New research from Goldman Sachs suggests that artificial intelligence and advanced digital technologies could significantly transform the economics of new oil and gas projects. By accelerating development cycles and reducing costs, these digital advancements are creating fresh opportunities for specific oilfield services companies, fundamentally shifting how capital is allocated in energy exploration.
According to the findings, the integration of AI and high-performance computing could slash the average development timeline for greenfield deepwater projects from approximately twelve years down to seven years. The majority of these time savings would occur prior to final investment decisions, driven by faster execution in exploration, appraisal, and engineering work.
Key economic impacts include:
- Accelerated Development Cycles: Digital tools could reduce deepwater project timelines from 12 to 7 years, primarily through speedier exploration and engineering.
- Enhanced Project Returns: Internal rates of return for typical greenfield projects could rise from 15.5% to 19%, fueled by lower capital expenditures, reduced operating costs, and increased production volumes.
- Lower Breakeven Prices: Project breakeven prices are projected to decline by approximately 15%, improving the viability of new developments in fluctuating market conditions.
The most substantial efficiency gains are expected to occur before construction begins. AI applications are anticipated to expedite seismic processing, reservoir modeling, and engineering design. However, once projects move into the construction phase, physical constraints such as fabrication capacity and equipment lead times are expected to limit further digital improvements.
Among oilfield services companies, TGS, Vallourec, and SLB were identified as the primary beneficiaries of increasing AI adoption. Their possession of proprietary data, specialized products, and digital capabilities positions them to gain from operator investments in AI-enabled exploration and production. Conversely, companies focused on floating production storage and offloading vessels, as well as pure subsea construction contractors, are expected to benefit less, as their operations remain constrained by fabrication capacity rather than digital workflows.
The report also highlights that AI will complement, rather than replace, existing digital technologies already utilized across the industry. By speeding up engineering, planning, and operational decision-making, these technologies will reinforce the foundational digital tools currently in use.