Oil and Gas Resources

How AI is Transforming Oil and Gas Procurement

By: George Mathew

Embracing AI has led companies within the oil and gas industry to overhaul their operations, ranging from enhancing exploration and drilling processes to optimizing production and logistics. As machine learning, big data analytics, and automation continue to advance, the oil and gas sector is witnessing impressive improvements in efficiency, safety, and environmental sustainability.

Role of AI in improving oil and gas procurement operations:

Improved quality through automated defect detection

AI powered Defect Detection solutions provide oil and gas companies a cost-effective and economical way of identifying defects in the production line. For example, computer-vision based systems can ensure quality of production is within acceptable limits and any defects such as improper threading in pipelines or error-prone mechanisms are identified in time.

Enhance effectiveness of safety and security procedures

AI-powered computer-vision solutions can help companies to effectively monitor their work site and ensure all safety procedures are being correctly followed. AI algorithms can analyze data from the AI-powered cameras and send alerts and proactive recommendations on safety standards. The biggest advantage is that AI solutions can provide alerts for even the smallest deviations which can be missed with manual processes, such as manually monitoring camera feeds or physical safety sweeps.

Keep production and maintenance costs under control

Oil and gas companies can use AI and IoT technologies to detect the probability of issues in the distribution pipeline such as material degradation and corrosion. Using knowledge graphs and predictive intelligence, the corrosion occurrence probability can be approximated, and alerts can be provided to pipeline operators for undertaking preventive maintenance. This ensures that companies can be proactive in handling the corrosion risks and more accurately study various machinery downtimes and predict time to carry out maintenance activity. This way, companies can plan and adjust for downtime, thereby helping reduce production and maintenance costs.

Analyze data to improve decision making

Since oil and gas companies typically deal with large amounts of data generated from the manufacturing and operational processes, it is imperative that proper analytics tools are used to draw the insights that this data holds. Big Data powered AI applications can help derive meaningful insights from the massive data resting in silos. AI algorithms assess data from various sensors, machinery and even geoscience data in real-time to generate intelligent suggestions based on business needs. These deep insights provide businesses with better visibility of the overall processes and operations, thereby enabling them to improve strategic decision making.

Increase efficiency of the oil and gas exploration process

The oil and gas exploration process is typically very expensive but is an important step to get a clear idea of where large oil reserves are present beneath the earth’s surface. However, the traditional process of exploration geophysics isn’t very precise and can prove costly. Autonomous AI-powered robots for exploration is an effective solution to make this process easier and more cost-effective. Some large oil and gas companies are already using drones to gather seismic images which are then processed through AI algorithms to extract useful information before explorations are carried out. This process minimizes human risk, ensures accurate data is being captured, and improves the overall efficiency of the exploration process.

How SpendEdge can help oil and gas companies with AI implementation

ai in oil and gas

Analyze the capabilities of AI solution vendors and select the best fit suppliers

The experience of our seasoned team of analysts in evaluating the capabilities of technology solution providers enables them to identify the best fit vendors providing AI solutions to the oil and gas industry. We analyze various factors such as years of experience, innovation, major clients, past projects, etc. to assess the capabilities of vendors and rank them based on how well they align with the objectives and requirements of our clients.

Identify what peers are doing and adopt best practices from their processes

When it comes to engaging with AI solution providers, our experts help in identifying the best approach on vendor selection, engagement models, contract negotiation, and cost management. With a clear view of the processes adopted by peers, our experts help clients understand the best practices to ensure cost savings and minimize risk in the procurement process. Adhering to preset guidelines as defined in the best practices helps companies ensure they are procuring the services of the best vendors and minimize risks and errors.


Identify the most important KPIs and SLAs to be included in contracts

SpendEdge’s analysts can help oil and gas companies understand the most important KPIs to measure the effectiveness of the services being provided by AI solution providers. This can provide a clear visibility on the RoI from AI solution implementation. Similarly, our analysts help clients identify the important SLAs to be included in the contract to ensure the most optimal services are being procured and there is minimal risk associated with the selected vendor.

Success story: How SpendEdge helped an oil and gas company implement AI solutions to manage predictive maintenance

SpendEdge’s client, a North American oil and gas company, was exploring the possibility of analyzing their operational data through AI-enabled solutions to have a better grasp over their predictive maintenance activities. They were previously using data engineers to manually analyze data to draw insights, but this approach had limitations because no amount of data engineers could possibly analyze all the operational data that is produced. The client reached out to SpendEdge to help identify AI-solution providers that have previously served the oil and gas industry.

SpendEdge’s analysts evaluated the current volume of data being generated by the client and the type of insights they were looking to obtain from the data. The main consideration was analyzing the smooth functioning of machinery and distribution pipelines. Through benchmarking the solutions being offered by different vendors, our analysts were able to develop a list of suppliers that could most optimally meet the client’s objective. In addition, a comparative analysis of the features of each company’s product, their years of experience, list of large clients, etc. was used to determine the best fit suppliers. The client eventually signed an annual contract with one of the vendors SpendEdge had identified and has been pleased with the findings from the implemented solution so far.

How SpendEdge helps

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Author’s Details

George Mathew

Associate Vice President, Sourcing and Procurement Intelligence

George is a procurement specialist at Infiniti Research and provides advisory services to clients across the pharmaceutical, CPG & FMCG, energy, and automotive sectors. He specializes in the procurement areas of industry benchmarking, cost modeling, rate card benchmarking, negotiation advisory, and supplier intelligence.

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