From AI to cloud: How oil and gas is digitally rewiring for profit and net-zero impact

How can oil and gas leaders achieve net-zero while safeguarding profitability? In this episode of Energy Transition Talks, CGI’s Frank Schmidt and Angelina Bakshi explore the digital enablers—AI, cloud, digital twins, smart energy systems, and LNG innovation—reshaping the sector. Learn how these technologies reduce emissions, improve efficiency, and unlock new business value. A must-listen for executives driving transformation in the energy industry. 

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Chapters

• 0:05 Introduction to Net Zero Digital Pathways
• 1:29 Digital Innovations Reducing Energy Consumption
• 3:30 ESG as Competitive Advantage
• 4:44 LNG and High ROI Opportunities
• 6:55 AI and Cloud Impact on Decarbonization
• 9:03 Barriers to Energy Transition Implementation
• 11:25 Near-Term Priorities for Energy Companies

Transcript

Angelina Bakshi: 0:05

Welcome and thanks for joining our Energy Transition Talks. On today's episode, we are going to be talking about accelerating net zero digital pathways that deliver return on investments and cost savings. My name is Angelina Bakshi and I am a business consultant with CGI, located in Western Canada, and it's a pleasure for me to introduce my colleague today, frank.

Frank Schmidt: 0:31

And setting the scene. My name is Frank Schmid, as you rightly said, vice President for the Global Energy Sector within CGI and, from that perspective, supporting one of our largest clients that we have for over 30 years in the oil and gas sector, and also support several other energy and oil and gas clients around the globe.

Angelina Bakshi: 0:52

Great Well, really excited to have you on the podcast today. I think we're going to be talking about net zero, investing in low carbon infrastructure and integrating energy systems, so we're really about you know what are the digital pathways that deliver return on investments and cost savings in regards to accelerating to net zero, topic that many oil and gas companies around the world are grappling with, curious about getting different types of pressures about. So I guess one of the first questions right off the bat is what's driving the digital shift?

Frank Schmidt: 1:29

Yeah, if you talk about the digital moves and reduction of costs, we see a few things happening. The first is the migration to public cloud platforms and if you perform a migration, you see that we can reduce 6% on the energy consumption, and even over 90% when you compare it towards a traditional data center usage. Another mean that you see is AI-powered predictive maintenance, so using AI to anticipate equipment failures, for instance. That reduces downtime, energy waste and unnecessary resource use. Another element that you see is the use of smart energy systems, so, for instance, using sensors and analytics to optimize the energy usage in real time, which lowers cost and carbon footprints. And the last one I would like to call is digital workflows and, in particular, cgi, when it comes to our oil and gas clients, is a long-term partner in the subservice and well space, where you traditionally have geoscience and engineering specialisms, and we can support them faster by using, for instance, low-code platforms and digitalization of the workflows, and that's what we do for several of our clients.

Angelina Bakshi: 3:10

A very cool, very interesting time in the industry. So how are leaders moving from, you know, compliance to opportunity? Some things are maybe being, you know, forced upon them. Some things they're doing because they see the opportunity. Yeah, how are we moving around?

Frank Schmidt: 3:30

I see there that's a good question and it's really relevant. I see two main drivers. One is the integration of ESG operating models. If you look at the ESG goals, they are more and more embedded into budgeting, for instance, product development, performance metrics across departments. And another driver I see is that leaders are moving indeed also to the value side and use ESG as an innovation tool and a brand equity. Think, for instance, about biodegradable packaging or circular business models. That will enhance your reputation as a company and it will also attract new talent and investors to your company. So, in short, esg is becoming not only a source of work, but more a source of a competitive advantage, and not just compliance.

Angelina Bakshi: 4:39

Where do you think along the value chain, are the fastest return on investment opportunities?

Frank Schmidt: 4:44

Well, you see a lot, but if I zoom in to where currently the global oil and gas market is focusing, let's take LNG as an example. Lng is often seen as a bridge or an intermediate source fuel in the energy transition and offers several high return on investment opportunities across the value chain. And let me take you through a couple of them. The first one I would like to mention is waste heat recovery. So in the value chain, you see a lot of focus on LNG. So a lot of oil and gas companies currently are focusing on LNG. And LNG is seen, by the way, as a bridge, an intermediate source of fuel in the energy transition, and it offers therefore high return on investment because it's an integral part of our energy demand. It's an integral part of our energy demand.

Frank Schmidt: 5:47

The first thing I would like to mention in the LNG side is waste heat recovery. So capturing and reusing heat during liquefaction improves the energy efficiency and lowers operational costs. A second one in the LNG area is renewable integration. For instance, if you use solar or wind to power an LNG facility, you will reduce carbon footprint and align with regulatory incentive. And the last technology that you see in the sector is digital. Twin technology in the sector is digital twin technology, so with that you can simulate LNG operations, which helps you to identify inefficiencies and optimize the performance in real time.

Angelina Bakshi: 6:32

Very interesting and actually just you know, you mentioned about the efficiencies in real time. Kind of takes me into the domain of how does AI and data and cloud solutions generate quantifiable measurements and impact for these decarbonization projects and intermediate renewable technologies?

Frank Schmidt: 6:55

Absolutely. It's really taking a boost the last year, so take, for instance, a boost the last year. So take, for instance, cloud. If you migrate your IT infrastructure to cloud data centers and, in addition, powered by renewables, you can cut IT-related emissions by over 90%. If you take, for instance, ai and machine learning, the tooling you there have will optimize energy use, predict equipment failure, for instance, and streamline operations, and you can uncover up to 40% of emissions reductions if you use AI and machine learning.

Angelina Bakshi: 7:40

So you're saying that this both cuts the emissions, but I'm hearing from you that we're also seeing some operating cost optimization or even potential capital investments. Is that correct? Absolutely. Or explain a little bit more about what are you seeing from use cases that you've seen so far.

Frank Schmidt: 7:59

Yeah, if you look at the OPEX, for instance, side and the emission cut side of things, for instance, predictive maintenance. So the use of IoT sensors within assets and within the field and overlaying that with AI models, you can forecast equipment failures much better. That minimizes your downtime and that automatically reduces your OPEX and also the reliability of an asset, and reliability and security in oil and gas is a major driver. An other one I see is smart grid optimization. The use of AI-driven grid management, for instance, improves your load balancing and reduces outage, which enhances your energy efficiency usage and that translates into lower emissions and operational costs.

Angelina Bakshi: 8:56

Really interesting stuff that's happening. So I guess the question that remains is what's holding oil and gas companies back? The question that remains is.

Frank Schmidt: 9:04

It's what's holding oil and gas companies back. I would say I would like to mention four main blockers, main themes, if you wish, I think. First of all, institutional silos, and what I mean by that is that different parts of the energy systems, for instance, grid operators, regulators, utilities they operate under fragmented authorities. That's, I think, the main driver. The second one I would like to mention is system complexity. If you look at decarbonization in the system, it's involving infrastructure, supply change, social systems, and the lack of integrated planning tools and real-time feedback loops makes it very hard in that ecosystem to optimize across sectors. A third one is obviously very important nowadays is political polarization, so climate policies face uneven support across regions, delaying adoption and creating uncertainty for investors and planners. And the last one that I see within our client set is also skill gap. So if I look at many of our energy clients, they lack the technical expertise to implement and, in principle, also at skill. Clean technology and sustainability roles often require cross-disciplinary knowledge engineering, data science which is in short supply currently.

Angelina Bakshi: 10:49

Those are some significant barriers and areas to try and tackle for any organization. So if you had to take a step back and say OK, within the next three to five years, which really in the oil and gas timeline is fairly short, it's really in the near term what are the areas that could best balance cost control and decarbonization impact in your opinion, Like where should a company start Energy companies with mature AI strategies.

Frank Schmidt: 11:25

They are doubling down on automation to cut OPEX and boost productivity, even amid the economic uncertainty that we face today. Another important one is the use of digital twins. These virtual models of operations, for instance within LNG terminals, grids, rigs, buildings allow for real-time monitoring, emissions modeling and scenario planning, and that enables smarter, lower-cost decisions. Another one that's more out of the real technology and IT stack is how do you source so smart sourcing and vendor consolidation Also, that is, if you infuse that with AI and supply chain optimization, a mean to reduce waste and improve resilience sense you also see globally, by the way, oil and gas companies partner to share risk and to share investment on the long term. And the last one I would like to mention is the integration of esg platforms, where you see that cloud-based systems for tracking, for instance, scope one, two and three, emissions and compliance will become the standard, and that reduces reporting costs and improves transparency.

Angelina Bakshi: 12:53

I think that concludes our time today. Really appreciate having you on this podcast and thanks so much.

Frank Schmidt: 13:01

Many thanks for having me and have a great rest of your day.