3 Stocks for 1 Big Energy Trend

Energy expert Daniel Yergin believes the world will be using a lot more energy in 2030, though the mix will still be dominated by oil and gas. Innovative companies that can help energy companies extract oil and gas more efficiently should profit tremendously as a result.

In a recent piece on trends in oil and gas technology, Mac Elatab discusses advances in technology that will make "oil and gas easier, safer, cleaner, and cheaper to extract." Ultimately, he feels that this development "presents a huge business opportunity ... and quality of life could improve for everybody."

The incredible potential of the digital oil field
One trend that seems especially promising is the development of the "digital oil field," which Elatab defines as "a web-based visualization platform from which companies can manage, measure, and track all of the data coming from all over the oilfield." This technology could possibly "increase the net present value of oil and gas assets by 25%," according to Booz & Co.

In a recent piece for TheWall Street Journal, Yergin said he feels that wide adoption of the digital oil field could result in an additional 125 billion barrels worldwide, which is "almost equivalent to the current estimate of reserves in Iraq."

IT and software companies are becoming more heavily involved with the trend -- among them are EMC (NYS: EMC) , IBM (NYS: IBM) , and Microsoft (NAS: MSFT) . In addition, Schlumberger (NYS: SLB) and Baker Hughes (NYS: BHI) , two leading oil-field-services firms, are also very active in this space.

3 ways to play the trend
Of the companies mentioned above, the following three might be particularly attractive ways to benefit from this growing trend.

1. EMC is one of the leaders in applying technology to oil and gas exploration and production. Indeed, it provides its services to more than 95% of the oil and gas companies on the Forbes Global 2000. Elatab also notes that the company is developing a center in Rio de Janeiro, which will focus on data analytics for oil and gas.

EMC was featured recently in our series on top big data stocks. My colleague Dave Meier felt the company was extremely effective in helping customers store, analyze, and act on their data, and he believed it would outperform the market over the long term.

2. IBM is very well-positioned to assist the oil and gas industry in processing the increasing amount of measurements in exploration, drilling, and production. The company recently announced that Watson, its famous artificial-intelligence computer, might be able to help energy companies discover best practices relating to "drilling analogs" and "extraction procedures from certain types of reservoirs." Already, IBM is talking to several oil-field clients, particularly in the area of seismic interpretation.

Like EMC, IBM was featured in our big data series. Dave Meier noted that IBM is a key player in this area, which has been data-centric for a very long time. IBM is also a stock that Warren Buffett seems very bullish on, so it's certainly one worth keeping an eye on.

3. Schlumberger is well-known for its commitment to technology development, so it isn't a surprise to see that it has a very significant digital oil field practice. Schlumberger defines the digital oil field as "accessing both low- and high- frequency data to integrate and automate drilling and production operations to improve recovery, operational efficiency, and effectiveness of equipment maintenance." It's been aware of this concept for more than 30 years now.

It seems clear to me that Schlumberger's efforts in this area will be richly rewarded in an environment of increasing demand and rising energy prices. The company, which has been able to deliver outstanding returns on capital in recent years, seems like a very attractive stock idea right now.

Exciting possibilities for investors
Yergin goes on to say that advances in technology "take resources that were not physically accessible and turn them into recoverable reserves." He believes that the digital oil field is a perfect example of how technology can "help to recover an enormous amount of additional oil worldwide."

Clearly, the digital oil field is an important trend that offers some exciting possibilities for investors. And following the three companies mentioned above might be a very good way to begin learning more about this developing trend.

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At the time thisarticle was published John Reeves does not own shares in any of the companies mentioned above. You can follow him on Twitter where he goes by @TMFBane.The Motley Fool owns shares of EMC and Microsoft. Motley Fool newsletter services have recommended buying shares of Microsoft and Schlumberger; and creating a bull call spread position in Microsoft. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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