company is helping oil industry customers meet emissions reduction goals, but he didn’t have the numbers to back up that assertion. “There is no one solution or one goal,” he said. A Microsoft spokesperson said the company doesn’t have access to customer data, but Power Partners “shared some of the successes we’re proud of.”
Such statements have angered critics who say cloud providers’ contracts with the oil industry are prolonging the life of fossil fuels, tarnishing their green credentials and risking climate change. “If you do something efficiently, it will do more,” argued David Carter, an engineer who left Microsoft last year because the company continued to work with the oil industry. Rob Day, co-founder of Spring Lane Capital, a sustainability-focused private equity firm, credits cloud providers with investing heavily in solar and wind projects to boost their business. “On the other hand, it’s not enough. They are making oil and gas drilling more profitable. Four points.”
The criticism hasn’t caused Microsoft and Amazon to retreat from the oil sector, but Alphabet Inc.’s third-ranked cloud player, Google, appears to have slowed down employee activity.
“Dirty Little Secret.”
Tech giants began courting oil companies several years ago, eager for business in the lucrative but technologically backward industry. Initially, Amazon, Microsoft and Google struggled to sell the benefits of their mammoth computing power. Oil executives have a hard time putting data on the cloud and exposing valuable trade secrets as well-tested information.
But the sector was riddled with inefficiencies. Daryl Willis, Microsoft’s vice president of energy, estimates that 90% of the geological and operational data oil and gas companies collect is unused, sitting in spreadsheets or files. Meanwhile, the mathematical models used for decades to estimate how much oil a well would produce were generating more than educated guesses.
“Ninety-nine percent of what goes into these models is novel,” said Jonathan Carter, who worked in technology for the European energy company’s exploration division from 2012 to 2016. Because we make a lot of money in the oil industry.
If there’s one thing cloud providers do well, it’s churning out large amounts of data quickly. Before Carter, who now teaches uncertainty and risk assessment at Coventry University, started working with AWS, it took the energy company weeks to create a few dozen images of the oil reservoir. Using AWS software, EON can run 60,000 simulations in a few days, he says, helping the company pinpoint exactly where to drill. (EON says it is diversifying its oil and gas exploration business and investing in “climate-friendly customer solutions”.)
Cloud tools can help model and scale how much carbon rigs produce, said Rajeev Sonthalia, president of oil services firm Schlumberger Ltd. . “As long as you keep production costs down, you get more barrels,” Sontalia said. “It will be a vehicle for growth.”
Cloud providers help oil companies maintain their wells, a costly and time-consuming process that can extend the life of their pumps. Leo Mariani, director and energy analyst at equity research and trading firm MKM Partners LLC, said cloud algorithms are helping maintenance workers find the best routes in vast oil fields in remote and hard-to-reach regions.
Chevron has purchased up to 400 HoloLens headsets from Microsoft and regularly uses the augmented-reality technology for a variety of tasks, including site surveys and safety assessments. A remote assistant program allows office-based professionals to direct on-site workers through inspections, maintenance tasks, and more. In investor reports, Chevron said it helped design headset versions of HoloLens. In the statement, the company stated that, among other benefits, the digital investment strategy will improve reliability and lead to “higher profits and lower carbon footprint.”
Angel Garcia / Bloomberg
Halliburton Co. and Woodside Energy Group Ltd. are among several oil companies using ASA server fields to analyze seismic data that would be impossible to handle using mainframe computers to map oil and gas discoveries. Microsoft engineers collaborated on Chevron’s project to open the Tengiz oil field in Kazakhstan. A software engineer sent to the site recalled working on complex research projects such as computer vision models for 3D maps. The engineer, who asked not to be named to discuss personal matters, considers Microsoft’s pledge to make the energy industry more sustainable as “marketing-speak.”
Peter Barnard, who runs Datagrasion Solutions Inc., spends his time helping oil miners load and manage data on servers managed by Microsoft and Amazon. Directors see the cloud as a way to modernize their operations and survive the boom-bust crisis, he said. “They make a lot of money out of our industry,” Bernard said of cloud service companies. “They continue to make a lot of money from our industry. But it is not popular to talk about it. “
Nowhere is this more true than within the cloud companies themselves. Microsoft workers have long protested their employer’s oil and gas deals – the extra production enabled by the company’s Chevron Kazakhstan project increased Microsoft’s carbon reduction goal by 5000%. A Microsoft representative wouldn’t comment on the project, but the company outlined a strategy to transition partners to zero-emissions. Amazon workers have protested AWS’ contracts with oil companies.
Microsoft’s Willis says the idea that the oil industry will quickly transition from oil to cleaner forms of energy is naïve. “We don’t have the luxury of turning one off and turning the other on,” he said. “Power is something that people love to hate, but no one is willing to live without it.” Willis also says that sophisticated machine analysis can better predict the best places to drill, eliminating the need to dig into the ground. “If you didn’t have to dig these holes, that would be a lot less emissions,” he said. “So it’s a great opportunity to help the industry.”
Still, optics are optics, and both Microsoft and Amazon have changed how they describe their work with the oil industry. AWS has removed blurbs from its website about “digital oil fields” and Dirks’ paintings, replacing it with bromides about clean energy and an e-book titled “Pathways and Principles for Energy Transformation.” Microsoft’s promotional materials featured images of oil fields for windmills.
After its own employee backlash, Google pledged to stop selling machine learning tools for oil exploration by 2020—effectively ceding the sector to its rivals. Google is “moving too far away from oil and gas,” Schlumberger’s Sontalia said.
But he believes Amazon and Microsoft will strengthen their ties to the industry and predicts spending on cloud services will rise from about 10% to 15% of the oil company’s IT budget to 75% within five years. Next month, Techlumberger plans to host a digital forum in Lucerne, Switzerland, where the technology can “deliver high-performance and sustainable power supplies.” One session will focus on oil-field production technology. Microsoft CEO Satya Nadella is the keynote speaker.
Written by Mark Bergen and Matt Day
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