Big Oil, Big Profits, Big Brother

The multi-billion-dollar digital services Microsoft provides to the oil and gas industry could help delay the energy transition — and threaten worker privacy.

by | Jan 25, 2021


Microsoft President Brad Smith, CFO Amy Hood, and CEO Satya Nadella. (Credit: Microsoft/Brian Smale)

In June, as 15 million people nationwide marched in Black Lives Matter protests and employees at tech companies called on their bosses to cancel company contracts with law enforcement, Microsoft announced that it would temporarily restrict sales of its facial recognition software to police departments.

In July, as temperatures in the far north climbed to record highs and wildfires raged on the frozen shores of the Arctic ocean, Microsoft said in a statement that it would expand its in-house carbon tax, and unveiled a new “Transform to Net Zero” coalition to help the business world accelerate toward a carbon-free future.

These announcements may seem like unrelated moves made in response to equally unrelated crises. But each represents Microsoft’s ongoing efforts to promote itself as a moral leader in tech that’s sincerely grappling with the potential for its products and services to have a negative impact on the world, whether the issue at hand is mass surveillance or climate change.

However, over the past several years Microsoft has also aggressively expanded into the multi-billion-dollar digital services market for the fossil fuel industry.

Microsoft is partnering with fossil fuel corporations and services providers to develop tools and apps that monitor workers in order to carve money-saving efficiencies out of oil and gas production. Firms like ExxonMobil, BP, and Chevron are also using the huge data processing capabilities of Microsoft’s Azure cloud hosting service to power machine learning and artificial intelligence tools that help them identify lucrative new drilling opportunities, monitor wells remotely, and predict when a pipeline requires maintenance before it breaks down.

According to a recent report by oil industry analysts at Barclays, these services stand to shave the industry’s collective expenses by up to $150 billion annually, enough to potentially “delay the global transition to renewable energy.”

These engagements undercut Microsoft’s claims to be leading the tech sector in corporate climate action, says Lindsay Baker, the former head of sustainability at WeWork. “This is an aspect of the fight against climate change that they could and should take responsibility for.”

Microsoft has repeatedly touted one particular oil industry big data tool in its customer stories and press releases:“Connected Construction,” an Internet of Things, or IoT, application developed for Petrofac, a major global oilfield services providerby Accenture, a Microsoft partner and one of the world’s largest consulting firms.

Connected Construction combines worker surveillance with productivity analysis. The platform “tracks people, equipment and materials on site, enabling real-time insights and decision-making which, in turn, improves performance,” according to Petrofac’s website. In practice, workers carry individual, internet-equipped identifier tags that transmit location data to a cloud-based server, in this case, located in Microsoft’s Azure cloud computing service.

Based on screenshots in a Microsoft video of Connected Construction’s digital dashboard, the system produces heat maps that reveal patterns in how workers move around a site, as well as the amount of time each worker spends in “productive” and “non-productive” zones.

“The intelligence generated enables supervisors to detect and predict any schedule deviations and make decisions that support both productivity and safety,” says Daniel Atbir, Petrofac’s former vice president of construction, in the video. “Time is saved by tracking and correcting unproductive trends.”

In a separate blog post, Tony Shakib, an “IoT Business Acceleration Leader” at Microsoft Azure, describes how Connected Construction analytics inspired Petrofac to build an on-site lunch canteen for its workers at a construction site where it was being tested, so that they would stop taking lengthy off-site trips to eat.

Accenture built Connected Construction on Microsoft’s Azure IoT Edge platform using “Microsoft technology predominantly,” according to an Accenture spokesperson.

In 2019, Microsoft and Petrofac tried out Connected Construction at Petrofac’s $600 million Salalah Liquefied Petroleum Gas project in Oman. In a trial run involving 1,000 workers, the data and analysis that Connected Construction provided led to a 5% productivity boost, according to a 2019 strategic report published by Petrofac.

According to a promotional document released last year by Avande, a Microsoft and Accenture joint venture, Connected Construction has the potential to achieve “multimillion-dollar savings even on single, small sites.”

Petrofac did not respond to questions regarding how widely the firm is using Connected Construction. But there is plenty of room for expansion: The company has 11,500 employees working in over 30 countries who design, build, operate, and maintain oil rigs, pipelines, and refineries.

Based on company promotional materials, Microsoft has worked with more than a dozen different fossil fuel companies since 2018. In 2020, Microsoft was a sponsor and “digital transformation partner” at the International Petroleum Technology Conference in Saudi Arabia, and in 2019, the firm launched an “AI Center for Excellence in Energy” in the UAE to “drive innovation” across the fossil fuel industry.

In its recent report on digital trends in oil and gas, Barclays identified Microsoft as the “most aggressive” major cloud services provider to enter the sector.

“Microsoft, which has made announcements with Equinor, Exxon, Chevron, Halliburton, and Schlumberger, among others, told us that [oil and gas] is a top priority and that it will continue to increase investment in the space,” the report says.

Microsoft has “made a real push into the space,” said Claire Curry, an analyst at BloombergNEF who monitors digital trends in oil and gas. “They’ve been aggressive with deal making, they sign normally seven-year contracts. They seem to have technology partnerships along with the cloud computing partnerships.”

Microsoft’s work with the fossil fuel sector goes beyond reducing overhead. In 2019, Microsoft announced a partnership with Exxon to apply cloud computing, machine learning, and IoT tools at the company’s Permian Basin operations in Texas. According to Microsoft, the collaboration has the potential to “expand production by as much as 50,000 oil-equivalent barrels a day by 2025.”

Also in 2019, Microsoft, Chevron, and oilfield services provider Schlumberger announced they were teaming up to “accelerate creation of innovative petrotechnical and digital technologies,” to be hosted on Microsoft’s cloud. The partnership will “dramatically accelerate” Chevron’s capabilities to analyze data about potential drilling sites, according to technology vice president Joseph Geagea in a press release, and allow it to “bring prospects to development more quickly and with more certainty.”

Microsoft announced last year that it has made a five-year strategic agreement with Halliburton, the $24 billion global oilfield services provider. According to a Microsoft press release, Halliburton will migrate all of its remote site management tools to the Azure cloud, a move CEO and board chair Jeff Miller hailed as “an important step” that will allow the firm to “drive additional business agility and reduce capital expenditures.”

Several Microsoft PR campains in recent years have sought to position the company as a climate leader in the eyes of the general public. Earlier this year, the company announced that it plans to become “carbon negative” by 2030, meaning that in 10 years, Microsoft intends to be drawing more carbon pollution out of the air than it emits.

But some activists argue that Microsoft is undermining its own climate goals by helping oil firms wring additional profits out of their oil and gas drilling, processing, and distribution operations, — earnings that could help them stay in business longer despite accelerating price drops and growth in renewables. According to a 2020 report by Greenpeace titled “Oil in the Cloud,” just one of Microsoft’s recent partnerships, with Exxon subsidiary XTO Energy, could create 3.4 million tons of carbon pollution by 2025.

Microsoft declined to comment for this story. But in past public statements, the company has insisted there is no conflict between its commitments to corporate climate responsibility and its work with the oil industry. In a blog post announcing Microsoft’s carbon negative goal, president Brad Smith wrote that Microsoft would continue working with the oil and gas industry in order to spur innovation and “enable energy companies to transition.” When Greenpeace published its report last May excoriating Microsoft (as well as Amazon and Google) for working with oil companies, Microsoft released a statement saying much the same thing.

Microsoft recently announced two oil industry partnerships that do appear to focus on addressing the climate crisis rather than accelerating it. In a new “strategic alliance” with Shell, the oil major will supply Microsoft with renewable energy while the two “work together on new digital tools” for reducing the carbon footprint of Shell’s suppliers. Similarly, Microsoft and BP say they have signed a memorandum of understanding to collaborate on sustainability initiatives that include carbon capture projects.

Bill Weihl, executive director of Climate Voice, a nonprofit advocacy group focused on pushing corporations to take more aggressive climate action, is not surprised that Microsoft is trying to reframe its oil and gas partnerships as an opportunity to help solve the climate crisis. “There’s a deep belief in Silicon Valley that innovation is the solution to most problems,” he says, “a natural tendency to say ‘we don’t need to change what we’re doing, we just need to innovate a solution to the problem that’s in front of us.’”

But Big Tech’s faith in innovation may also provide oil and gas companies with cover to continue doing business as usual. “I think it is disingenuous at best and maybe pure sophistry at worst to say this is about helping these companies make the transition,” says Weihl, “when basically what they’re saying is we’re going to keep expanding oil and gas infrastructure and the amount that’s extracted, and we’re betting there’s going to be this magic solution soon enough” to stave off climate catastrophe.

While criticism from climate activists has led Microsoft to try to recast its oil and gas partnerships in a greener light, these corporate watchdogs are largely overlooking the fertile ground some of the same technologies are creating for potential privacy and labor abuses.

Luke Stark, an assistant professor at the University of Western Ontario and a former technology ethics researcher at Microsoft Research in Montreal, says that technologies like Connected Construction, while designed to find cost-cutting efficiencies and improve safety, could be used equally well to set crushing productivity targets and track labor activists.

“You sort of have this intersection of two problematic things, you’ve got the oil stuff and you’ve got the workplace surveillance stuff,” he says.

Stark’s concerns echo those of a Microsoft engineer who, writing under the pseudonym Zero Cool for Logic Magazine last year, described being sent to Kazakhstan to help Chevron develop new digital technologies for use at its giant Tengiz oil field. According to Zero Cool, Chevron asked Microsoft for help developing computer vision-based surveillance tech that could identify workers engaging in “suspicious activity.”

The Chevron managers “claimed that monitoring workers was necessary for keeping them safe, or to prevent them from stealing,” Zero Cool wrote. “But it wasn’t convincing in the slightest. We knew that they simply wanted a way to discipline their low-wage Kazakhstani workforce. We knew they wanted a way to squeeze as much work as they could from each worker.”

Neither Microsoft nor Chevron responded to requests for comment on Zero Cool’s account.

Through a former editor, Zero Cool declined to be interviewed for this story. But the technology they describe sounds similar to an app or platform that Microsoft and Shell developed in 2018: “intelligent computer vision tools” running on Azure process security camera footage in order to identify “high-risk” behavior at gas stations, such as people smoking or stealing. According to a customer story about the collaboration on Microsoft’s website, Shell sees “vast potential” to expand the use of this technology across its operations, including remote monitoring of workers on construction sites or equipment on the seafloor.

Curry, the BloombergNEF analyst, says that the oil industry’s adoption of these sorts of surveillance technologies is unsurprising because they solve many problems inherent in trying to monitor and optimize activities in complex work environments that are often the size of small cities.

“A large part of the reason workers aren’t efficient in refineries and so forth is just travel time,” says Curry. So “it’s not the fault of the worker, that’s just the nature of the business.” As Petrofac discovered in its trial run of Connected Construction, making these invisible time sinks visible can save a lot of money.

But in an industry where every minute of downtime can cost thousands of dollars, workplace optimization and disciplining workers for any lapses in productivity are two sides of the same coin, says Tim Lagonegro, a retired driller and 33-year veteran of the oilfield services provider Baker Hughes. In the early 2000s, while working in Nigerian oil fields, Lagonegro says he observed the introduction of tracking devices in company cars, tech that allowed managers to remotely monitor workers’ driving habits, including how fast they were driving and whether they were accelerating or braking harshly.

The tech was ostensibly introduced to improve safety, but Lagonegro says managers used it to discipline or even fire workers who exhibited poor driving habits, something he believes allowed the company to negotiate better insurance rates.

“It always felt punitive,” he says. “It just seemed like Big Brother. It’s always about the money, the company maximizing profits at the expense of the guy on the fire line.”

According to Stark, who worked at Microsoft for about a year, Microsoft employees are genuinely concerned about both the climate crisis and how technology can erode privacy. Continued pressure from the public and employee activists may result in positive change on both fronts: In December, the firm responded to criticism of a new ”productivity score” feature in its Microsoft 365 software, which critics said would fuel workplace surveillance, by publicly stating its “fundamental” commitment privacy. But Stark believes that ultimately government regulators will need to step in and set limits on how employers use the increasingly powerful tools that companies like Microsoft are developing and hosting.

“Especially on the timeframe we need to decarbonize, it’s just not possible to have these companies collectively act in a positive way,” he said. “The structure of their businesses is around their bottom line.”

Maddie Stone
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Maddie Stone is a freelance journalist based in Philadelphia. Her work has appeared in National Geographic, the Washington Post, The Atlantic, and more.