The global oil and gas industry is experiencing tough times with frequent failure of various field equipment, plunging supply chain, turbulent crude market and stringent environmental regulations. In times like this, IIoT oil and gas is being appreciated at all the levels of the industry value chain.
What is the Industrial Internet of Things?
IIoT is part of a larger concept known as the Internet of Things (IoT). The application of the Internet of Things across industries is popularly known as Industrial Internet of Things or Industry 4.0.
The invention of Programmable Logic Controller led to the inception of IIoT. IIoT is an integration of many recent advancements including cybersecurity, cloud computing, mobile technologies, machine-to-machine, 3D printing, advanced robotics, big data, etc. It has enabled the acquisition of a far greater amount of data, at a far greater speed and far more efficiently.
For an industry as diverse as oil and gas, the benefits of IIoT oil and gas application lie in the strategized deployment of this technology. IIoT will help in connecting objects which were previously impossible to reach and will assist in digitization, optimization and automation of the processes. IIoT oil and gas is emerging as the new reality of the industry. This revolutionary technology will save time and enhance the efficiency of the operations throughout the oil and gas value chain.
Why Industrial Internet of Things in the O&G Industry?
The oil and gas companies are facing challenges which are majorly ascribed to the inappropriate approach of the companies to collect data and maintain assets. The time has arrived when oil and gas companies must leverage the immense potential of data and its dynamics.
When there is a change in the state of the shale shaker, the mud pumps get affected and the repercussions are serious. If the pipeline leakage cannot be identified, it poses a major threat to the company, or for that matter, if the burner fails at any point, the overall refinery operation is disrupted. These are just a few examples of the issues which occur every now and then and affect every stage of the oil and gas business life cycle. And these failures are evidence to the traditional monitoring solutions have now become outdated, expensive and less efficient.
All the sectors of the industry- upstream, midstream and downstream, can function effectively only with the help of detailed information from all the areas of operations and IIoT, as a technology, helps in achieving just that.
Challenges faced by the Industry
There are some major challenges faced by the companies in all the three sectors of the industry and thus, a technology that can generate, store, communicate and process data with an aim to transform business, is the need of the hour.
- UPSTREAM: Companies during the search of a new offshore or onshore oil and gas field and its operation seek a process that is economically feasible and environmentally responsible. But billions of dollars are lost in this process which cannot be recovered in any form.
- MIDSTREAM: One of the huge problems for midstream companies is the leakage of oil. According to a report of Pipeline and Hazardous Materials Safety Administration (PHMSA) of the United States, since 2010, approximately nine million gallons of crude oil has been spilt from the US pipelines.
- DOWNSTREAM: The downstream sector is been ravaged by the uncertain downtime and ageing infrastructure. In such difficult times, the maximum possible ROI can only be achieved through reduced unplanned downtime. This will lay the foundation of enhanced operational efficiency.
Arrival of IIoT as a promising breakthrough
IIoT oil and gas can subdue all the above challenges easily and has endless applications in the oil and gas industry. Taking each sector into account, a detailed study of the applications of IIoT oil and gas has been mentioned below.
Amidst the rise and fall of oil prices, the upstream companies are going through a phase of increased technical and operational complexity. Over a period of time, there has been a substantial increase in the number of equipment that are placed on the seabed and the range of pressure and temperature they can bear.
The increase in complexity and number of equipment has led to a data explosion in the E&P segment. These data are captured using thousands of sensors. According to a report by Deloitte, “by some estimates, internal data generated by large integrated O&G companies now exceed 1.5 terabytes a day.” But the matter of concern is that this data surge has not been able to return even 1% of the economic benefits.
In another report by Teradata, it was mentioned that “The upstream industry loses $8 billion dollars per year in non-productive time (NPT) as engineers spend 70 per cent of their time searching for and manipulating data”.
Year after year, all this cash flow is leading the industry towards a major revenue loss. The companies need to understand that no matter what data capturing structure they build, optimization of that data is of utmost importance if they want to streamline existing operations and search for new areas of improvements.
A few ways in which IIoT oil and gas can be deployed in this sector of the industry are:
Production: Approximately 50,000 wells are handled by a large company and so if these wells, which are spread across the world, can be automated and monitored, it will be one of the most successful applications of IIoT oil and gas in the upstream.
Development: Active rig time can be increased significantly by deploying smart sensors, big data analytics and planned networking. This and a connected supply chain networked through big data can lead to a reduction in project delays and cost inflation.
Exploration: The data which is buried under the sea is the most difficult to tap. But with the improvement in seismic data acquisition (4D, micro-seismic) and computing power, the companies are able to get a better idea of the subsurface geology. The scope of improvement lies in faster processing of data and transforming them into surface models.
“Midstream energy companies lag far behind than what other industries invest in information technology.” – Lars Larsson, Senior Product Manager, Schneider Electric
The midstream sector has to deal regularly with the transportation of large volumes and grades of products from multiple locations to the new end users and markets. But the real difficulty lies in the unintentional pipeline breaches, fuel leaks and thefts which has led to an annual loss of $37.23 billion. These mishaps have become a major concern for companies.
IIoT oil and gas has enabled companies to reduce leakage and increase efficiency. Companies like TransCanada and PG&E are successfully overcoming this pitfall by using sensors (installed inside or outside the pipeline) to create data of potential pipeline breaches. Currently, smart sensors are being used by TransCanada and Enbridge to test four technologies which can see, feel, smell, and hear various aspects of their oil pipelines.
Presently, IoT is also enabling the integration of pipeline data with the data from the exporting facilities, markets, and marine terminals which will result in data-equipped midstream enterprise. This will not only increase the operational efficiency of the sector but also enable cross-border linkages.
Commercially, downstream is the most challenging segment of the oil and gas business. There have been a few innovations recently in the processing technology but the uncertain refinery shutdowns, mishandling of various grades of crude and increasing strictness in the environmental regulations are drawing the gross refining margins towards the minimum.
All this can be controlled with IIoT oil and gas. Deploying sensors to create data whether at the asset level or to the whole plant will help in analyzing and optimizing operations to prevent failures and shutdowns. Also, a well connected and informed supply chain will lead to a healthy retail market which will help in tapping the new consumers and markets frequently and successfully.
To summarize, IIoT oil and gas is no longer an additional value feature but an urgent priority for all the sectors of the industry. The industry needs more relevant real-time data, connectivity of people, objects and process across the industry value chain to enter the period of growth and high efficiency.
Revolution in O&G through IIoT
IIoT oil and gas is the future of the industry but at present, the industry is lagging behind because of the slow implementation rate. Below are a few ways in which the technology can transform the industry at all levels of operations:
- Generating Revenue
According to Oxford Economics, if IoT is adopted by the whole industry, the global GDP will increase by 0.8% or $816 billion in the next decade.
With the regular fluctuation in the market, profit margins have tightened for the oil and gas companies. This is the chance for the industry to invest in IIoT oil and gas in order to increase ROI rather than implementing traditional cost-cutting measures and upsetting the whole ecosystem.
- Operational Efficiency
The loss of revenue due to the retirement of the ageing force in the coming years is inevitable. But this can be compensated with the investment in big data analysis and remote visibility which will lead to better asset management and optimization of production.
- Reduced Safety Risks
Oil and gas industry has been acknowledged as one of the most dangerous industries in the world. But with better information and awareness around the equipment and operations through IIoT oil and gas, all of this can be controlled.
- Reduced environmental footprint
With the increase in operational efficiency and decreased accidents, there will be a significant reduction in the impact of the oil and gas industry on the environment. The oil spills will decrease, energy use will decrease and other accidents will decrease leading to the reduction of environmental footprint.
Recent Advancements in the IIoT Technologies
Since IIoT oil and gas has emerged as one of the urgent requirements of the industry, there are many companies which are trying to integrate the whole system to get efficient results. There have been some major advancements by the tech giants of the industry which have been outlined below:
Predix is one of the most successful conglomerates of GE. It is also one of the world’s largest IIoT platform for the oil and gas industry. Its platform assists visualization, analysis and application without the need of custom software or applications. Predix provides analytics for anomaly detection, predictive maintenance, and prescriptive controls.
Predix is the business under GE Digital and GE Digital generates yearly revenue of $4 billion.
- Bosch IoT Suite
This initiative of Bosch has helped developers build, implement, and operate cloud-based IoT applications. The numerous cloud services offered by IoT Suite has made it easy for the oil and gas industry to build an integrated environment that assists the optimization of operations. This product of Bosch is built on top of Eclipse IoT open source projects and OSGi industry standards.
- Honeywell- Connected Performance Services
Honeywell is more than a century old company in the petrochemical industry and has now become one of the leading providers of IIoT oil and gas. The company has recently built a cloud-based service which enables monitoring, prediction and improvement in the plant performance. Honeywell Connected Plant helps in reducing downtime of the plant and improve underperforming assets.
These companies are a trailblazer in the IIoT oil and gas field and have helped the industry realize that now is the time to switch to IoT for a better future. These companies are helping the industry save millions of dollars on a yearly basis. Apart from this, there have been other initiatives taken in this field by many other companies to help in the better optimization of processes.
Towards Industry 4.0
Collaboration through IIoT oil and gas is the window that offers numerous possibilities and the industry is focusing on this presently. Amidst this backdrop, Energy Dais, an online O&G collaborative platform, understands the current industry needs. The company has curated a list of top IIoT companies of the industry which will help you get a better insight into the technological advancements in this field.
IIoT is connecting people, assets and the processes for the asset-intensive oil and gas industry. This technology is helping the industry deliver value irrespective of the market conditions. It will be interesting to observe emerging trends with respect to this revolutionary and empowering technology.
“To achieve the full benefits of digital transformation, companies will have to build their capabilities along a maturity curve that begins with connecting operations, moves to connecting the value chain and, finally, builds a fully connected enterprise.”
(This disclaimer informs readers that the views, thoughts, and opinions expressed in the article belong solely to the author and are based on general research. They do not necessarily reflect the views of the author’s employer, organization, committee or any other group or individual.)