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Internet of Things Technologies Could Transform Oil, GasIndustry

The global oil and gas industry’s hunt for hydrocarbons in increasingly remote, extreme environments and its focuson safety and efficiency as it faces a shortage of expertise is driving the need for Internet of Things solutions withinthe industry.

The Internet of Things – where objects, people and animals have unique identifiers and can transfer data over anetwork without requiring human-to-human or human-to computer interaction – has evolved from the convergence ofwireless technologies, micro-electromechanical systems and the Internet. In the Internet of Things, a thing can be aperson with a heart monitor implant, a car with built-in sensors that alert drivers to low tire pressure – or any naturalor manmade object that can be assigned an IP address and able to transfer data over a network.

The shift from human input generating data – such as credit card transactions at a gas station pump – to datagenerated between machines, is greatly expanding the number of possible transactions that can occur. Presently,there are at least 10 billion unique devices currently connected, according to technology analysis firm Gartner. By2020, Gartner expects the Internet of Things will have more than 50 billion devices.

The number of machine to machine (M2M) communications devices, which are a subset and major component of theInternet of Things, also is expected to grow. Originally used for automation and instrumentation (SCADA), M2Mcommunication technologies allow devices to use fixed and wireless networks to communicate with one another, saidFrank Weber, director of cybersecurity for the energy sector with NSS Labs, in an interview with Rigzone.

The number of devices with cellular or satellite connectivity deployed in oil and gas applications around the world was423,000 at the end of 2013, according to Berg insight, an analyst firm focused on the M2M market. Berg estimatesthat number will rise by 21.4 percent to 1.12 million by 2018. At the end of this forecast period, the mix betweencellular and satellite-based M2M devices will be around 781,000 cellular units and 244,000 satellite communicationunits.

Examples of transactions in the M2M world include a wireless sensor on a pump in an oil well, and devices such ascell phones mixed with human and machine-generated responses. In retail, radio-frequency identification, shippingand cell networks, machines are recording and reporting on what other machines are doing, which increases theamount of data being generated. This includes smart homes and power distribution grids, said Weber.

Internet of Things solutions are important for the oil and gas industry in that it allows oil and gas companies tomanage and gather data from operations in remote environments while eliminating the need for workers in theseenvironments. Already facing a challenge in qualified skilled labor, the global oil and gas industry faces losing evenmore of its workforce as Baby Boomer-aged workers begin to retire in the next few years.

“To cope with this future loss, the industry must address how to best leverage its existing resources,” said SerhiiKonovalov, who leads Cisco’s O&G Global Industry Solutions Practice and O&G Innovations, in an interview withRigzone.

“As we look back in history, there’s been a lot of different technological advances that have made a huge impact,such as canals, railroads and electricity,” said Greg Carter, head of Cisco System’s Internet of Everything businessunit, in an interview with Rigzone. “We see the Internet as the next major driver of change.”

Several drivers are behind the move towards Internet of Things technologies. Safety, which Carter said is the firstpriority for Cisco’s oil and gas customers, is one factor. The tightening of regulations in the oil and gas industry,

coupled with accidents such as Deepwater Horizon and cyberattacks that threaten everything from safety toproduction systems to a company’s brand, also is driving the shift towards Internet of Things solutions. Another majordriver is operational efficiency, such as maintaining uptime in production systems and optimizing operations to copewith pricing pressures.

Instead of flying an expert out to a remote oil and gas site to troubleshoot a problem, video technology can allowremote experts and onsite workers to share data and collaborate on solving an issue, said Carter. This can allowpeople on site and the management team at the home office to look at well and sensor data to manage a number ofonshore or offshore wells and work with value chain partners and customers to solve problems more quickly. Thistechnology, which can close the gap between remote operations and oil and gas experts, also is available fromLibrestream.

In addition to these drivers, the falling costs of sensors and introduction of simple, easy-to-use next generationsensors are allowing companies to more easily deploy sensors. The increase in sensors in onshore and offshore oiland gas operations – which can generate one to two terabytes of data per day per well – has contributed to the BigData trend in the oil and gas industry. These sensors can be used in a number of settings, from wells to pipelines.Innovation in sensors also continues to grow as oil and gas companies test distributed acoustic sensors.

Fog computing is also extending the cloud closer to the ground, allowing companies to identify select data sets in thecloud, and to bring this data down for analysis at the edge of the cloud, rather than sending all data across at once,which takes up bandwidth and raises costs. Fog computing doesn’t require additional appliances, allows for thestorage of data and enables companies to detect leaks and other issues more quickly, Konovalov noted.

Implementing Internet of Things technologies can provide oil and gas companies with the visibility to better controland maintain assets while reducing health and safety risks.

“This allows companies to better predict when equipment needs maintenance, to track spare parts on rigs, to knowwhether contract workers at a refinery are certified to be in certain areas, and to know how many people to evacuatewhen an incident occurs,” Konovalov said.

In July, Cisco announced two new industry solutions – Cisco Collaborative Operations and Cisco Secure OpsSolutions to address the challenges that its customers face from the Internet of Things – or what Cisco calls theInternet of Everything – in terms of risk management and compliance for industrial control environments in a numberof industries, including oil and gas, as well as connecting experts for mission-critical communications andcollaboration.

Carter estimates that between $10 and 20 trillion dollars is at stake in the different verticals in which Cisco plays,including oil and gas.

“Oil and gas companies can realize efficiencies in their operations by taking advantage of technology that enables theconvergence of data, voice and video and multiple business processes that can connect remote workers into systemsand connect production data into the supply chain,” Carter said.

Internet of Things technology can bring benefits to operations in unconventional oil and gas plays, where companiesare adopting a manufacturing approach to drilling and contending with low gas prices. The Internet of Things can alsoallow companies to have more visibility in operations in challenging environments such as ultra-deepwater, whereautomation has a chance to play a larger role. Several companies are building Internet of Things capabilities inside ofblowout preventers that will allow for better control and decrease maintenance time. Opportunities exist in the middleof these two examples of how the Internet of Things can help the oil and gas industry meet its goals of cost efficiency,reliability and safety, said Konovalov.

Oil and gas companies initially met Internet of Things solutions with skepticism, Konovalov said, but noted that manycompanies are now acknowledging that the Internet of Things is here and are trying to organize themselves for the

Internet of Things.

“When companies look at the future, competition will be about who can best capture the value of technology,” saidKonovalov.