Why on Earth Is BP Flying Drones Over U.S. Land?

BP’s use of unmanned commercial drones at its Alaskan operations should improve safety and reliability, as well as save time and money.

Jun 24, 2014 at 12:00PM

Earlier this month, the Federal Aviation Administration for the first time granted a company permission to fly an unmanned commercial drone over U.S. land.

But the company to receive this breakthrough approval wasn't Amazon.com, which last year revealed its ambitious plan to deliver packages to customers via drone-like "octocopters." It was BP (NYSE:BP).

BP's landmark deal
The British oil giant inked a five-year contract to use commercial unmanned drones at its drilling operations in Alaska's Prudhoe Bay field, one of the largest oil fields in North America. It plans to use the drones to conduct aerial surveys of its operations, including well pads, roads, pipelines, and other infrastructure.


A U.S. soldier prepares to launch the AeroVironment RQ-11 Raven drone. Photo credit: Wikimedia Commons.

BP tapped California-based drone manufacturer AeroVironment (NASDAQ:AVAV) for the task. AeroVironment flew the first drone -- the Puma AE -- two weekends ago over Prudhoe Bay to record and analyze data from BP's operations there. By using the Puma, a hand-launched 13.5-pound aircraft with a 9-foot wingspan, BP hopes to improve the safety and reliability of its Alaskan operations, as well as to save time and money.

While BP is the first company to receive federal authorization for a large-scale commercial drone program, it's not the only energy company testing drones. Houston-based exploration and production company Apache (NYSE:APA) has used drones to inspect operations at a Scotland gas plant, while ConocoPhillips (NYSE:COP) last year used ScanEagle drones manufactured by Insitu, a subsidiary of Boeing (NYSE:BA), to survey Alaska's Chukchi Sea before it could begin drilling there.

Advantages of using drones
According to Tim Conver, AeroVironment's chairman and chief executive officer, the partnership will provide BP a "safer, better, and more cost-effective solution for managing critical infrastructure and resources." BP and other energy companies usually rely on manned aircraft -- typically helicopters -- or on-the-ground inspectors to perform crucial safety checks on pipelines and other infrastructure.

Unfortunately, many pipelines are located in remote regions such as Alaska, where harsh terrain and challenging weather conditions can make safety inspections a highly time-consuming and arduous task. Helicopter surveys can also be highly risky, as they frequently require researchers to fly at low altitudes over difficult terrain. 


An aerial view of Alaska's Prudhoe Bay oil field. Photo credit: Wikimedia Commons.

But unmanned drones could make it a lot easier to detect safety issues such as leaks or weak spots in pipelines. They can also provide much better data and offer solutions to common issues. For instance, AeroVironment's Puma drones, which are outfitted with sophisticated laser-based sensors, can identify issues on the gravel roads that are crucial to BP's operations and determine the best way to fix them.

They can also make 3-D models of gravel pits and pinpoint specific areas that are prone to flooding. In other words, they could accomplish the same task as helicopters or on-the-ground specialists but better, faster, more cost-effectively, and -- crucially -- without jeopardizing human lives.

The takeaway
BP's use of drones is its latest initiative to improve safety standards, part of a companywide effort that began after the 2010 Deepwater Horizon disaster in the Gulf of Mexico, which led to the worst accidental oil spill in history and caused BP tens of billions of dollars in financial damage.

Like ExxonMobil after the 1989 Exxon Valdez oil spill, the hope is that BP will take the lessons it learned from the Gulf spill and become a more operationally sound and more safety-conscious oil company.

As for unmanned drones catching on in the energy industry, much of it will depend on how pilot programs like BP's fare. But given the industry's renewed emphasis on improving safety and the likelihood of continued improvements in drone technology, the outlook is good.

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Arjun Sreekumar has no position in any stocks mentioned. The Motley Fool owns shares of Amazon.com, Apache, and AeroVironment and recommends Amazon.com and AeroVironment. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

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Jun 12, 2015 at 5:01PM

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