Development and production offer biggest AI prizes – McKinsey

The largest near-term AI prizes within the energy industry sit in the development and production stages of the value chain and the rapidly growing technology could unlock a $230bn opportunity, according to McKinsey research.

They represent large pools of economic value, generate high-frequency operational data, and are governed by physical systems where feedback can be observed. Plus they have measurable metrics, including cycle time, uptime, recovery, cost per foot, cost per barrel, nonproductive time (NPT), and capital efficiency.

The industry’s AI challenge is often described as a technology problem: incomplete data, legacy systems, limited connectivity, and models that are not robust enough for complex field environments.

“These barriers are real, but many companies may be tackling the wrong scaling problem,” the research states. “AI creates the most value when it changes decisions. The scaling challenge is to build new ways of working that use AI tools to make faster, more consistent, and higher quality decisions that drive better outcomes with lower risk profiles.”

Scaling AI in a company is ultimately a CEO-led transformation.

“The leader’s role is to move AI from a set of promising pilots to a core part of how the enterprise creates value by setting the ambition, prioritising the selected domains and use cases, and making adoption a performance expectation,” it notes.

“For CEOs ready to act, the potential path forward starts with three steps: define the AI value aspiration for your asset base and portfolio, assess organisational and technical readiness against the domains that matter most, and build then execute a sequenced road map that addresses technology, workflows, talent, and commercial models.”