This year’s ADIPEC conference took place against a backdrop of acute geopolitical risk for global energy markets, from conflicts in the Middle East and Ukraine to trade tensions and a contentious US election with potentially big ramifications for the industry.

But it was hard not to conclude that an even bigger disruptor was the showstopper in Abu Dhabi: AI. This technology’s influence over energy supply and demand is growing at a rate that threatens to wrongfoot swathes of the industry.

“This is probably the biggest revolution that we will see in our careers on productivity and enhancement” Auchincloss, BP

AI and datacentres are the new energy guzzlers. They are already driving up electricity consumption in the US and elsewhere. Add in electric vehicles and wider electrification, as well as the push to deliver energy access to millions in the developing economies, and the demand trajectory looks very steep indeed.

“My team and I are now slowly waking up to the fact we may have grossly underestimated the actual gradient [of demand] in the next four or five years,” said Muhammad Taufik, CEO of Malaysian state energy company Petronas.

The growth of AI, datacentres and digitalisation means the time for deliberations over which technologies should be prioritised to deliver lower-carbon energy over the coming decades is over. Wind, solar, hydrogen, biofuels, natural gas, CCS, nuclear and others all have a role a role to play.

“AI will be fed partly by renewables, partly by gas, and a combination of those will potentially stabilise that. You then have nuclear energy coming in the next decade potentially. All of it, I think, we will desperately need to meet the growing energy demand,” Wael Sawan, CEO of Shell, told ADIPEC.

This surge in demand will heighten the inherent tensions between decarbonisation and energy security. Soaring electricity demand presents multiple challenges, ranging from a lack of grid infrastructure and the need for massive capital investment to soaring prices for end-consumers.

Murray Auchincloss, CEO of BP, said AI’s demand is being felt primarily in the US, China and India. US power demand is ticking up another percentage point every month, he said. “We are going to be surprised on the upside as other geographies bring in AI,” he told the conference.

Perhaps the most widely quoted line during ADIPEC was: “Take the power needed to conduct a Google search and multiply it by ten for the use of ChatGPT”.

Datacentres are also making their presence felt. In large economies such as the US, China and the EU, they already account for around 2–4% of total electricity consumption, the IEA said. The impact on local demand is even greater. The datacentre sector has already surpassed 10% of electricity consumption in at least five US states. In Ireland, it now accounts for more than 20% of demand, the IEA added.

Revolution

AI is, of course, going to be hugely influential on the way energy is produced, helping to align supply with the demand that it creates.

“I am pretty surprised by how fast [AI] moves,” said Auchincloss. AI has delivered cost savings for BP of 30% in areas such as back office and marketing within three or four months of its deployment. The company is now applying it to its upstream business, with similarly spectacular results.

“It can literally design a thousand wells in three months, whereas it would take years and years and years for engineers,” Auchincloss said. “This is probably the biggest revolution that we will see in our careers on productivity and enhancement.”

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Author: Stuart Penson