Despite the widespread diffusion of renewable energy, oil and gas are among the highly valued commodities in the energy sector. However, commodity cycles, capital planning challenges, and increasing operational risk have propelled the oil and gas industry to make more intelligent and efficient decisions. In a 2018 Ernst & Young (EY) survey, Artificial Intelligence (AI)/Machine Learning (ML) didn't even rank in the top five technologies used by seven global oil and gas supermajors (Figure 1). Further, they feel that in the coming years, technologies like robotic process automation (RPA) (25%) and advanced analytics (25%), but not AI/ML, will have the most significant and positive effect on their businesses. AI/ML have enormous potential in the oil and gas industry, and by not considering it, leaders in the sector risk being blindsided. It can help reduce costs, add capacity and capability, speed decision-making, and improve quality while managing risk.

If there's one thing a digital strategy can't be, it's incremental. The mismatch between most incumbents' business models and digital futures is too great--and the environment is changing too quickly--for anything but bold, inventive strategic plans to work. Unfortunately, most strategic-planning exercises dogenerate incrementalism. We know this from experience and from McKinsey research: on average, resources don't move between business units in large organizations. A recent book by our colleagues, Strategy Beyond the Hockey Stick, seeks to explain what causes this inertia (strategy's social side, rooted in individual interests, group dynamics, and cognitive biases) and to suggest a way out (understanding the real odds of strategy and overhauling your planning processes to deliver the big moves that can overcome those long odds). All this holds doubly true for digital strategy, which demands special attention.

It will take time, but AI could offer oil and gas companies a new way of maintaining their competitive edge. The capabilities of artificial intelligence (AI) technology have grown in recent years. But further development is needed before AI's benefits can be fully reaped, The Wall Street Journal reported earlier this month. The Journal reported that AI is appearing in people's everyday lives. But many companies lack the data, problems that just the expense of creating an AI system, and lack of people capable of building such systems.