Big Oil is tapping Big Tech to keep drilling off the shores of Brazil even as the global pandemic traps workers at home.
Confronted with the need to keep employees working remotely, Petroleo Brasileiro SA fast-tracked a move to a Microsoft Corp. cloud platform it had already been testing before lockdowns, Fernando Lemos, Microsoft’s chief technology officer in Brazil, said in an interview. That’s allowing staff to access from home data that was previously only available in the oil giant’s offices in Rio, and to monitor the use of safety equipment at deep-water vessels.
With the help of Microsoft’s artificial intelligence technology to process its myriad of geological data, Petrobras also aims to eliminate dry holes during exploration and reach commercial production at offshore wells faster while reducing costs.
“We increased and sped up the use of artificial intelligence on drillships,” Lemos said. “We were put to the test as a provider for Petrobras.”
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The virus-induced move puts Microsoft and Petrobras at the forefront of cloud computing for oil exploration in an industry that’s wary of compromising secret information on third-party platforms. But the partnership with one of only a handful of companies in the world that produce more than 2 million barrels of crude a day may also land Microsoft in the crosshairs of environmentalists.
Microsoft has one of the most aggressive greenhouse-emission reduction plans of any tech company — a pledge to be carbon negative, removing more carbon dioxide from the atmosphere than it emits, by 2030. The software maker has started a $1 billion climate fund to invest in green companies and joined with Nike Inc., Starbucks Corp., Unilever NV and Danone SA in a consortium devoted to sharing resources and tactics for slashing carbon emissions.
At the same time, Microsoft has been criticized by environmental advocates for selling software that’s used to help boost exploration and extraction to customers like Exxon Mobil Corp. and Chevron Corp.
A May 19 Greenpeace report called out Microsoft and Amazon.com Inc. for “connections to some of the world’s dirtiest oil companies for the explicit purpose of getting more oil and gas out of the ground and onto the market faster and cheaper.”
“The significance and complexity of the task ahead is incredible and will require contributions from every person and organization on the planet,” a Microsoft spokesperson said in response to questions about the company’s business with oil companies. “That’s why we are committed to continuing to work with all our customers, including those in the energy industry, to help them meet today’s business demands while innovating together to achieve the business needs of a net zero carbon future.”
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Petrobras and Microsoft also argue that they are curbing the carbon footprint by increasing efficiency.
Large oil producers have relied on advanced technology for data processing for years, with BP Plc and Italy’s Eni SpA running two of the world’s most powerful supercomputers. Cloud-computing, however, still face fears of security breaches, and industries like agriculture and retail have moved faster to adopt it.
Its contract in Brazil gives Microsoft a significant foothold in an oil-services market that’s dominated by the providers of drilling and fracking equipment. Global oil-service leaders Schlumberger Ltd., Halliburton Co. and Baker Hughes Co. are all vying to convert titans like Exxon and Royal Dutch Shell Plc to their digital platforms.
Petrobras relies heavily on its own research after years seeking to crack ways to develop ultra-deep deposits trapped miles beneath the Atlantic seabed, known as pre-salt. Peers like Exxon and Shell tend to rely more on service providers like Schlumberger and Halliburton.
That gives Petrobras an edge in adopting cloud-computing for deep-water exploration, Lemos said.“Few companies in the world do research in marine waters and research in deep waters,” Lemos said. “We don’t have companies with the same level of development as Petrobras to do this. It’s not even fair to compare.”
Necessity was the mother of invention for the state-controlled producer. With its shallower offshore fields aging, it became a matter of survival more than a decade ago to unleash its pre-salt reserves at a time when global oil servicers were focused on developing fracking to tap U.S. shale deposits.
Multibillion-dollar investments in unprofitable refineries and costly fuel subsidies under a previous government left Petrobras with a hefty debt burden that, along with a massive graft scandal, made it one of the hardest-hit companies during the previous oil-market crash of 2014-2016.
Since then, the company has sought to reinvent itself as a leaner, more efficient producer. So, when Covid-19 hit earlier this year and the oil market crashed once again, Petrobras had already been seeking to use technology to cut costs, while managing to increase production at the same time.
“Before we were training for the digital revolution. Now we’re in a race,” said Melissa Fernandez, the head of technology at the Brazilian Petroleum Institute, a Rio-based research and policy group that represents local and foreign oil companies. She predicts experts in artificial intelligence and robotics will be in high demand in the Brazilian oil industry in the coming years.
Meanwhile, other jobs are being lost. Petrobras has already cut roughly 20,500 positions, or 26% of its workforce, over the past four years, and aims to reduce it by another 22% in three years.
Efforts to master technology are setting Petrobras further apart from peers in Latin America. Petroleos de Venezuela SA and Petroleos Mexicanos, once the top two producers in the region, have both been grappling with declining output and crumbling infrastructure for years, with Pemex recently becoming the worst-hit oil company by the pandemic in deaths and infections. Colombia’s Ecopetrol SA, with production fading at home, expanded into U.S. shale last year before the price crash put those projects in doubt.
Petrobras started migrating employees to Microsoft’s Office 365 last year. Then the pandemic hit, and the software facilitated a fast increase in the use of Microsoft’s Azure cloud service. The use of “virtual terminals” has grown to about 15,000 a day. Geologists who study the company’s offshore data now do it from home. A pilot project with Microsoft to monitor safety equipment offshore was expanded.
“In three to four months, we’ve done a transformation that would normally take three to four years,” said Nicolas Simone, who took charge of the company’s new digital and innovation division in October. “Our goal is to keep our workers safe, and this involves the use of technology on a large scale.”
The shift at Petrobras has also landed Facebook Inc. the biggest contract in Latin America for its Workplace corporate platform. The oil producer is using the service to help implement a permanent work-from-home rotation to cut office expenses even after Covid-19 lockdowns are over.
Chief Executive Officer Roberto Castello Branco has been addressing staff through Workplace lives, while employees use it for chats and video conferences.
“People post, they can like or not. It’s more expressive,” said Adriano Marcandali, Facebook’s head of Workplace in Latin America. “You can personalize, you’re able to understand what groups of employees people follow.”
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