How the Internet of Things (IoT) is Revolutionizing the Oil and Gas Sector

The application of digital technology in the oil and gas industry offers significant opportunities for these sectors to streamline their production and increase revenues. The operation strategies of oil and gas companies are in serious need of an overhaul, given that the price per barrel for these fuel sources has been cut in half over the past few years. The application of digital technology like IoT can make the sector once again into a profitable industry by interconnecting assets and collect data to optimize upstream and downstream processes.

Reform the Oil and Gas Sector

IT solutions for the oil and gas industry have been transforming the sector over the past several decades. However, investment in information technology in oil and gas is quite low compared to exploration, development, and maintenance of assets. If IT solutions for the oil and gas industry were to increase even a single-digit percentage, the impact on efficiency and thus profits would be massive.

The best way the sector can take its operations to the next level is to begin generating, storing and processing data the same way it does its fuels. This requires the implementation of IoT in each phase of production and logistics. As of today, only 2% of all energy data is captured, most of which is done without automation. An increase in the collection of data through IoT implementation will dramatically increase the capabilities of downstream and upstream industries.

According to Teradata, the upstream oil and gas industry loses around $8 billions dollars per year due to non-productive time (NPT) caused by weak information management. According to Accenture, there has been nearly a 20 percent increase in the number upstream oil and gas companies investing in IoT since 2015. Improving the efficiency of the upstream industry is increasingly more necessary as the locations of resources becomes more complex. As more oil and gas is discovered in deep waters of offshore or remote oil sands, distance and will demand an increased interconnection to maintain high performance, supply, and profit margins.

Regarding increasing downstream efficiencies, oil and gas companies can improve asset tracking my implementing the use of sensors on inventory shipments. Given that the price of sensors continues to fall, this simple implementation could increase awareness of supplies and inventories at a small investment to oil and gas companies. This would allow companies to monitor not only the location of their products but also their conditions. Sensors can offer tracking of varying aspects of logistics such as temperature changes, leaks, etc. that can affect customers’ shipments. A survey conducted by Intel found that IoT implementation within the downstream oil and gas industry can allow companies to more efficiently rank their wells by production efficiency, increasing asset portfolio management and improving process flow. Total cost reductions thanks to IoT implementation are projected to reach 30 percent, which could change the entire business structure of the industry.

Interconnecting various aspects of production through IoT will enable oil and gas companies to offer better, more reliable services, and allow them to optimize their production and logistics processes to reduce variable and fixed costs. This small investment should be a no-brainer for sectors which spend trillions of dollars on exploration and maintenance of equipment and assets. With the implementation of IoT, the availability and reliability of these precious resources will continue to climb, as will company and investor profits. For More technology experience visit Silicon Valley Center


Location: Silicon Valley, CA, USA

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