From The Wall Street Journal

Eighty miles off Norway’s west coast, one of the country’s smallest oil platforms is gearing up to start production. On board, there’s no helipad and no toilet. There aren’t even lifeboats.

That’s because the slimmed-down oil platform, operated by Equinor AS A, is expected to run without anyone on board. While workers can be ferried in for repairs or other matters, the platform’s nine oil and gas wells will be controlled from a hub 5 miles away.

For years, big oil companies’ strategy was rooted in tapping as much oil as possible with bigger, deeper, more complex wells. But, driven by a deep slump in oil prices four years ago, an increasingly cost-conscious industry has been experimenting with new digital technologies to open up resources long thought too small or too remote to bother with.

“It was a confluence of the lower oil price driving change management and more powerful computers,” said Christyan Malek, an oil analyst at JPMorgan Chase & Co. Unpredictable market moves are keeping the pressure on, despite crude prices that are trading around their highest levels in more than three years. “As long as oil stays volatile, the industry will maintain its focus” on freeing up more cash, Mr. Malek added.

Typically, the complex engineering involved in extracting oil from Norway’s deep and rough waters has made it necessary to have real people onboard monitoring such activity in real time. Where unmanned platforms have been used, they have targeted simpler reservoirs, smaller fields and controlled fewer wells.

The new technological arms race among big oil companies is taking on a more Silicon Valley varnish. Equinor’s unmanned North Sea oil platform marks a new generation of technology that has a much wider scale of monitoring capabilities and digital sensors, as well as the capacity to manage a greater number of wells than older versions.

“The capability to capture data and to use that data to make operational decisions in real time…is really a step change,” said Martin Kelly, head of corporate analysis at Edinburgh-based consultancy Wood Mackenzie. “Companies are riding a technological wave.”

The goal in these technologically advanced projects is to cut costs. Giants like Exxon MobilCorp. and BP PLC are betting on new tech to convince skeptical investors that they can remain lean and competitive as oil prices rise, and maintain a long-term edge in oil extraction in a post-carbon world.

At stake is $300 billion—the potential savings from big oil companies’ digital push—according to an analysis by JPMorgan. The bank estimates that efforts to harness data and automate drilling could slash the sector’s $1 trillion in annual global capital expenditures roughly a third by 2021.

BP has said it expects to drive down costs by 20% in the coming years through technological improvements. It is running fiber-optic cables to all its oil wells, allowing the company to gather data and monitor projects in real time. Across the industry, much of this data is collected through slower methods—sometimes by hand.

Equinor, which used to call itself Statoil, is already looking at more-sophisticated automated platforms that rely on video surveillance, robots and remotely operated vehicles. The first such project could start by the mid-2020s, relying on drones to fly in specialist supplies.

While such projects should save money and improve efficiency, critics wonder whether they will come at the expense of worker safety and environmental safeguards. The industry says that fewer workers means less chance of accidents and that the high-tech monitoring has helped avert potentially risky situations.

“We are now investing to secure a global leadership position within digital technologies, because it is a key enabler for improved safety, lower cost, higher volumes and lower emissions,” Equinor Chief Executive Eldar Saetre told analysts in February.


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