September 3, 2017

IoT in Oil & Gas Industry

In spite of the fact that US oil boom has reached its peak so far and oil & gas companies are making tremendous profits, oil & energy sector is vastly deprived of its fair share of IT innovations. Our O&G experts who have assisted Oil & Energy companies and primarily fracking services companies in close collaboration with their supply chain business groups have reported a tremendous gap between upstream operations and IT alignment.

Oil & Energy companies are facing a lot of pressure to increase the ROI of their investors and venture capitalists. The single most important entity the whole oil & energy business revolves around is a well. One single well stimulation process may involve multiple sites, multiple fracking operations, multiple phases involved in the each fracking process, high value equipment and tools, amount of various materials such as sand to be used in each phase, varying ratio of chemicals and proppant to be used, and a lot of other information which comes from the well data. The biggest challenge these companies face is that this well data is not only maintained in both structured (various data bases such as MS Access, SQL and Oracle) and unstructured (such as spread sheets, emails, word documents) formats but also is stored in various disparate applications being used by different departments (such as sales, inventory, purchase, manufacturing, logistics, 3PL, finance, regulations & compliance etc.) that means there is always a multiple heaps of data stored in silos which further presents the biggest challenge in the form of a lot of redundant data, same data stored in multiple applications, duplication of data in the same application, adding to the management’s inability to view data at an aggregated level resulting in highly inaccurate forecasts for example- inaccurate demand forecasts and supply lead time may lead to delayed operations resulting in the degradation of chemicals and proppants and increasing the overall cost of the project.

Be it inventory of sand, proppants, chemicals, drill casing, wire lines, lubricants or pump trucks and other high value and heavy equipment needed in each phase of fracking may result in inventory disaster and lack of proper replenishment strategy can make it even worse and may lead to high cost of demurrage and detention. Being an asset intensive industry, Oil & Gas industry must be ale to manage their assets more efficiently than ever. They must be equipped with technologies like smart sensors and IoT that can enable them in a rapid and accurate decision making process.

To add to the worries of the oil and gas companies, environmental regulations are becoming tougher. Accidents have become very expensive and companies can no longer afford them; even small accidents now severely impact the future of the company. The industry is adapting to these new realities. Changes have already begun in the field installations, in the corner office, and across the oil and gas value chain—the change is called the Internet of Things (IoT).

Below are some really high value IoT use cases that can save big dollars to Oil & Gas companies:

  • Identifying underutilized E&P assets (e.g. pump trucks, fleet)
  • Optimized asset utilization to avoid cost inflation
  • Remote fleet monitoring and performance analysis
  • Predictive maintenance of equipment
  • Driver behavior
  • Fuel management
  • Efficient inventory management using technologies like RFID
  • Avoiding risks related to hazardous material using smart sensors
  • Avoiding risks related to the safety of human resources at fracking sites
  • Compliance with environmental regulations
  • Sharing real-time data (such as resource availability, utilization rate, over stock/ under-stock situations at various sites) across value chain to control project costs
  • Demand forecasting in upstream, midstream and downstream operations
  • Internet-connected trackers using long-range networks or Low Power Wide Area Networks (LPWANs), Satellite trackers provide location data on an item almost anywhere on the planet, even in areas that do not have cellular coverage
  • Near-field communication (NFC) tags, based on RFID standards, allow workers to use their mobile devices as readers for the NFC tags, which provides an advantage over RFID tags and readers to let companies track assets throughout their delivery journeys
  • Achieving operational efficiency

 

Losing a drilling day waiting on mud system arrival, losing a week of production because of a treating chemical stock out, or missing a day of retail sales because the refinery production schedule was not aligned with demand may mean millions to a company Imprecise forecasting of demand in all upstream, midstream and downstream operations makes the entire business critical decision making processes profoundly erroneous, not only leading the whole organization being incapable of leveraging their historical data but also making them blindfolded to their future opportunities. The entire well stimulation operation whose success or failure in terms of profitability heavily depends on intricate activities involved in each phase further more the whole project cost relies on the preciseness in costing of the activities. Using Inaccurate data to calculate the project cost draws a thin line between multi-million dollars profit and multi-million dollars loss and determines the difference between the success and failure of the project.