Artificial intelligence and advanced digital technologies could dramatically shorten the time needed to develop new oil and gas projects while improving profitability, according to a new analysis by Goldman Sachs.
The investment bank said the growing adoption of AI, high-performance computing and digitalisation across the energy sector has the potential to reduce the average development timeline for greenfield deepwater oil projects from around 12 years to just seven years.
According to Goldman Sachs, the greatest gains are expected during the pre-investment phase, where AI can accelerate seismic data processing, reservoir modelling and engineering design. These improvements could significantly reduce the time required before projects reach a final investment decision.
The bank estimates that faster development schedules, combined with lower capital expenditure and operating costs, could boost the internal rate of return for a typical greenfield oil project to 19 per cent, up from 15.5 per cent under current development models.
In addition, project breakeven oil prices could fall by approximately 15 per cent, making new developments more economically attractive even in a lower-price environment.
Goldman Sachs noted that AI-powered technologies are transforming upstream operations by enabling companies to analyse vast amounts of geological and engineering data more efficiently, helping to improve decision-making and reduce project risks.
However, the bank cautioned that the benefits of digital technologies become more limited once construction begins. Physical constraints, including fabrication capacity, equipment availability and supply chain lead times, are expected to restrict further reductions in project schedules during the execution phase.
The analysis suggests that while AI cannot eliminate all bottlenecks in large-scale energy developments, it could substantially improve the economics of future oil and gas projects and create new growth opportunities for selected oilfield services companies that provide digital and technology-driven solutions to the industry.
As energy companies seek to balance cost discipline with rising global energy demand, Goldman Sachs believes AI and digital innovation will increasingly play a central role in reshaping how major oil and gas projects are planned and delivered.
