Executives from small and large exploration and production firms have differing views on the potential impact of artificial intelligence (AI) on break-even prices, the fourth quarter Dallas Fed Energy Survey stated.
In a special questions segment, the survey asked participants from exploration and production firms by how much they expect artificial intelligence to lower their firm’s break-even price for new wells in dollars per barrel over the next five years. Executives from 45 exploration and production firms answered the question, according to the survey, which highlighted that small exploration and production firms produced fewer than 10,000 barrels per day in the fourth quarter and large exploration and production firms produced 10,000 barrels per day or more. Responses came from 37 small firms and eight large firms, the survey showed.
“The majority of executives at large E&P firms expect artificial intelligence to provide some reduction to their firms’ break-even prices for new wells over the next five years,” the survey stated.
“However, the majority of executives at small E&P firms expect AI will not lower their firm’s break-even price,” it added.
According to the survey, the response 62 percent of the 45 exploration and production firm executives gave to the question was $0. Sixteen percent responded with $0.01-$1.00, 11 percent responded with $1.01-$2.00, nine percent responded with $2.01-$3.00, and two percent responded with $4.01-$5.00.
Among executives at large exploration and production firms, 38 percent responded with $0.01-$1.00, 25 percent responded with $1.01-$2.00, 25 percent responded with $0, and 13 percent responded with $4.01-$5.00, the survey showed.
Among executives at small exploration and production firms, 70 percent responded with $0, 11 percent responded with $0.01-$1.00, 11 percent responded with $2.01-$3.00, and eight percent responded with $1.01-$2.00, the survey revealed.
“AI has helped reduce our effective well costs, not through a single measurable dollar impact, but through broad productivity gains across our office,” one exploration and production firm said in a comments section of the survey.
“Employees complete tasks more quickly, avoid overlooked items through AI reminders and use AI to review documents when time is limited. These incremental improvements make our operations more efficient and ultimately lower our aggregate cost of drilling a well,” the firm added.
The special questions segment of the fourth quarter Dallas Fed Energy Survey also asked participants from oil and gas support services firms if their firm had entered the power supply services business beyond providing those services to traditional oil and gas companies. Executives from 36 oil and gas support services firms answered the question, the survey showed.
“The power supply services business typically entails providing and managing electrical power for businesses and industries,” the fourth quarter Dallas Fed Energy survey stated.
“Most executives (81 percent) report their firms have not entered the power supply services business beyond providing those services to traditional oil and gas companies,” it added.
“Six percent of executives said their firms have entered the business, and an additional 14 percent report their firms are considering it,” it continued, highlighting that percentages do not sum to 100 due to rounding.
In the comments section of the survey, one oil and gas support services firm said, “we have a renewable business utilizing solar generation and potentially batteries to supply specific community and industrial projects, mostly behind the meter and as a supplement to existing supply”.
The Dallas Fed states on its website that it conducts the Dallas Fed Energy Survey quarterly to obtain a timely assessment of energy activity among oil and gas firms located or headquartered in the Eleventh District. The Eleventh District encompasses Texas, northern Louisiana and southern New Mexico, the site highlights.
Data for the fourth quarter Dallas Fed Energy Survey and special questions segment was collected from December 3-11. According to the Dallas Fed’s site, 131 energy firms responded to the survey and 128 oil and gas firms responded to the special questions segment.
To contact the author, email andreas.exarheas@rigzone.com
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