Like the utility industry, the oil and energy industry is going through some hard times where they’re not growing or making a significant profit. Further, like many other verticals, experts are now turning to the Internet of Things (IoT) and big data analytics to save the industry.
When it comes to the oil and gas industry, they’re a little different as they have already tried (and failed) to use big data analytics effectively. As they keep evolving and digitizing operations, they’re also willing to keep trying until they get it right.
According to a survey conducted by Accenture and Microsoft, 86% to 90% of the respondents felt that enhancing their mobile, IoT, and analytical capabilities would provide value for the business. Further, according to Marco Annunziata (GE’s Chief Economist), past efforts to digitize the process failed because "efforts were deployed in siloes without a comprehensive strategy and never achieved enterprise scale."
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Searching for natural resources is extremely expensive, so inexpensive sensors and cloud-based big data analytics is the perfect solution for lowering operating costs and enhancing productivity.
So how exactly will big data analytics help increase profits?
IoT and the Future of the Oil Field
Although oil and gas are lucrative industries making billions of dollars in profits, it’s also a significantly risky business. It’s expensive to explore and identify new oil and gas reserves, procure the heavy equipment, and to work in volatile sites like the middle of the ocean.
What adds to the cost is the management of these sites where extensive upkeep will be required. So with the oil prices continuing to plummet, the industry needs to cut costs wherever possible. That’s where big data comes in. With big data, you can develop data-driven oil and gas fields that will make predictive asset management a reality.
Big data can also help identify better locations to explore and probe to find natural resources. Drilling for oil is extremely expensive, so if you can avoid probing in the wrong place, you can save millions.
Further, production can also be forecasted based on the location of each drill site. As a result, overhead costs can be significantly reduced (and have a positive impact on profit margins).
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The Dutch oil and gas giant Shell partnered with Hewlett-Packard to use fiber optic cables for these sensors. Amazon Web Services manages the data once it’s transferred to its servers. As a result, company has a better understanding about what’s underground. By comparing the data with other oil fields, geologists are able to pinpoint locations more accurately.
Efficient Equipment Maintenance & Single Asset Management
It’s true that oil and energy companies are digitizing their processes, but this alone will not be enough. The industry needs to take it a step further to keep costs down.
One of the main sources of overhead expenses is equipment. As a result, companies need to manage and maintain a number of assets which can be complex and huge. To ensure that the supply chain is functioning properly, from drilling sites to gas stations (upstream and downstream), all the equipment needs to be efficiently managed.
A single maintenance system that detects and predicts problems with assets can help companies fix the issue before it becomes a problem. As a result, service can be maintained without disruptions and costs can be kept low by avoiding the purchase of unnecessary parts or hiring (unnecessary) maintenance personnel.
Big data can save the oil and energy industry, but getting there won’t be easy. At the present time, the industry is faced with an aging workforce, complex asset mix, regulatory environmental issues, and turbulent politics.
Further, no two oil and gas fields will be exactly the same. Every site will have its own operational challenges and equipment diversity. As a result, the investment into digitization will also be complex and will be variable over time.
On the bright side, the sensors are inexpensive and they’re getting even cheaper and incorporating them into an extreme mix of assets won’t be very difficult. Before long there will be a steady stream of data in real-time that can be used to be competitive.
Digitizing will take time, but it’s imperative for the industry to move into the next phase of human evolution. These same values are relevant for any industry to survive, not just oil and energy companies.