AI could unleash a trillion more barrels of oil
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Illustration: Sarah Grillo/Axios
AI is emerging as the oil industry's next big unlock by boosting reserves and supercharging efficiency.
Why it matters: This could stabilize oil and gas prices over the long term, but it's also raising questions about the climate impacts of such trends.
- "The sky is the limit in terms of the production," Mike Sommers, head of the American Petroleum Institute, told Axios. "The days of predicting peak oil are long gone."
Driving the news: AI could "unlock an extra trillion barrels of oil," Wood Mackenzie wrote in a recent report.
- The consultancy says its new proprietary AI tech is allowing companies to better identify where they "can wring substantially more oil out of producing reservoirs."
- In layperson's terms: AI is helping squeeze more juice out of the same orange.
What they're saying: "That's a TRILLION ADDITIONAL barrels of oil [that] would not otherwise be possible. 🤯," wrote climate activist Holly Alpine on LinkedIn.
- Alpine, who is co-lead of a campaign called Enabled Emissions that seeks to highlight how AI and other advanced tech are driving more oil and gas production, continued: "[F]ossil fuels were becoming too difficult and expensive to produce — until AI came along to make them profitable again."
Zoom in: The charts below — via the new Wood Mackenzie report — show the declining new discoveries of oil in the bar chart on the left, contrasted with the forecasts for demand and current production plans.
- The gap between the two purple lines could prompt massive price spikes due to not enough supply to keep up with demand.
- Wood Mackenzie projects demand will eventually drop by 2050 due to cleaner energy sources coming online.
- But it won't decline fast enough to match the current production forecasts for existing fields.
Reality check: The optimism from Sommers and the outrage from Alpine might both be overstated, analysts say.
- "The world has ample oil resources to meet any likely demand scenario for many decades to come," said Andrew Latham, Wood Mackenzie's senior vice president of energy research.
- That means this AI development may not have a tangible bearing on oil demand, and "therefore no impact on emissions from oil consumption," Latham said by email.
What we're watching: Alpine's group has a paper under scientific review that seeks to quantify AI's net climate impact across different energy pathways.
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