Business and Technology Insights

IoT in Oilfield Operations: Ushering an Era of Connected Barrels

 
September 5, 2018

These are exciting yet challenging times for the Oil and Gas industry. Increasingly complex operations and tightening global competition continue to pose roadblocks, even as the availability of digital solutions such as IoT and new ways of working inject excitement and innovation into the enterprises.

Digital IoT platforms incorporate and integrate key technologies of Business 4.0 approach - namely Intelligence, Agility, Automation, and Cloud. Such platforms act as a “digital spine” that connects field sensor data collected by wells, facilities, and pipelines, benefiting oil field operators in powerful ways. Imagine a batch of crude oil in a gathering line, scheduling its own “crude by rail” pickup at a rail terminal. Sounds too far-fetched? Not quite so.

Agility in the oilfield translates into the ability to respond to events, improve the value of assets, and manage change effectively. To understand how IoT platforms can enable agility in several important ways in the oilfield, we need to look at how other industries are doing it.  Original Equipment Manufacturers (OEMs) across industries are changing their business models. They are moving from selling equipment to selling services. Aircraft engine manufacturers, for instance, no longer sell only engines. They sell “flight hours”. The new approach creates value for both the manufacturer as well as the customer. But it also requires tight integration that is difficult to sustain with traditional point to point linkages. With the advent of IoT platforms, the time is ripe for OEMs in oil and gas to replicate such models that enable high levels of collaboration and data analytics. 

Extracting value from ‘digital exhaust’

The recent price disruption in the petroleum market was challenging for both oilfield service companies and producers. It revealed that the traditional inflexible and inefficient approach to services is not robust enough to control costs. Oil companies typically spend huge amount of money on gathering and storing operations data. But, do they actually use the data they collect?

Most of the data is wasted - often referred to as “digital exhaust”.  However, now, Managed Data Services Providers (MSPs) are changing the equation. They provide end-to-end IoT managed services to deploy a fully enabled IoT platform that provides a secure environment, enabling new and creative avenues to enhance collaboration and deliver service. With IoT as the backbone, managed service partners are re-thinking their approach to services, pushing oil  producers to reconsider how best to work with their service partners.

Catering to needs of tomorrow with IoT

Digital automation is expanding in the field of Oil and Gas exploration as advanced drilling control systems increasingly move processing power and decision making to the very edge of the activity. Wells fitted with sensors are beginning to diagnose their own settings based on their activity level and the activity of those around them. Contrary to popular perception, the exciting promise of oilfield cognitive automation is not about displacing the things humans do, but enabling those that humans can’t.

To derive the maximum potential from IoT investments, oil companies must integrate these solutions end-to-end to build a connected oil enterprise, sans silos. According to studies, IoT applications in O&G could increase global GDP by as much as 0.8% or USD 816 billion during the next decade. Well implemented, IoT has the potential to propel oil companies into the future by leveraging agility and predictive insights. 

Tom Franklin is an Industry Advisor and Director of the TCS Energy & Resources Center of Excellence for Business Performance. He comes to TCS with over 40 years of Oil & Gas industry experience in operations and business unit management. For the last few years, he has worked with Energy & Resources Oil & Gas customers in the area of Digital Transformation. His main area of focus has been Advanced Digital Analytics for operations safety and performance improvement. He is one of the leaders of the implementation of TCS’ Industry 4.0 approach for the Energy & Resources unit and its Oil & Gas customers.