The Internet of Things (IoT) is heralded as a development that has the capacity to revolutionise the way we live. As IoT has the ability to transfer data without human interaction, it enables previously unprecedented amounts of data to be collected and exchanged with other devices, or through a central platform. In the future, this is set to increasingly help the oil and gas industry to directly manage existing assets, supply chains and/or customer relations.
In a Deloitte report, Connected barrels: Transforming oil and gas strategies with the Internet of Things, it is stressed that IoT can create an entirely new asset: information about the biggest elements of oil and gas businesses.
WHEN INFORMATION BECOMES VALUE
In such a large and diverse industry, there is no one-size fits all IoT solution. Regardless of business priority served by new sources of data, the way in which the resulting information creates value can be understood using a common analytical framework: The Information Value Loop. In completing a circuit of the Value Loop, from action back to modified action, information is communicated from its location of generation to where it can be processed. Information creates data sets that can be analysed in ways that generate action. The action is subsequently identified, which creates new information and restarts the cycle.
In essence, IoT connects existing technologies in a specific way that enables new actions from people and companies that could not have been taken before, therefore, creating value. For example, consider a standard factory. The goal may be to increase the span of key parts. Sensors could create information about rotations, temperature, and vibration of machinery, communicating that information to central servers where it can be collected and analysed in conjunction with other data.
With this analysis, the factory owners could create a predictive model of failure of that key part, and conduct maintenance only when failure is to be expected. This new action would create value in the form of reduced maintenance costs by limiting unplanned downtime and extending the premaintenance lifetime of the asset. The Deloitte report suggests that oil and gas organisations should design IoT deployments to create a flow of information around the Value Loop most relevant to a given business priority.
THE KEY TO IOT SUCCESS – Get the priorities right
According to a recent report by BIS Research, the global IoT in oil and gas market is expected to reach 39.40 billion by 2023, growing by 24.17 per cent each year from 2018 to 2023. IoT in the oil and gas market refers to a wide array of solutions, such as sensing, communication, cloud and edge computing, and data management. Sensing systems encompass a broad range of systems including different sensors, GPS devices, and Radio Frequency Identification. The BIS Research report highlights that the deployment of IoT solutions do not inevitably create economic value and a company cannot just add some sensors and ‘call it a day’.
Instead, companies must link IoT technology deployment with specific business priorities. BIS Research suggests companies first focus on minimising the risks to health, safety, and environment by reducing disturbances. Next, the focus could shift towards improving the cost and capital efficiency of operations by increasing productivity and optimising the supply chain. After this, companies could aim to focus on exploring new sources of revenue and competitive advantage that can help add more value to the business.
ACT TO REDUCE BOTTLENECKS
According to the Deloitte report, there will likely be impediments that limit the flow of information in the Value Loop which can be thought of as bottlenecks. A key challenge to realising the value of any IoT deployment is correctly identifying and effectively addressing any bottlenecks that may materialise.
Upstream, midstream and downstream players will likely have different IoT-enabled business objectives and different Value Loop bottlenecks. A company in the midstream segment may be focused on the ‘reliability’ of their processes or assets, driven by accuracy and/or time gains. A common Value Loop bottleneck companies in this space may be the ability to create new data, which could be solved with the implementation of new sensors.
A downstream company’s primary IoT-enabled business objective may be more towards ‘new value creation’, driven by a need for timeliness or security gains. Deloitte states that at this level, the challenges faced by companies are large and not entirely technical. While data can be brought together and displayed using existing communication and telematics, the greatest bottleneck is in getting consumers to act. This could be solved with appropriate ecosystem management.
COMPANIES USING IOT
In 2016, Shell deployed an IoT connectivity solution that combined IT automation and instrumentation technologies to provide digital oilfield capabilities to a Shell Nigeria pipeline facility. \ The Digital Oilfield (DOF) solution provides pipeline surveillance and wellhead monitoring capabilities to remote infrastructure in the Niger Delta. The DOF combines IT automation and instrumentation technologies to provide a support platform to utilise remote field data while optimising operational efficiencies.
This integrated technology platform offers faster analysis and more efficient data management to provide a comprehensive insight into field processes and results in safe and efficient oilfield operation.
More recently, in February 2019, ExxonMobil announced it would use cloud technologies in its Permian Basin operations. The application of the technologies is anticipated to improve capital efficiency and support Permian production growth by as much as 50,000 oil-equivalent barrels per day by 2025.
ExxonMobil’s Permian Basin acreage covers a 9.5 billion oil equivalent barrel resource base and more than 1.6 million acres, which means it represents the industry’s largest acreage position using cloud-based technology. Leveraging the power of IoT and the cloud, ExxonMobil is expected to make faster and more-informed decisions on drilling optimisation, well completions and prioritisation of personnel deployment. Importantly, leak detection and repair response times could be further reduced with enhanced access to emissions data, strengthening the voluntary actions to manage methane emissions.
Sources: Connected barrels – Transforming oil and gas strategies with the Internet of Things, Deloitte; Growing Internet of Things platforms, Deloitte; The more things change: Value creation, value capture, and
the Internet of Things, Michael E. Raynor and Mark Cotteleer, Deloitte Insights; Global IoT in Oil and Gas Market – Analysis and Forecast (2018- 2023), Bis Research