The scale of adoption of the Internet of Things in oil and gas industry is impressive: researchers claim, in as little as 4 years the market for IoT in O&G worldwide is set to reach $39.40 billion. The tremendous call for digital transformation in oil and gas industry is dictated by large extent by the range of technological challenges that organizations in downstream, midstream and upstream markets currently face: industrial control system management, tracking assets and machinery, maintaining pipes and wells in optimal condition, to name a few.
Plummeting prices for oil products account for increased need for implementing disruptive new-gen tech in oil and gas to optimize company operations and generate revenue. By introducing IoT solutions, O&G companies hope to boost productivity, decrease expenses, increase bottom line growth and avoid accidents.
Here, we will discover how IoT changes oil and gas industry, examine oil and gas IoT use cases, and draft a step by step plan for implementing IoT in your O&G business. Read on to learn more!
Challenges in the Oil and Gas industry
O&G companies are subdivided into three main categories: organizations are referred to as upstream, midstream and downstream. Upstream companies concentrate on search of new oil and gas reservoirs on sea and land, midstream deal with logistics (think vehicle fleets transporting O&G products to storage facilities, retailers and refineries), while downstream deal with marketing, refinery and distribution (a gas station is an example of a downstream O&G business).
Understandably, the issues these companies deal with also differ – as well as the transformations that ensue with the adoption of IoT.
Challenges in upstream oil and gas – The hottest problem in this field is maintaining extremely complicated and costly equipment. The exploration of surfaces for effective gas and oil extraction involves the application of heavy machinery and advanced technologies. Implementing IoT in the upstream oil and gas industry allows organizations to inspect even the most innovative engineering facilities remotely: prevent malfunctions, track schedules, and provide automatic alerts in case any damage occurs.
Oil and gas midstream challenges – Initially, oil and gas technology solutions required making physical inspections to see if they comply with existing regulations. By utilizing IoT innovations for oil and gas, O&G organizations are able to detect fluctuations in temperature, moisture, and other parameters, as well as ensure meeting global regulatory requirements on harmful emissions. Moreover, by using IoT, midstream oil and gas companies can transport O&G products in a substantially easier and safer manner.
Downstream challenges in the oil and gas industry – Cooling water, treating harmful waste, recovering oily sludge and solvents are among the most difficult challenges each downstream oil and gas company faces. With IoT, downstream oil and gas companies are enabled to use energy more efficiently, and revolutionize the entire operational process.
How technology affects the oil and gas industry: IoT benefits for O&G
Given today’s global warming issues, the activity of environmental activist groups, volatile prices, and the strife to create/discover new energy sources; IoTs application in O&G could be a lifesaver for many companies. The use of IoT in the oil and gas segment enables them to solve a large number of common industry issues.
If used to its full potential, the oil and gas industry achieve the following:
- Boost productivity – Using IoT in the oil and gas sector can help optimize expenses and facilitate an overall technological process of extracting oil and gas.
- Increase safety – IoT eliminates a great number of risks and mistakes, often caused by the human factor.
- Facilitate making data-driven decisions – IoT is able to provide precise real-time data for making decisions about the next important steps in research, extraction, refining, and logistics for the O&G industry.
- Reduce waste – Industrial IoT in the oil and gas sector is also focused on making it more environmentally friendly by eliminating the risks of leakage or equipment damage.
- Automation – IoT automation in O&G reduces machinery malfunction and minimizes downtime in case of crashes and breakdowns. By eliminating the human factor, IoT also reduces the number of accidents and accounts for increased employee security.
So, how does technology affect the oil and gas industry? In a nutshell, using IoT helps companies avoid disruptions and accidents, makes the entire production process more predictable, increases revenue while cutting expenses, beats competition, and expands market share.
IoT use cases in Oil & Gas
Surely, each O&G company approaches the adoption of IoT differently, based on its current needs and business objectives. In O&G, the market segment is also a decisive factor. Let’s now explore a range of the Internet of Things applications in the oil and gas industry.
Preventive equipment maintenance
The role of preventive maintenance in O&G is difficult to overlook. Predictive analytics helps reduce unproductive time, which is a common cause of revenue losses for O&G companies. For the upstream segment, tracking machinery conditions remains among the most pressing challenges.
Most of the oil and gas mining is done in difficult to access areas, and typically, an onsite presence is required to indicate malfunctions and determine if a particular piece of mining machinery needs repairs. IoT enables organizations to track the state of their equipment in real-time, without any physical presence, and avoid downtime.
Remote inspection of O&G machinery
Remote inspection plays a huge part in preventing accidents. Oil leakages, for example, usually lead to huge revenue losses, environmental problems, and serious damage to the organization’s reputation. Oil and gas IoT solutions not only track leakages and alert the managers about the problem, but also automatically inspect different types of machinery, and prevent damages and emergency situations.
IoT sensors are used for inspecting the state of pumps, filters, and other core pipeline components as well as flow thickness. In the US, IoT vendors, Ambyint and WellAware, provide O&G businesses with solutions for real-time inspection of wellheads and pumpjacks, enabling them to ensure sustainability, meet international standards, and prevent accidents.
Tracking tanker fleets in real-time
IoT sensors for oil and gas tankers inspect parts of the ship that are carrying products remotely, and monitor difficult-to-reach transportation facilities without any need to use human labor. These sensors track the location of any particular tanker and it’s health, and account for increased efficiency and security of transporting O&G products.
By using satellites, GPS and cellular data, IoT is able to provide near real-time updates on the current state of equipment and immediately respond to any changes in equipment operation, as well as update business-critical software in real-time.
The security of workers
O&G is a hazardous business accounting for immense rates of onsite accidents. The workers operate in some of the most dangerous conditions on the planet and regularly subject themselves to risks of injury. IoT monitoring helps evade the risks of equipment breakdowns; moreover, in the near future, some of the most potentially dangerous operations will be carried by automated machinery, without human intervention.
Advanced data analytics
Ultimately, IoT is all about capturing data and using it to derive valuable insights. Equipped with sensors, O&G production sites, such as pipelines, oil fields and refineries, are capable of collecting terabytes of data, all of which needs to be stored, categorized and analyzed. Some of this data is time-sensitive: for example, accident alerts need to have higher priority over other data types.
While previously, the only way to transfer this data was via satellite, which, admittedly, consumed a lot of time. IoT uses LPWANs (low power wide area networks) for data transmission and edge computing to process huge data sets. This enables IoT solutions to quickly provide insightful info to end users in comprehensive and readable formats.
Managing the supply-chain
The complex procedure of extracting oil and gas has also been made much easier with IoT; it also offers irreplaceable tools for managing the supply-chain. Based on info collected by IoT sensors, refineries can be notified about the types of oil that have been delivered, and make important manufacturing, inventory, and operational decisions.
In downstream O&G, IoT sensors help notify distributors when clients are running out of oil and gas. In the United States, where many homes use heating oil, one IoT vendor, TankClarity, has created a device which alerts both clients and distributor companies about low oil levels and instantly refill its supply. The same IoT system enables distributors to analyze the consumption and create a consumption plan for months in advance.
Steps for adopting IoT in your Oil & Gas business
Implementing advanced technologies in the oil and gas industry requires investments, and is a lengthy, painstaking process. Adopting a disruptive technology on a large scale requires a carefully crafted plan.
Below are the steps we suggest taking on the way toward using IoT to transform your O&G business.
1. Analyze your competitors: O&G is a competitive field; at the end of the day, companies want tech innovations to give them a competitive advantage. Examine how your competitors are using cutting edge technologies for ideas and insights.
2. Identify your current problems: every O&G business has at least one major bottleneck – a problem, to which IoT could provide a solution. Identify the most urgent problems you want IoT to solve.
3. Select the hardware type: the issues you want to solve and the data you want to collect will determine the type of hardware for your IoT solution.
4. See if your current equipment can connect to these hardware types: legacy equipment connectivity to IoT devices is one of the major roadblocks O&G companies face while undergoing their digital transformation. Yet, there are solutions on the market aimed at tackling this problem.
5. Use advanced solutions for data analytics: IoT is all about data; it should be collected and processed on time, and visualized in a readable format. Make sure your IoT solution comes with data analytics software. Hire Data Engineers and Analysts to read and structure the data.
6. Protect the security of IoT devices: admittedly, IoT increases the “attack surface” that hackers can use to harm your business. Implementing IoT requires using advanced security systems based on big data and machine learning to detect previously unknown threats.
7. Start small: the truth is – you don’t have to infuse IoT into every aspect of the production process all at once. You can start small, with simple and high-impact tasks, or better yet, with a pilot project, and move on after you’ve achieved the initial results. Partnering with a reliable IoT provider will ensure your transformational initiatives prove successful.
Still not sure where to start? Talking to digital transformation experts may help alleviate your concerns and shed light on the main areas which should be the focus of your transformational initiatives. At Eastern Peak we can help you boost the performance of your critical oil and gas assets and integrate them with IoT sensors and equipment.
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