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IoT for oil and gas industry: Updating a decades-old process

Though IoT for oil and gas companies has been around for years, it hasn't always been attainable for all, until now.

The internet of things may be the next big thing for a lot of industries, but in the oil and gas sector, remote monitoring of oil rigs and wells has been around for more than a decade. Even so, the high cost and complexity of creating the infrastructure and collecting the data has limited the number of assets big oil behemoths can monitor, while putting the practice of using IoT for oil and gas purposes out of reach for the majority of small and midsize operators.

The hurdle for some has become a window of opportunity for the two-year-old WellAware, which touts its IoT analytics solution as a modern and complete technology stack for helping oil and gas companies optimize the management and efficiency of their assets. The WellAware platform veers from traditional monitoring solutions thanks to its low-cost network infrastructure primed for remote oil fields, suite of mobile applications and analytics tools, which enable oil and gas operators of all sizes to achieve new levels of savings and peak operating efficiencies, according to Dave Milam, chief product officer at WellAware.

"Doing real-time monitoring of production assets is not a new idea in the oil and gas market -- the challenge has been that it is hard and expensive," Milam said. "The cost impact of this different approach is what truly changes the game."

Oil and gas industry needs IoT

As the oil and gas sector comes face to face with a number of unique challenges, it could use a game changer. The volatility of declining oil prices has chopped profit margins in half in just a few months, mounting pressure on companies to get a handle on inefficiencies, rein in operating costs and reduce downtime. U.S. operating expenses for the sector totaled over $50 billion in 2014 with downtime in excess of 10%, Milam said. In addition, the average worker in this sector is seven times more likely to be injured, which puts the issue of safety and compliance front and center.

Doing real-time monitoring of production assets is not a new idea in the oil and gas market -- the challenge has been that it is hard and expensive.
Dave Milamchief product officer, WellAware

The old way of monitoring rigs and wells involved custom-built solutions that included multimillion-dollar, dedicated radio networks for communications and complex and costly SCADA systems, Milam said. "Long story short, monitoring production data is nothing new for operators, but it's only been something the super majors and major companies could afford to do," he explained. "And even then, they had to pick and choose, only able to monitor maybe 60% to 70% of their wells."

IoT for oil and gas industry: A prime candidate for modernization

Oil and gas companies are prime candidates for leveraging an integrated IoT strategy to transform business operations for many reasons, not the least of which is their relative digital immaturity compared to other industries -- a 4.68 on a scale of one to 10, according to MIT Sloan Management Review and a Deloitte 2015 study. For example, industry experts estimate that only 1% of information gathered from the field is currently made available to oil and gas decision-makers. By leveraging IoT for oil and gas and using IoT platforms to increase data capture and analysis, companies in the sector could save millions of dollars by eliminating unplanned well outages and by boosting crude output by as much as 10% over two years, the report found.

WellAware is certainly banking that its modern IoT for oil and gas approach will make it far easier for companies in the sector to leverage networking, automation and analytics technology to gain a competitive edge. Instead of having to build out expensive satellite radio networks, WellAware has forged a deal with On-Ramp Wireless to build a wide-area IoT communications network that will cover over 55,000 square miles of the most active U.S. oil and gas fields, representing more than half of total production, Milam said. The partners are integrating On-Ramp Wireless' RPMA technology into WellAware solutions to deliver low-power, secure WAN connectivity in a challenging environment.

On the software side, WellAware's SaaS-based approach unlocks critical data from proprietary SCADA systems, opening up ready access to insights and exception-based monitoring to field operators using familiar tools like smartphones and tablets. "We're trying to make the data accessible and make it simple," Milam said. "With one price for a monthly subscription per oil well, companies get the hardware, software and network they need."

With the WellAware platform, oil and gas companies can keep tabs on their assets in the field without having to physically send someone out in a pickup truck canvassing a route that could be hundreds, even thousands of miles, Milam said. The real-time monitoring identifies and flags potential problems, minimizing downtime, reducing operating expenses by cutting back how often field operators physically have to be on-site at a rig for maintenance, and helping to uphold safety and compliance standards by providing actionable intelligence that can foster better decisionmaking, Milam explained.

Raymond Welder, president and CEO at Welder Exploration & Production, an operator in South Texas, has seen the benefits of leveraging IoT for oil and gas firsthand. Since implementing WellAware on a number of wells and replacing a manual, labor-intensive gauging process, Welder said, the company has saved close to $340,000 in operational costs and decreased downtime by 50%, leading to an additional $265,000 in revenue.

"Now that we get real data in real time from the wells, we put fewer miles on the road, have less wear and tear on trucks, and fewer opportunities for accidents," Welder said. "If it weren't for WellAware and its platform, our people wouldn't be able to produce more for less."

Next Steps

IoT spending is increasing, but how it is allocated is the question

IoT finds a home on the farm

Mesh networking can interconnect IoT devices

This was last published in August 2016

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Using IoT for oil and gas offers many benefits; which do you think is the most important?
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Interesting.  The focus is always on what is happening upstream. At the refinery the is a lot of room for the IOT.  My feeling is that for so many years the focus was delivering "crude at the gate" at the lowest possible cost and the cost of refining was ignored by comparison.  Now a combinations of ineffecincy and a retiring skilled labor force is not only impacting profits, but creating a dangerous environment as fewer people know what they are doing.  I'm working on the downstream end of things as there is plenty that can be done to lower costs using the IoT to collect data on machinery, manage it effectively and decrease lost profit opportunity when equipment breaks down (which  I think will be happening more and more as time goes on). 
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In India, where the market has just opened up for oil marketing companies (OMCs) the focus has now slowly come upon gross refining margins. IoT should be the next game changer. IoT can also be seen as a new tool for the age old Lean philosophy; achieving greater margins by achieving efficiency in operations. 
I come from the downstream sector too. Can anyone share articles about what downstream OMCs are doing globally in IoT?
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I see little to convince me of the security of this technology as it currently stands. Couple with this, the inevitable heuristic skew introduced by those who stand to gain from potential savings with its correlated effect through direct or indirect funding of research and reporting, and the worrying international change in the language of security to a military operations paradigm, and well...It makes me wonder if the true protagonists have something to gain from the consequent fragility beyond the value chain data bonanza. either that or I am missing part of the picture. I mean if data centers need high security and employee vetting, then what should the consequent parts manufacturing chain security levels look like?
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I'm grateful that someone has finally found a way to update the process of monitoring wells, but I doubt anyone (outside the very tight industry inner circle) would be even modestly impressed that "collecting the data carries both cost and complexity that exceeds the cost and complexity of the well itself." There are a lot of destroyed wetlands and oil-soaked birds that might disagree.
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