U.S. oil and natural gas executives are looking to incorporate emerging technologies to improve business operations, but they do not expect artificial intelligence (AI) or automation to eliminate jobs, according to KPMG's 2018 U.S. Energy Outlook Survey.
About half (51%) of the 92 executives surveyed expect technology to replace tasks to allow allow employees to focus on strategic activities. Almost one-third (32%) plan to use AI and other technologies to improve products and services.
"Emerging technology is disrupting the status quo, and concepts around digital labor and cognitive technology are being explored industrywide, resulting in concerns over how the workforce will be affected," said KPMG’s Regina Mayor, global and U.S. energy sector leader. "However, utilizing innovative tech to alleviate mundane and time-consuming tasks will put organizations in a strong position to make big change as they operate with a more efficient workforce."
There is a growing sense of optimism by energy executives, with 59% of those surveyed expecting an improved U.S. economy in the next year, and 83% planning to increase or maintain headcount.
“When asked about top strategic priorities over the next year, 21% cite reduction of cost structure, 21% cite acquisition of competitors or relevant businesses, 16% plan to invest in new products or geographies, and 11% point to reducing operational complexity,” according to KPMG.
However, the executives see barriers to achieving growth this year.
Of those surveyed, 38% cited concerns over volatile commodity/inputs, 15% cited a lack of customer demand, and 13% identified regulatory constraints as a hurdle.
Some concern remains about global oil prices, but expectations for 2018 are higher. About 45% estimate the average price of Brent crude oil to be between $50-59/bbl, and 49% expect to see prices in the $60-69 range.
“Additionally, deal activity remains high, with 54% of respondents indicating a likelihood to be involved in a merger or acquisition (M&A) this year. Twenty-nine percent indicate consolidation of core businesses as the biggest driver of M&A activity, and only 6% say bankruptcies or restructuring are an M&A driver.”
Regarding new technologies, the KPMG survey found “only mild concern” about the impact of autonomous vehicles on the energy industry.
“Sixty-five percent of respondents say autonomous and electric vehicles (AV/EVs) won't disrupt their businesses. In fact, the majority (59%) don't expect business model changes due to growing adoption of AV/EVs to occur for at least five years, if at all.”
Renewables are making a strong appearance, but executives indicated the future of energy is a mix. More than half (54%) of respondents said they have no plans to invest in renewables. Another 44% expect the United States to achieve a 50% renewables footprint by 2035, and 30% said it will never happen.
"The industry is making great strides to add renewables into the mix, but power is a growing demand for our world," said Mayor. "To achieve a sustainable future, we need to create an energy ecosystem that includes both renewables and fossil fuels, and looks at the less mature and untapped resources that will allow us to harness energy globally for the long-term."