The Oil Exploration & Production Industry Builds a Case for Robotics


Founder & Chief Energy Strategist John Licata of Blue Phoenix, Inc., an independent research company covering the energy sector, urges large oil exploration and production (E&P) companies to embrace advanced robotics and artificial intelligence (AI) technologies.



  • Some Developments – Drilling rig services businesses such as Nabors Industries have launched R&D initiatives emphasizing the use of software and advanced automation to enhance efficiency and safety at exploration and extraction facilities. That said, the use of robotics and intelligent systems remains largely untapped.
  • Cost Cutting & Efficiency Are Top Priorities – Licata explains that E&P companies are primarily focused on trying to mitigate the risk and safety challenges of exploration. Advanced robotics technologies can be of assistance in this regard, and should therefore be studied and utilized if warranted.
  • Holding Operations, Waiting for Cost and Efficiency Improvements – Licata states that the industry-wide availability of traditional drilling rigs from contractors such as Hercules Offshore, Transocean or Diamond Offshore Drilling indicates that E&P companies are putting voluntary projects on hold while they wait for more efficient and less expensive solutions to come to market. Licata believes that this trend will reverse within 24 months, but also recommends that drilling and rig contractors integrate robotics technology into their offerings and up to consider the acquisition of robotics providers.



  • Still Drilling, but Drilling Better – The current offering for drilling robots counts many systems specifically developed to address safety and efficiency challenges. As an example, Norway’s Robotics Drilling Systems AS developed an autonomous drilling rig system for unmanned drilling operations that is set to move to commercialization phase soon thanks to an additional 50MNOK ($8.4m USD) investment from Odfjell Drilling, a Norwegian drilling service company. FMC Technologies and Honeybee Robotics also offer robotic solutions for the Exploration & Production industry.
  • Acquiring Capabilities, Not Just Companies with a Solution The robotics firms offering solutions for the exploration and production industry are relatively small in size in compared to the E&P players themselves. Despite providing ingenuous technologies that enhance energy production performance, the size of the robotics firms limits their ability to scale the deployment of their solutions. To benefit from robotics technologies more quickly, as well as serve their own internal needs, E&P companies often acquire specialized robotics businesses. Companies in other vertical industry sectors do the same. Some of the more notable examples include Amazon’s purchase of Kia Systems and Google’s acquisition of multiple robotics companies.

    E&P contractors provide commoditized services (currently in surplus) in a highly competitive market. To differentiate themselves from their competitors, these companies will add robotics technologies to their offerings, often through the acquisition of robotics technology vendors. However, robotics technologies for E&P operations are only just emerging. They will rapidly evolve and mature, driven by the demand for environmentally friendly, cost effective solutions that increase productivity and efficiency. Therefore, E&P services firms incorporating robotics technologies into their offerings (including by acquisition) should consider robotics vendor’s current and future R&D capabilities in addition current offerings when assessing acquisition targets. End-users of contract E&P services should evaluate competing service offerings in this light.

Business Models – E&P contractors generally charge for their services based on operation time (often in $/hour, for example during drilling operations). “Value” is often not directly linked to productivity and efficiency making competitive differentiation difficult. “Price wars” can result.

As robotic technology for exploration and production develops, solutions will enable and support key, measurable, success factors including productivity, efficiency, safety and environmental impact. E&P contractors providing advanced robotics solutions (either internally following an acquisition or via partnerships and sourcing) can offer unique exploration and production capabilities (ex. new drilling environment only accessible with proprietary technology). These capabilities can act as a powerful differentiator, but more importantly, would encourage the development of new business models enabled by the robotic technology.


Building Source

Why Offshore Drillers Need Artificial Intelligence to Remain Viable (Motley Fool)