IIoT can Transform the Oil and Gas Industry
Tim Shea, Senior Analyst ARC Advisory Group

In the back of plunging oil prices where the most of operating companies are reluctant from committing CAPEX, the article urges that there has never been a better time for the oil & gas industry to invest in IIoT (Industrial Internet of Things) technologies and solutions for improving operational efficiencies and reduce exploration and production costs. While the industry has already witnessed the beginnings of a complete transformation as the digital oilfield becomes a reality, IIoT can be an empowering solution that helps make the holy grail of petro-technical data integration and smart oil fields a practical reality.

Currently, the global oil & gas industry is experiencing an unusually volatile period with oil prices plunging over 50 per cent in six months. While this could discourage some operating companies from committing capital , ARC believes that there has never been a better time for the oil & gas industry to consider targeted investments in IIoT (Industrial Internet of Things) technologies to help improve operational efficiencies and reduce exploration and production costs. We are already seeing the beginnings of a complete transformation as the digital oilfield becomes a reality and the Industrial Internet of Things emerges to find its place in production. But even though the technical possibilities are becoming clear, real movement in this direction will depend on business benefits and business cases coming into clear focus.

Today, industry problems and potential solutions are too often discussed using dated assumptions, framing, positioning, and approaches. Legacy IT infrastructure and strategies often interfere with progress. Even though business models have had to adapt a bit to support new production technologies and methods, the established practices have been slow to change . This is partly a cultural issue, reflecting the conservative, independent, field-centered mentality that has driven much of the industry's past success . But it also reflects the reality that potential new solutions are not yet known or trusted.

On the other hand, the industry also places a premium on reducing cost and risk. And that opens the door to IIoT, which offers substantial potential for performance improvement. In just one example, data that GE collected from an oil rig off the Scottish coast showed that a seal was about to fail on a water injection pump. GE's service staff was able to detect this because of deviations in the pressure reading, enabling the customer to transport a new seal to the rig and replace it before it failed. The customer estimated that it saved USD 7.5 million in losses from unplanned downtime. There is a huge potential for a host of other similar opportunities to be discovered, instrumented, and monitored - not only on this rig, but on other rigs and in other oilfields around the globe.

Most upstream oil & gas operations must operate with disparate and often widely distributed assets operated by different groups (reservoir engineers, production engineers, etc) each with their own agendas, types of data (structured, unstructured, reservoir data, drilling data, production data, etc) and means of accessing and analysing their respective data. Often, a lack of collaboration between these groups and inability to access data in a timely manner can increase non-productive time, reduce efficiencies, delay time to first oil and/or lower than desired production rates. IIoT-enabled solutions can increase operational visibility and collaboration among personnel by enabling real-time data to be transformed into actionable information that can be shared across groups and across assets (wells, vessels, etc) to help optimise production, improve operational efficiency, and increase profitability.

IIoT systems offer significant potential to improve asset reliability, availability, and performance in both onshore and offshore/subsea oil & gas industr yoperations and, in many cases, support business process improvements across the supply chain.

Improving Asset Performance
Most onshore upstream oil & gas operations are asset-intensive and the IIoT offers significant opportunities to improve overall asset performance and uptime. In this environment, operations tend to be highly distributed, lightly staffed, and downtime costs are significant. IIoT-connected devices enable end users, service providers, and/or OEMs to remotely monitor sensor data (vibration, temperature, pressure, etc) to help improve asset uptime through remote diagnostics, troubleshooting, and predictive maintenance. An alert from a health monitoring application notifies a maintenance planner to have someone inspect the equipment and schedule the repair prior to a failure.

Collaboration Platforms
With fewer experienced workers on site and typical difficulties effectively communicating situational details to the main office, when problems crop up, it can take far too long to assemble an appropriate team of experts and establish the necessary communication channels. Here, modern IIoT-enabled collaboration platforms can help organisations establish a common, shared space and communications network as soon as a problem develops. Radio and telephone voice communications and data and video feeds can be shared between a central monitoring and resolution team and remote experts. In addition, all necessary participants can share applications and desktops through the same common space. This enables them to collaborate effectively based on the latest information to be able to rapidly assess the problem and orchestrate the best solution.

IIoT emphasises remote access to connected machines to enable transformative business improvements. This includes field service by original equipment manufacturers (OEM). With IIoT, OEMs can greatly improve the value of their service plans through more uptime and less unplanned downtime for the equipment user. Remote device monitoring coupled with device-level service apps, advanced analytics, and information sharing help manufacturers more rapidly diagnose and troubleshoot issues in the field and dispatch local service providers to address them in a more timely fashion.

Upstream oil and gas production encompasses a variety of processes, activities, and equipment for developing and extracting hydrocarbons. Typically, the preproduction or development phase lasts several months (or weeks for onshore wells). This involves planning and executing a project designed to build the necessary infrastructure at the site and condition the well for extraction. The production or extraction phase can last many years or even decades. Activities can range from simple collection, to artificial lift, to occasional work-overs or well interventions, or even ongoing enhanced oil recovery (EOR) or mining and processing (in the case of oil sands). IIoT technologies and solutions offer significant opportunities for improvement across both the pre-production/drilling and production /extraction phases.

Smart Assets and Devices
IIoT starts with intelligent, connected things. In practice, this means deploying assets and devices designed and delivered with local intelligence and communications capability, or adding these capabilities to legacy assets . Smart assets can be remotely monitored and often function as a platform for new applications and services. Examples could include a highly instrumented artificial lift pump or compressor, a multiphase flowmeter, or a remotely operated vehicle (ROV). Wearable devices, such as badges, wristbands, goggles, and helmets provide another example.

Cyber security tops the list of challenges for IIoT. Traditional security architectures have relied on a layered approach of complicated networks and systems defined by industry standards. IIoT challenges the fundamentals of the way we build and maintain networks that support industrial assets. While providing some guidance for field devices, current standards such as the ISA /IEC 62443 family of standards for industrial control systems do not adequately address pervasive IIoT architectures, such as cloud. Since IIoT typically involves a large amount of real-time production or plant data, new approaches - such as end-point security and cloud data center security are more relevant.

Platform and Software
Asset connectivity is an important part of any IIoT solution, but nothing useful can result without additional platforms and software systems. Key platforms and software include connected device management (CDM) platform and enterprise mobility management platforms for smart devices, cloud, video , and application and execution software.

Network Connectivity
Most IIoT applications will use a variety of technologies for private and public connectivity. Like any outsourced technology, the service levels must be managed to match those of the business and industrial users need visibility into the lifecycle plan of the internet technology. The application requirements for network services vary dramatically depending on location, required data rates, anticipated scaleup, and the available local services and utilities.

As the IIoT emerges, upstream oil & gas operators will have more data to manage than ever before. In reality, many upstream operators faced Big Data challenges well before the term came into common use. Vibration, temperature and pressure sensors; strain gauges; pumps; vehicles, and all kinds of rotating equipment will generate data that oil and gas producers can use to increase production, cut operating costs, and improve health and safety. In addition, operators may have to manage incoming data from third-party services. Ultimately, it will be analytics that liberates the value of IIoT Big Data.

Application Software
The payoff from IIoT comes from the software that takes action or guides users based on information from connected devices and assets, often in conjunction with analytics. This software must be designed to carry out the particular functionality needed for a given IIoT application. The execution software should be capable of securely carrying out business logic, modeling assets, visualising processes and data, managing data storage, and integrating with other systems.

In addition to helping improve operations and maintenance activities in oil & gas activities, the IIoT can help in improving activities across the supply chain. One of the biggest causes of non-productive time is people not being able to find the right data, inability to integrate different data types and data structures and the complete lack of collaboration among operational groups. Assuming increased standardisation and data type and communications network interoperability, IIoT can be an empowering solution that helps make the holy grail of petro-technical data integration and smart oil fields a practical reality.