The Internet of Things (IoT)—the connected network of Internet-enabled physical devices that collect and exchange information with each other—is rapidly growing in both acceptance and applicability across a number of industries.
This trend shows no signs of slowing down. Studies predict that by 2020, the IoT will include nearly 50 billion devices worldwide with 212 billion sensors producing 44 zetabytes of data. These devices, the “things” in the IoT, include everything from smartphones and automobiles to valves and pumps in industrial plants.
The growing momentum of IoT adoption is mainly driven by the reduction in cost of connectivity and computation. According to market studies, over the past 10 years, the cost of sensors has been cut in half, the cost of bandwidth has dropped by a factor of 40, and the cost of processing has decreased by a factor of 60. Although further efforts are required to lower the cost of sensors, the number of new IoT use cases has grown and a greater number of technology companies are developing IoT-specific services and technologies ranging from sensors and chip sets to platforms and software systems. The main barriers to IoT adoption by industries—network security and scalability—have also been addressed, with reliable and highly secure communication systems and analytics.
What do these advances mean for the oil field? The oil and gas industry finds itself at the precipice of a new era of innovation, spurred by a normalization of oil prices over the past 2 years. Now, as E&P companies slowly ramp up drilling and production activities while adjusting to a new period of “lower for longer” prices, the time is right for widespread adoption of the IoT.
Advancing the Digital Transformation
While several operators and service companies have begun implementing the IoT in some parts of their daily operations, the industry as a whole still seems uncertain about how to integrate it for optimal business impact. Fortunately, the industry does not have to start from first principles to implement IoT technologies, thanks to an infrastructure built in support of the first iteration of the digital oil field more than a decade ago.
The digital oil field has made strides in certain areas, such as affording project collaboration with colleagues located across the globe via real-time operating centers. However, the concept has not fulfilled its ultimate promise of enabling information-based business decisions that deliver end-to-end optimized operations, increased uptime, and new value creation.
A true digital transformation in the oil and gas industry is now possible, thanks to a confluence of events. First, the successful adoption of IoT-enabled analytics in the consumer space has created an expectation of similar results in the E&P arena, along with a strong ecosystem capable of delivering those results. Second, ongoing advances in cloud-based storage, data transmission, and computing power continue to drive cost reductions in IoT infrastructure and implementation. And third, oil and gas companies have a growing interest in using IoT strategies to transform their business operations by fully integrating equipment and systems—from the sandface to their back-end IT and financial systems.
Transforming Production Data Into Asset Optimization
Production operations are a prime application for IoT technology, which has the potential to increase asset awareness, appreciably lower the cost of automation, and ultimately enable asset optimization and control at much lower costs. Big-data analytics have clear business cases for field production. Real-time monitoring and analysis related to failure predictions, for example, allow operators to deploy field crews as needed, and to only those wells requiring maintenance or repair. This can significantly lower field operating costs, while improving safety by minimizing the number of trips to and from different wellsites.
Today, many of the production assets are either connected through proprietary SCADA systems and expensive communication infrastructure, or not connected at all. To achieve production optimization at the field and asset levels, we need to turn artificial lift systems into IoT devices with sensors and an open communication infrastructure that connects across wells and to the back-end applications. With the right IoT infrastructure, we can achieve integrated management of the reservoir, well, and surface facilities—enabling end-to-end optimization with a much more economical value proposition compared to the status quo. The Industry 4.0 initiative is all about autonomous systems using the IoT, open architectures, and communication protocols. A true digital transformation is now possible for the oil field.
Envisioning the Field Before and After
Beyond production, the drilling operation can also be automated through the use of new IoT-enabled software platforms and infrastructure that fully integrate drilling operations for all sections of the well. The drilling rig is an inherently dangerous place for workers, and a prime location for implementing IoT technology to simultaneously lower safety risks and improve economics.
Having the right IoT infrastructure in place makes many types of big-data analytics possible. Data from one well, or multiple wells, can be integrated and analyzed all the way back to the enterprise resource planning system based at the corporate office. This real-time and historical analysis allows the operator to compare initial projections with actual data and then make corrections to optimize the production process and bring costs back in line with expectations.
How does the industry more fully embrace and implement the IoT in its daily activities, when all of the equipment and services required to complete a project typically come from multiple service providers?
A typical production operation, for example, includes a variety of lift systems, surface systems, and reservoir data. They are then connected via SCADA systems that communicate with back-end applications. Separately, maintenance crews execute regularly scheduled activities in the field without the benefit of real-time data. To optimize the entire production operation, these different systems and groups must effectively talk to each other.
To truly advance the digital oil field, the industry as a whole must develop a consistent set of standards for IoT and applications communications. Standardization around applications interfaces, protected communication protocols, and data acquisition and storage will afford an integration that promotes compatibility and interoperability. By standardizing the collected technical and nontechnical data, and then running integrated analytics across all E&P functions, the upstream community can improve communication and gain new operational insights.
In addition, IoT open-source communities are defining various standards, inclusive of interoperable data models, industrial architecture, security and connectivity frameworks, and fog computing platforms that are key elements to the successful delivery of the new digital oil field. These new standards will enable service providers to achieve their ultimate goal: to help operators lower costs and improve safety through end-to-end automation.
These concepts are not years away or on the distant horizon. The IoT can be fully implemented in the oil field today, with the equipment and systems we currently have available. All that is required is a little self-reflection, discipline, and cooperation. It is up to us as an industry to come together, collaborate, put these pieces together, and make the vision of a fully optimized digital oil field a reality.
