Energy Sector: Trends in Internet of Things (IoT) - Drivers, challenges and technology developments
The oil prices underwent a significant low from a peak of US$115/barrel in June 2014 to under US$35/barrel at the end of February 2016. The financial turmoil pressed oil & gas (O&G) companies to adopt innovative ways to make up for the losses as their standard approach to stay profitable by cutting operational costs and reducing workforce was no longer viable. Consequently, use of the Internet of Things (IoT) is starting to gain significance among O&G companies on a wider scale. IoT entails the use of electronic devices that capture or monitor data and are connected to a private or public cloud, enabling them to automatically trigger certain events. In the last few years, IoT has emerged, offering O&G companies broad range of solutions to drive efficiencies to sustain in a low oil price environment.
Even though O&G companies have long used a range of sensors in their operations, the advent of IoT has revolutionized the role of sensors. As IoT goes mainstream, O&G companies can make decisions at the edge of the network using advanced analytical solutions. Upstream companies (including exploration and production, or E&P) leverage IoT to reduce non-productive time (NPT) by using real-time data generated through IoT devices that help in forecasting failures and plan preventative maintenance of assets. In addition, IoT facilitates upstream O&G companies with enhanced workers’ safety, in addition to integrating chunk of reservoir data with real-time field data to predict well placement and flow rates.
Downstream companies (transportation, refiners, and retailers) face a difficult task of transporting oil and gas through pipelines to market. IoT assists such O&G companies in detecting leakages, monitor and control operations on pumping stations, maintain pipeline pressures, and emergency shutdowns. The real-time availability and analysis of data helps in avoiding major operational risks including oil spills that the sector deals with. O&G companies look towards IoT as a potential source for revenue generation by increasing their visibility into the supply chain and minimize their downtime to the market. With the use of IoT, O&G companies can plan their refinery shutdowns, improve safety measures, handle different grades of crude oil, and create new values beyond the refineries.
IoT offers a myriad of applications to O&G companies that assist them in enhancing efficiencies and improve productivity. To highlight, in November 2017, Chevron partnered with Microsoft in an effort to support its digitization initiative of improving operational efficiencies and drive performance by use of advanced technologies including IoT and analytics. A select few companies, including Microsoft, Cisco, and IBM, dominate the IoT software and services segment in the O&G sector. The O&G sector appears to be the most promising area for wearables adoption. While wearables are most commonly used for fitness-tracking purposes at the moment, their scope appears to be increasing in creation of connected field workforce with the use of devices such as smartglasses or smart helmets to tracking devices becoming more commonplace.
The rapid development in the IoT space has the potential to lead to digital transformation in the O&G sector on a wider scale than ever before. IoT is transforming the way O&G companies have been operating and accessing the massive data flowing through the systems to gain actionable insights. Moreover, the companies need to start treating data as an asset in an effort to enhance process optimization under a safe working environment.
The report Energy Sector: Trends in Internet of Things (IoT), is an attempt to analyze the key trends expected to impact the Energy industry and its various stakeholders in 2018.
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