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Energy sector AI spending is set to soar to $13B, report says

eyes on ai

Deloitte predicts AI will represent 57 percent of IT spending by U.S. oil and gas companies in 2029. Photo via Unsplash.

Get ready for a massive increase in the amount of AI spending by oil and gas companies in the Houston area and around the country.

A new report from professional services firm Deloitte predicts AI will represent 57 percent of IT spending by U.S. oil and gas companies in 2029. That’s up from the estimated share of 23 percent in 2025.

According to the analysis, the amount of AI spending in the oil and gas industry will jump from an estimated $4 billion in 2025 to an estimated $13.4 billion in 2029—an increase of 235 percent.

Almost half of AI spending by U.S. oil and gas companies targets process optimization, according to Deloitte’s analysis of data from market research companies IDC and Gartner. “AI-driven analytics adjust drilling parameters and production rates in real time, improving yield and decision-making,” says the Deloitte report.

Other uses for AI in the oil and gas industry cited by Deloitte include:

  • Integrating infrastructure used by shale producers
  • Monitoring pipelines, drilling platforms, refineries, and other assets
  • Upskilling workers through AI-powered platforms
  • Connecting workers on offshore rigs via high-speed, real-time internet access supplied by satellites
  • Detecting and reporting leaks

The report says a new generation of technology, including AI and real-time analytics, is transforming office and on-site operations at oil and gas companies. The Trump administration’s “focus on AI innovation through supportive policies and investments could further accelerate large-scale adoption and digital transformation,” the report adds.

Chevron and ExxonMobil, the two biggest oil and gas companies based in the Houston area, continue to dive deeper into AI.

Chevron is taking advantage of AI to squeeze more insights from enormous datasets, VentureBeat reported.

“AI is a perfect match for the established, large-scale enterprise with huge datasets—that is exactly the tool we need,” Bill Braun, the company’s now-retired chief information officer, said at a VentureBeat event in May.

Meanwhile, AI enables ExxonMobil to conduct autonomous drilling in the waters off the coast of Guyana. ExxonMobil says its proprietary system improves drilling safety, boosts efficiency, and eliminates repetitive tasks performed by rig workers.

ExxonMobil is also relying on AI to help cut $15 billion in operating costs by 2027.

“There is a concerted effort to make sure that we’re really working hard to apply that new technology … to drive effectiveness and efficiency,” Darren Woods, executive chairman and CEO of ExxonMobil, said during a 2024 earnings call.

From Your Site Articles
Here were the top energy transition interviews on EnergyCapital — according to its readers. Photos courtesy

Who's who in Houston energy transition: Top 5 interviews of 2024

year in review

Editor's note: As the year comes to a close, EnergyCapital is looking back at the year's top stories in Houston energy transition. EnergyCapital launched specifically to cover the energy transition community — and that includes the people who power it. Throughout the year, we spoke to these individuals and some resonated more than others to readers. Be sure to click through to read the full interviews or stream the podcast episode.

David Pruner, executive director of the Texas Entrepreneurship Exchange for Energy (TEX-E)

David Pruner, executive director of TEX-E, joins the Houston Innovator Podcast. Photo via LinkedIn

David Pruner is laser focused on the future workforce for the energy industry as executive director of the Texas Entrepreneurship Exchange for Energy, known as TEX-E, a nonprofit housed out of Greentown Labs that was established to support energy transition innovation at Texas universities.

TEX-E launched in 2022 in collaboration with Greentown Labs, MIT’s Martin Trust Center for Entrepreneurship, and five university partners — Rice University, Texas A&M University, Prairie View A&M University, University of Houston, and The University of Texas at Austin.

Pruner was officially named to his role earlier this year, but he's been working behind the scenes for months now getting to know the organization and already expanding its opportunities from students across the state at the five institutions. Read more.


Barbara Burger, mentor and adviser

Houston energy leader Barbara Burger joins the Houston Innovators Podcast to discuss the energy transition's biggest challenges and her key takeaways from CERAWeek. Photo courtesy of CERAWeek

Last month, Barbara Burger participated in four panels at CERAWeek by S&P Global, and from her insider perspective, she had a few key takeaways from the event, which brought together energy leaders, tech startups, dignitaries, civil servants, and more.

In a recent podcast interview, Burger shared some of her key takeaways from the event — and how these trends are affecting the industry as a whole. Read through an excerpt or stream the full episode below. Read more.


Tyler Lancaster, partner at Energize Capital

Tyler Lancaster, a Chicago-based investor with Energize Capital, shares his investment thesis and why Houston-based Amperon caught his eye. Photo courtesy of Energize Capital

One of the biggest challenges to the energy transition is finding the funds to fuel it. Tyler Lancaster, partner at Energize Capital, is playing a role in that.

Energize Capital, based in Chicago, is focused on disruptive software technology key to decarbonization. One of the firm's portfolio companies is Amperon, which raised $20 million last fall.

In an interview with EnergyCapital, Lancaster shares what he's focused on and why Amperon caught Energize Capital's attention. Read more.

Teresa Thomas, vice chair and national sector leader for energy and chemicals at Deloitte

Teresa Thomas, newly named vice chair and national sector leader for energy and chemicals at Deloitte, shares her vision in an interview. Photo via LinkedIn

Deloitte is undergoing a leadership shift — and this evolution for the nearly 200-year-old company directly affects its Houston office and the energy transition line of business.

Earlier this month, Teresa Thomas was named vice chair and national sector leader for energy and chemicals at Deloitte. Based in Houston, she will also serve as an advisory partner and leader in Deloitte & Touche LLP's Risk & Financial Advisory energy and chemicals practice. She succeeds Amy Chronis, partner at Deloitte LLP, who will continue to serve within the energy and chemicals practice until her retirement in June 2024.

In an interview with EnergyCapital, Thomas shares a bit about what she plans on focusing as she takes on her new role. Read more.

Sarah Jewett, vice president of strategy at Fervo Energy

Sarah Jewett, vice president of strategy at Fervo Energy, shares how Fervo has been able to leverage proven oil and gas technologies, such as horizontal drilling, and more, to pave the way toward a low-carbon energy future. Photo via HETI

Houston-based Fervo Energy, the leader in enhanced geothermal technology, is accelerating decarbonization by bringing 24/7 carbon-free electricity to the grid.

Fervo’s mission is to leverage geoscience innovations to accelerate the world’s transition to sustainable energy. Fervo continues to demonstrate the commercial viability and scalability of enhanced geothermal energy, which uses breakthrough techniques to harness heat from the earth and generate continuous electricity.

Sarah Jewett, VP of Strategy at Fervo, shared more about how Fervo has been able to leverage proven oil and gas technologies, such as horizontal drilling, well stimulation, and fiber-optic sensing, to pave the way toward a low-carbon energy future. Read more.

A Houston energy tech company makes the list of fast-growing businesses. Photo via Getty Images

Houston energy tech company scores spot on Deloitte's list of fast-growing businesses

by the numbers

Deloitte’s annual North America Technology Fast 500 list includes a Houston energy tech company boasting 407 percent growth.

NatGas Hub LLC landed at No. 286 on the list, which is an annual ranking of the fastest-growing North American companies in technology, energy tech sectors, telecommunications, life sciences, media, and fintech. It marks an improvement for the company, which provides an automation software for natural gas nominations and scheduling services. In 2023, the company ranked No. 356 with 364 percent growth.

Direct Digital Holdings Inc. took the highest-ranking spot for Houston companys, coming in at No. 101 (up from 108 previous year) with 1,184 percent growth. Additional Houston companies on the list include Liongard (No. 437, 246 percent growth) and Stratus Medical LLC (No. 483, 212 percent growth).

"Houston continues to demonstrate its prowess in fostering growth and technological advancement and I’m incredibly proud to see some of our local companies making significant strides and earning their well-deserved spots on the 2024 Deloitte Technology Fast 500 list,” Houston managing partner at Deloitte Melinda Yee says in a news release.

Award winners were selected based on fiscal year revenue growth from 2019 to 2022.

The companies achieved revenue growth ranging from 201 percent to 153,625 percent over the three-year time frame with an average growth rate of 1,981 percent and a median growth rate of 460 percent, according to a news release. Texas accounts for 6 percent of the winning companies with 73 percent of the companies from Texas are in the software sector.

“These companies exemplify the entrepreneurial spirit and innovative mindset that define Houston's dynamic business ecosystem,” Yee adds.

In 2023, the Houston representation looked similar. Direct Digital Holdings again topped the Houston rankings at No. 108, with Liongard, NatGasHub.com, and P97 Networks also showing substantial growth. As a state, Texas had 30 companies that made the list of the 541 ranked. In 2022, just one Houston company was recognized, as at No. 372 Onit reported revenue increase of 369 percent.

Biopharmaceutical company TG Therapeutics, Inc. was the No.1 spot in 2024 with a growth rate of 153,625 percent from 2020 to 2023. See the full list here.

———

This article originally ran on InnovationMap.

Teresa Thomas, newly named vice chair and national sector leader for energy and chemicals at Deloitte, shares her vision in an interview. Photo via LinkedIn

Newly named corporate energy, chemicals leader on navigating dynamic energy transition sector

Q&A

Deloitte is undergoing a leadership shift — and this evolution for the nearly 200-year-old company directly affects its Houston office and the energy transition line of business.

Earlier this month, Teresa Thomas was named vice chair and national sector leader for energy and chemicals at Deloitte. Based in Houston, she will also serve as an advisory partner and leader in Deloitte & Touche LLP's Risk & Financial Advisory energy and chemicals practice. She succeeds Amy Chronis, partner at Deloitte LLP, who will continue to serve within the energy and chemicals practice until her retirement in June 2024.

In an interview with EnergyCapital, Thomas shares a bit about what she plans on focusing as she takes on her new role.

EnergyCapital: As you transition into your new role, how would you describe your focus and priorities? 

Teresa Thomas: I am excited about what lies ahead for the energy and chemicals sector. The sector is moving into the new year with strong production and a focus on returning value and achieving efficiency. The sector is innovating with new technologies, such as artificial intelligence, including generative AI. that can capture value from data to transform and reinvent business processes and optimize the workforce.

The mission for my leadership role is to grow our practice by serving our clients with world-class solutions; venture into new innovative areas that exceed the changing needs in our sector; and attract, retain, and develop the best talent across Deloitte’s four businesses. I am bullish about the sector's role in leading on the forefront through the energy transition, pioneering innovative technologies and solutions that will help solve some of society’s most pressing issues, and contributing unique and differentiated ideas to help transform the energy and chemicals sector to meet global demands in a sustainable and profitable way.

EC: How is Deloitte navigating the trends and progression of the energy transition? What are clients’ expectations, and how does the company plan to stay a step ahead?  

TT: At Deloitte, we proactively navigate the dynamic landscape of the energy transition with a strategic, collaborative, and innovative edge. Our extensive global presence and diverse partnerships, spanning industries, regions, and academic institutions, keep us abreast of emerging trends, regulatory shifts, and technological advancements. Client expectations are evolving towards sustainable practices, and we respond by providing innovative solutions that align with their goals.

Our commitment to staying a step ahead involves continuous investment in talent development and innovative technologies. Central to our strategy is taking ownership of pivotal marketplace issues and adeptly guiding clients through the intricacies of their business challenges. Through harnessing our extensive expertise that cuts across our four business, we aim to create growth opportunities and offer innovative solutions.

EC: Energy companies have been known to more slowly adopt and adapt to new technologies. Is that changing?

TT: We believe the energy and chemicals industries is at the forefront of adopting cutting-edge technologies to bolster operational efficiency, increase productivity, reduce costs, and advance safety and sustainability measures. From bringing new materials to consumers, pioneering offshore operations, transforming shale resources into one of the most competitive resources, to developing new and sustainable molecules, the industry has highlighted its adaptability. The industry continues to be a leader of groundbreaking technologies including the development of biofuels, biomaterials, carbon capture, hydrogen production, and more.

Additionally, energy companies are increasingly leveraging digital technologies, including GenAI to enhance operational efficiency, optimize resource management, and drive innovation across various segments of the industry. From interpreting seismic data and predicting reservoir behavior, to employing carbon analytics and tracking GHG emissions, the industry is transforming its operations and contributing to a more sustainable and efficient energy landscape. While there is much more to be done, we remain confident that the energy industry will continue to help lead the way in innovation.

The oil and gas industry has been increasingly investing in clean energy over recent years, wherein the clean energy investments by the oil and gas industry as a share of their upstream capex quadrupled between 2020 and 2022. Yet, this clean energy investment remains less than 2 percent of the overall clean energy investments made in 2022.

After having outperformed the broader S&P 500 by over 45 percent since 2021, the oil and gas industry faces a threefold mandate:

  1. uphold financial stability,
  2. sustain high dividends, and
  3. augment investments in low-carbon ventures.

However, the central challenge lies in scaling the energy transition while maintaining profitability and shareholder value.

EC: The chemicals sector, in particular, seems ripe for disruption with new and developing alternative materials on the scene. What do you expect to see from this industry in 2024?

TT: There is a chemicals and material transition taking place as companies are pushed to develop more sustainable, lower-carbon materials. And given that 96 percent of all manufactured goods are touched by chemistry, this transition could also be transformational. Over the next year, we expect chemical companies to continue positioning themselves for this high-tech, low-carbon future in three notable ways.

  • First, we expect companies to increase automation and digitalization to improve productivity and accelerate innovation.
  • Second, we see companies continuing to invest in circular solutions, whether it's designing materials for a sustainable end-of-life or using renewable feedstocks.
  • Third, we expect some companies to lean into the new chemicals and materials needed to support the energy transition.

EC: As a Houstonian, what do you see the city’s role amidst the future of energy?

TT: Houston is a top global city, driving transformational change and a convener to an ecosystem of players that are leading the charge in the energy transition through biofuels, biomaterials, and advanced methods for carbon capture and hydrogen production.

Although not a native, I did find the energy and chemicals sector early in my career which brought me to this dynamic city. Houston’s advanced network of partners are working together toward creating innovative solutions that are accelerating the advancement of a lower carbon future.

———

This conversation has been edited for brevity and clarity.

Here are three things to know in Houston energy transition news. Photo via Getty Images

Deloitte's new energy lead, a $7.4B deal, and more things to know this week

take note

Editor's note: It's a new week — start it strong with three quick things to catch up on in Houston's energy transition: a roundup of events not to miss, a Houston energy executive to know, and more.

Incoming: Deloitte names new head of energy, chemicals practice

Teresa Thomas was named vice chair and national sector leader for energy and chemicals at Deloitte. She takes over the role from Amy Chronis, partner at Deloitte LLP, who will continue to serve within the energy and chemicals practice until her retirement in June 2024.

"I am fortunate to have worked in the energy and chemicals industry for most of my career, and I'm honored to continue working with companies that are playing a pivotal role in powering progress and purpose," Thomas says in a news release. "Our industry is at the epicenter of the energy transition that can fuel tremendous potential for society, and I'm excited to be leading during this important and transformational time."

Last year, Chronis announced her retirement from Deloitte, and the company named Melinda Yee as the incoming Houston managing partner at Deloitte, a role Chronis held in addition to the title of vice chair and US energy and chemicals leader. Chronis is slated to retire in June 2024, and Yee's new role became effective this month. Read more.

Events not to miss

Put these Houston-area energy-related events on your calendar.

  • Energy Underground's January meeting is on January 18 at noon at the Esperson Building. Register.
  • The Houston Oil and Gas Executive Leadership Summit is an meeting of executives, policymakers, academics, and other professionals with a particular interest related to energy. The event is January 25 at the DoubleTree by Hilton Hotel Houston. Register.
  • Future of Energy Summit is Tuesday, February 6, at AC Hotel by Marriott Houston Downtown. Register.
  • The De Lange Conference, taking place February 9 and 10 at Rice University's Baker Institute for Public Policy, is centered around the theme “Brave New Worlds: Who Decides? Research, Risk and Responsibility” this year. Register.

Really big deal: Southwestern Energy to combine with Chesapeake in $7.4B deal

Chesapeake Energy and Southwestern Energy are combining in a $7.4 billion all-stock deal to form one of the biggest natural gas producers in the U.S.

The transaction, valued at $6.69 per share, will create a company that has large scale acreage in the Appalachia region and Haynesville, Louisiana. It has current net production of approximately 7.9 Bcfe/d with more than 5,000 gross locations and 15 years of inventory.

“The world is short energy and demand for our products is growing, both in the U.S. and overseas," Chesapeake CEO Nick Dell’Osso said in a prepared statement Thursday. "We will be positioned to deliver more natural gas at a lower cost, accelerating America’s energy reach and fueling a more affordable, reliable, and lower carbon future." Read more.

Teresa Thomas was named vice chair and national sector leader for energy and chemicals at Deloitte. Photo via LinkedIn

Deloitte names new Houston-based leader of energy, chemicals practice

new hire

Deloitte announced a new local leader to oversee energy and chemicals nationally.

Teresa Thomas was named vice chair and national sector leader for energy and chemicals at Deloitte. Based in Houston, she will also serve as an advisory partner and leader in Deloitte & Touche LLP's Risk & Financial Advisory energy and chemicals practice.

She will lead the strategic direction of Deloitte's energy and chemicals practice and drive program growth in the sector. Thomas succeeds Amy Chronis, partner at Deloitte LLP, who will continue to serve within the energy and chemicals practice until her retirement in June 2024.

"I am fortunate to have worked in the energy and chemicals industry for most of my career, and I'm honored to continue working with companies that are playing a pivotal role in powering progress and purpose," Thomas says in a news release. "Our industry is at the epicenter of the energy transition that can fuel tremendous potential for society, and I'm excited to be leading during this important and transformational time."

Last year, Chronis announced her retirement from Deloitte, and the company named Melinda Yee as the incoming Houston managing partner at Deloitte, a role Chronis held in addition to the title of vice chair and US energy and chemicals leader. Chronis is slated to retire in June 2024, and Yee's new role became effective this month.

Thomas has served in a variety of leadership roles and has more than 20 years of experience in the energy industry. She is used to serving multiple large clients, and developing deep C-suite and board relationships, as well as advising on future success for the business, and the industry as a whole. She was named as one of Hart Energy's 25 most influential women in energy in 2023, and is the vice chair and board member of The Rose, which is a nonprofit women's breast health organization in Southeast Texas.

"Teresa has played an integral role as strategic advisor to many of our valued energy and chemicals clients as they navigate significant transition, and her leadership, enthusiasm and vision will help shape the future of our practice," Stanley Porter, vice chair at Deloitte and U.S. energy, resources and industrials leader, says in a news release. “I am confident that Teresa brings the right vision, experience and relationships to further lead and grow the energy and chemicals sector as it experiences critical transformation and convergence."

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UH launches new series on AI’s impact on the energy sector

where to be

The University of Houston's Energy Transition Institute has launched a new Energy in Action Seminar Series that will feature talks focused on the intersection of the energy industry and digitization trends, such as AI.

The first event in the series took place earlier this month, featuring Raiford Smith, global market lead for power & energy for Google Cloud, who presented "AI, Energy, and Data Centers." The talk discussed the benefits of widespread AI adoption for growth in traditional and low-carbon energy resources.

Future events include:

“Through this timely and informative seminar series, ETI will bring together energy professionals, researchers, students, and anyone working in or around digital innovation in energy," Debalina Sengupta, chief operating officer of ETI, said in a news release. "We encourage industry members and students to register now and reap the benefits of participating in both the seminar and the reception, which presents a fantastic opportunity to stay ahead of industry developments and build a strong network in the Greater Houston energy ecosystem.”

The series is slated to continue throughout 2026. Each presentation is followed by a one-hour networking reception. Register for the next event here.

ExxonMobil pauses plans for $7B hydrogen plant in Baytown

project on pause

As anticipated, Spring-based oil and gas giant ExxonMobil has paused plans to build a low-hydrogen plant in Baytown, Chairman and CEO Darren Woods told Reuters.

“The suspension of the project, which had already experienced delays, reflects a wider slowdown in efforts by traditional oil and gas firms to transition to cleaner energy sources as many of the initiatives struggle to turn a profit,” Reuters reported.

Woods signaled during ExxonMobil’s second-quarter earnings call that the company was weighing whether it would move forward with the proposed $7 billion plant.

The Biden-era Inflation Reduction Act established a 10-year incentive, the 45V tax credit, for production of clean hydrogen. But under President Trump’s One Big Beautiful Bill Act, the period for beginning construction of low-carbon hydrogen projects that qualify for the tax credit has been compressed. The Inflation Reduction Act called for construction to begin by 2033. The Big Beautiful Bill changed the construction start time to early 2028.

“While our project can meet this timeline, we’re concerned about the development of a broader market, which is critical to transition from government incentives,” Woods said during the earnings call.

Woods had said ExxonMobil was figuring out whether a combination of the 45Q tax credit for carbon capture projects and the revised 45V tax credit would enable a broader market for low-carbon hydrogen.

“If we can’t see an eventual path to a market-driven business, we won’t move forward with the [Baytown] project,” Woods told Wall Street analysts.

“We knew that helping to establish a brand-new product and a brand-new market initially driven by government policy would not be easy or advance in a straight line,” he added.

ExxonMobil announced in 2022 that it would build the low-carbon hydrogen plant at its refining and petrochemical complex in Baytown. The company had indicated the plant would start initial production in 2027.

ExxonMobil had said the Baytown plant would produce up to 1 billion cubic feet of hydrogen per day made from natural gas, and capture and store more than 98 percent of the associated carbon dioxide. The plant would have been capable of storing as much as 10 million metric tons of CO2 per year.

Greentown and partners name 10 startups to carbontech accelerator

new cohort

The Carbon to Value Initiative (C2V Initiative)—a collaboration between Greentown Labs, NYU Tandon School of Engineering's Urban Future Lab and Fraunhofer USA—has announced 10 startup participants to join the fifth cohort of its carbontech accelerator.

The six-month accelerator aims to help cleantech startups advance their commercialization efforts through access to the C2V Initiative’s Carbontech Leadership Council (CLC). The invitation-only council consists of corporate and nonprofit leaders from organizations like Shell, TotalEnergies, XPRIZE, L’Oréal and others who “foster commercialization opportunities and identify avenues for technology validation, testing, and demonstration,” according to a release from Greentown

“The No. 1 reason startups engage with Greentown is to find customers, grow their businesses, and accelerate impact—and the Carbon to Value Initiative delivers exactly that,” Georgina Campbell Flatter, CEO of Greentown, said in a news release. “It’s a powerful example of how meaningful engagement between entrepreneurs and industry turns innovation into commercial traction.”

The C2V Initiative received more than 100 applications from 33 countries, representing a variety of carbontech innovations. The 10 startups chosen for the 2025 fifth cohort include:

  • Cambridge, Massachusetts-based Sora Fuel, which integrates direct-air capture with direct conversion of the captured carbon into syngas for production of sustainable aviation fuel
  • Brooklyn-based Arbon, which develops a humidity-swing carbon-capture solution by capturing CO₂ from the air or point-source without heat or pressure
  • New York-based Cella Mineral Storage, which works to develop subsurface mineralization technology with integrated software, enabling new ways to sequester CO2 underground
  • Germany-based ICODOS, which helps transform emissions into value through a point-source carbon capture and methanol synthesis process in a single, modularized system
  • Vancouver-based Lite-1, which uses advanced biomanufacturing processes to produce circular colourants for use in textiles, cosmetics and food
  • London-based Mission Zero Technologies, which has developed and deployed an electrified, direct-air carbon capture solution that employs both liquid-adsorption and electrochemical technologies
  • Kenya-based Octavia Carbon, which develops a solid-adsorption-based, direct-air carbon capture solution that utilizes geothermal heat
  • California-based Rushnu, which combines point-source carbon capture with chemical production, turning salt and CO2 into chlorine-based chemicals and minerals
  • Brooklyn-based Turnover Labs, which develops modular electrolyzers that transform raw, industrial CO2 emissions into chemical building blocks, without capture or purification
  • Ontario-based Universal Matter, which develops a Flash Joule Heating process that converts carbon waste such as end-of-life plastics, tires or industrial waste into graphene

The C2V Initiative is based on Greentown Go, Greentown’s open-innovation program. The C2V Initiative has supported 35 startups that have raised over $600 million in follow-on funding.

Read about the 2024 cohort here.
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