Oil and gas companies, which are grappling with an intense battle for customers amid a supply glut and stressed prices, are increasingly looking for ways to improve efficiency and reliability of their assets to gain a competitive edge. One area of rising investment is in the confluence of technology that allows greater communication and integration of different devices and sensors, the so-called Internet of Things (IOT), a promising disruptor that can allow producers to keep wells flowing and refineries running at a pace that wasn't possible only a few years ago.
By
Ghassan Barghouth
VP Middle East – Oil & Gas and Industrial Segments,
Schneider Electric
Oil and gas
companies, which are grappling with an intense battle for customers amid a
supply glut and stressed prices, are increasingly looking for ways to improve
efficiency and reliability of their assets to gain a competitive edge. One area
of rising investment is in the confluence of technology that allows greater
communication and integration of different devices and sensors, the so-called
Internet of Things (IoT), a promising disruptor that can allow producers to
keep wells flowing and refineries running at a pace that wasn't possible only a
few years ago.
IoT has
captured the imagination of consumer-device manufacturers, from refrigerators
that can automatically restock favorite foods to cars that communicate with
other vehicles and road infrastructure. Lower costs of sensors and the ability
to transfer and process growing amounts of data is enabling the shift to
greater connectivity for both consumer and industrial applications. In the oil
and gas sector, a critical industry that’s generally resistant to chasing the
latest fads, the adoption has been explosive.
Companies are
rushing to create cloud services that connect and integrate wells with other
equipment in effort to optimize energy consumption, increase reliability, and
allow for condition-based maintenance that helps producers maximize returns and
maintain continuous output.
This is
happening as a result of the growing number of devices with cellular or
satellite connectivity deployed in oil and gas applications around the world,
which was 423,000 at the end of 2013, according to Berg insight, an analyst
firm focused on the machine-to-machine market. Berg estimates that number will
rise by 21.4 percent per year to 1.12 million by 2018. All those devices churn
out peta-bytes (millions of gigabytes) of data that has to be analyzed and
shared on cloud systems, and protected from cyber risks. The applications are
almost limitless, from drones that can inspect remote operations to wearable
devices that track workers and foster better collaboration.
Machines have
been talking to each other for decades. With the Internet of Things, humans are
included in this conversation, transforming physical assets into digital ones
that constantly monitor its surroundings and communicates to humans, making our
machines more alive. By funneling this data into the cloud rather than
segregated, closed systems, people are able to interpret insights and trends on
how machines are behaving, and benchmark them against other assets which helps
make better decisions. In the next few days, IOT will develop a trend within
the industry to create a “self healing” or a “self optimizing” plant. Equipment and systems will be creating the
necessary workflows based on process simulation to heal abnormalities.
The value that
can be generated in the oil and gas industry by implementing an integrated IoT
strategy is considerable. According to a recent Deloitte study, decision makers
in the industry have access to just one percent of the data gathered from
assets. Improving data capture and analysis can cut unplanned well outages by
50 percent and increase "crude output by as much as 10 percent over a
two-year period."
This potential
for rising production from existing assets comes as international and national
oil companies retrench from investing in new technologies after crude prices
plunged over the past year. And it's precisely during such a period, when
planned projects are shelved and workers are let go, that low-cost oil
producers in the Gulf Cooperation Council should exploit favorable pricing from
services providers and make investments that will give them an edge when prices
rise.
Energy
companies are traditionally hesitant with new technology given the numerous
risks that must be mitigated, such as worker safety, protection of assets, and
environmental concerns. These issues take on an even greater importance for
countries in the Gulf, including Saudi Arabia, Kuwait, the United Arab
Emirates, Qatar and Oman, which derive the bulk of their income from oil and
gas exports. Any adoption of new technology has to ensure that critical
infrastructure is not jeopardized. Still, many companies in the region
recognize the importance of digitizing their assets and are well into the
process of developing these new systems.
One of the
faster growing segments is in Digital Oil Fields, which uses big data, workflow
automation, and other processes to improve efficiency and maximize output.
Although the
Middle East has been a relative slow adopter, according to RnR Market Research,
the region is poised to be the world’s fastest-growing digital oilfield market,
with spending to rise at a compound annual growth rate of 5.9% to 2022. This
compares with 4.8% for the global market during the same period. Kuwait Oil Co.
has launched three major pilot projects with a fourth one in the planning
phase. Oman, a pioneer in deploying enhanced oil recovery technologies to boost
output from its fragmented and mostly heavy crude reserves, is betting on its
program to ramp up production.
The National Oil
Companies in the region own some of the world's oldest continuously-operated
fields. Much of the equipment lack documents, control logics, and operational
procedures; many records are missing and knowledge isn't transferred between
departing and incoming employees. It's no surprise that GCC producers are
moving to digitizing their assets.
IoT has also
been used to build a 3D model of a refinery in the region, which was mounted on
a gaming platform to create a simulator. Workers could then be trained on how
to operate and maintain a plant without risking the safety of the facility or
interrupting output. These simulators mimic real-life scenarios, and include
operating procedures that enhance the transfer of knowledge within
organizations.
Technology may
advance incrementally on the margins for long periods of time without
substantially affecting established players. Indeed, developing technologies
may remain uneconomical on average, even as leading innovators approach
breakthroughs. The future will see an increase in mergers, acquisitions, and
the emergence of IoT (IT/Industrial) hybrid companies collaborating to bring
affordable and efficient innovation to the market. But once a technology
delivers cost and performance that is materially superior to the status quo; it
may well be adopted rapidly en masse.
About The Author:
Ghassan Barghouth, VP Middle East – Oil & Gas and Industrial Segments, Schneider Electric.
He has held a
number of key leadership roles throughout his 15 year experience in the gulf
region, where he successfully led highly-reputed specialized Energy Services
and Energy Management companies' organization's growth and sales strategies
across the Gulf region, covering Power Generation Services and I(W)PP projects,
and driving significant expansion of solutions available for the Transmission
& Distribution, Smart Grid, Oil & Gas, and Industrial Services
segments. Ghassan holds a bachelor degree in mechanical engineering from the
University of Jordan.
Source: The Gulf Intelligence, Dubai, UAE
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