SPECIAL REPORT
Next Generation Sensor
Network Solutions for Offshore
Oil and Gas Operations
Internet of Things –
A Good Investment While Prices Are Low
Big Data and the Future of Oil
How Internet of Things Technology
is Revolutionizing Offshore Oil
New Software for a New Age
Converging Technologies Make for an Exciting Future
Sponsored by
Published by Global Business Media
NEXT GENERATION SENSOR NETWORK SOLUTIONS FOR OFFSHORE OIL AND GAS OPERATIONS
SPECIAL REPORT
Next Generation Sensor
Network Solutions for Offshore
Oil and Gas Operations
Internet of Things –
A Good Investment While Prices Are Low
Contents
Big Data and the Future of Oil
How Internet of Things Technology
is Revolutionizing Offshore Oil
New Software for a New Age
Converging Technologies Make for an Exciting Future
Foreword2
Tom Cropper, Editor
Internet of Things – 3
A Good Investment While Prices Are Low
Scot Stelter, Sr. Director, Product Marketing - Mojix, Inc.
Crude Prices Put Capex Budgets Under Pressure
Sponsored by
Published by Global Business Media
Published by Global Business Media
Global Business Media Limited
62 The Street Ashtead Surrey KT21 1AT
United Kingdom
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Publisher
Kevin Bell
Editor
Tom Cropper
Don’t be in Second Gear When Prices Snap Back
Internet of Things Solutions Foster Operational Excellence and Competitive
Advantage
Common Characteristics of Effective IoT Platforms
Big Data and the Future of Oil
Tom Cropper, Editor
The Big Price Crash
The Role of Data
How Internet of Things Technology
is Revolutionizing Offshore Oil
Business Development Director
Marie-Anne Brooks
Jo Roth, Staff Writer
Senior Project Manager
Steve Banks
The Rise of IoT
Advertising Executives
Michael McCarthy
Abigail Coombes
Production Manager
Paul Davies
For further information visit:
www.globalbusinessmedia.org
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neither the Publishers nor the Editor are
responsible for such opinions and views or
for any inaccuracies in the articles.
8
10
Iot and the Oil Field of the Future
New Software for a New Age
12 Jo Roth, Staff Writer
Evolving Technologies
New Developments
Converging Technologies Make
for an Exciting Future
14
Tom Cropper, Editor
The Future Market
Technologies of the Future
References16
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NEXT GENERATION SENSOR NETWORK SOLUTIONS FOR OFFSHORE OIL AND GAS OPERATIONS
Foreword
T
Internet of Things –
A Good Investment
While Prices Are Low
HE OFFSHORE industry is at a crossroads.
which can place the more proactive companies at a
The world still contains enough oil to last for
crucial competitive advantage.
decades, but there’s no guarantee it will be able to
One of the stock phrases in this new environment
tap all these resources. Money is tight. Exploration
is the ‘Internet of things’ (IoT). Jo Roth investigates
is expensive. If offshore oil companies are to
more about the evolution of IoT technology and
survive, they will have to find a way to balance these
how this is driving forward innovation.
conflicting demands. How? Increasingly it looks
Even with this, though, making sense of all the
as if the critical factor of the next few years will be
information harvested remains a major challenge.
the way in which the industry makes use of data.
James Butler looks at the developments needed
The industry is collecting more information
in data management software. In particular, he’ll
than ever before. Doing so allows them to make
analyze Mojix’s own ViZix software which provides
savings, improve production, maintain safety and
intuitive real time access to multiple data streams.
conform to more stringent environmental regulations.
By doing so, it offers critical improvements over most
In the first article in this report, we hear from Mojix
existing IoT technology.
Inc., one of the leading names in this space. They
Lastly, we’ll take a look to the future. The importance
outline the different technologies coming to market
of data is shaped by the uncertain environment
which are revolutionizing the way the industry
in which oil and gas companies operate. We’ll examine
does business. We will then look more closely at
where the market is going and what technologies
the growing role of data in the oil industry. We are in
will be key in driving innovation going forward.
the age of big data – with rigs becoming more
automated and connected than ever before. The
convergence of multiple technological advances
is opening the door to numerous improvements
NEXT GENERATION SENSOR NETWORK SOLUTIONS FOR OFFSHORE OIL AND GAS OPERATIONS
Tom Cropper
Editor
Tom Cropper has produced articles and reports on various aspects of global business
over the past 15 years. He has also worked as a copywriter for some of the largest
corporations in the world, including ING, KPMG and the World Wildlife Fund.
Scot Stelter, Sr. Director, Product Marketing - Mojix, Inc.
Investments in IoT will give firms a competitive advantage when prices snap back
Crude Prices Put Capex
Budgets Under Pressure
In a contributed article in Forbes online edition
on May 29th a market analyst firm predicted
that the price of Brent crude would average
$75 per barrel over 2015, with a target of $85
within 18 months.1 The price had been idling
around $70 for several weeks, and the analysts
said supply reductions would lead to price
increases. The rationale made sense, but not the
timing, as the price has declined since, touching
$43 lately. While futures traders expect that prices
will recover, because producers are unwilling to
risk market share with significant production cuts,
and demand is rising slowly in OECD2 countries,
the consensus is that it will take 2-3 years before
the price rises above $80 again. In preparation,
many are deferring projects, pressuring suppliers,
reducing R&D and trimming CapEx budgets.
Don’t be in Second Gear
When Prices Snap Back
But now is not the time to cut back on
investments in operational excellence, say
many analysts, including Bain and Company.
“Short–term cost cuts may deliver immediate
relief, but the wrong cuts can threaten the
balance of safety, reliability and cost leadership
… Operational excellence allows oil and
gas leaders to confidently say and prove that
they are running their assets safely, reliably,
sustainably and cost–effectively.”3
One interpretation is that no one can afford
to be in second gear when, as Alger energy
analyst Eric Richards put it, “a snapback in prices”
comes “once supply and demand equilibrium is
reached.”4 The prescription? Firms should use this
period to invest in competitive advantage in the
form of operational excellence.
Internet of Things Solutions
Foster Operational Excellence
and Competitive Advantage
Among the more promising investments firms
are making is in applications of the Internet
of Things (IoT). IoT solutions enhance and
exploit the flow of data from the edge of
the business, where the activity is, to where
managers make decisions at the site, functional
or corporate level.
FIGURE 1: CATEGORIES WHERE THE IoT ENHANCES OPERATIONS FOR OIL AND GAS FIRMS
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NEXT GENERATION SENSOR NETWORK SOLUTIONS FOR OFFSHORE OIL AND GAS OPERATIONS
NEXT GENERATION SENSOR NETWORK SOLUTIONS FOR OFFSHORE OIL AND GAS OPERATIONS
IoT solutions enhance
and exploit the flow
of data from the edge
of the business, where
the activity is, to
where managers
make decisions at
the site, functional or
corporate level
FIGURE 2: MOJIX ViZix IoT PLATFORM DISPLAYS COLOR-CODED CREW LOCATIONS IN AN EMERGENCY
Though lately layered in hype, the IoT is quite
real and hardly new. British Petroleum has been
using sensors to observe the characteristics of
oil as it comes out of the ground to assess the
health and longevity of the well for 10 years,
according to a recent article in Fortune,5 and
has recently kicked off a project to update these
proprietary systems with the latest standardsbased IoT technology. While this high-profile
application is expensive, there are many
more affordable applications that deliver
ROI, not only for the oil producers, but also
for their suppliers and contractors. Many
applications provide edge data from sources
in one of three categories: people, supply chain
and assets.
Below are descriptions of three actual, deployed
IoT use cases that illustrate these benefits.6
1. Rig crew safety: Crew tracking system for
barges and rigs ensures effective emergency
response
2. Supply chain: Supply chain tracking system
synchronizes material delivery during rig
construction to reduce construction costs and
avoid schedule penalties
3. Asset visibility: Offshore service and supply
firm tracks leased assets to ensure timely
MRO7 and verifiable use and invoicing
1. Crew tracking system for barges and rigs
ensures effective emergency response
The national oil company (NOC) in this
example has invested in a people-tracking
system on barges supporting an offshore
field. Using a passive RFID 8 system, the
solution tracks the location of crewmembers
to ensure that they muster to a safe location
in the event of an emergency. Crewmembers
wear battery-free, no-maintenance tags that
cost less than $5.
The C1D1-compliant, Mojix STAR, wide-area
RFID system reads tags at key chokepoints such
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as stairways and mustering areas, providing
crewmembers’ current or last known location.
The data generated by the RFID sensors flows
into a cloud-based system based on the Mojix
ViZix connected-business intelligence platform.
Web-accessible displays inform emergency
management teams on the rig, but also
crucially, onshore, to help locate crewmembers
and verify muster to safe locations. Userconfigurable reports, which can be tabular or
graphical, indicate where crewmembers are
and whether they’ve made it to a safe location in an
emergency. Figure 2, in which crew avatars have
been color-coded to indicate who has made it
to the muster site (green) and who hasn’t (red),
shows what it might look like for an offshore rig.
A linearly-scalable “big data” database and
a user-configurable rules engine enable
complex event processing (CEP) in real time.
2. Supply chain tracking system
synchronizes material delivery during
rig construction to reduce construction
costs and avoid schedule penalties
An international oil company (IOC) uses the IoT
to synchronize subassemblies and components
destined for final assembly in South Korea.
The multi-billion dollar mega-project, with
over 70 international suppliers, ends with a
completed offshore platform.
The solution uses both passive RFID tags
and GPS tags to track components moving
through a complex logistics process from their
points of origin to the final assembly site in
South Korea (Fig 3). It starts with employees
associating RFID tags with items, guided by a
workflow that reduces error. The battery-free,
passive RFID tags require no maintenance, and
typically cost less than $0.25 each.
RFID tags on individual components are
associated with pallet tags, which are, in turn,
associated with GPS tags on containers,
FIGURE 3: IoT SYSTEM COLLECTS DATA FROM MULTIPLE SENSOR TYPES TO SYNCHRONIZE RIG
CONSTRUCTION MATERIALS
and finally with the GPS transponder of the
vessel itself. This enables synchronization
of deliveries, which minimizes holding costs
and avoids delivery penalties, which could
otherwise approach a million dollars per day.
As with the previous example, the data
stream flows into a cloud-based system that
provides both tabular and graphical reports
on the location of shipments en route. Once
goods have arrived they go into a warehouse
where a passive, RFID-based real-time
location system (RTLS) locates them to within
a 3-meter radius, ensuring quick access
when requisitioned by the factory. An example
of how this might look to a user is shown in
figure 4. When the factory requisitions material
from the warehouse, the transfer of the material
is recorded by the system, triggering actions in
MES9, WMS and accounting systems.
3. Oil equipment supplier tracks assets
to maximize return on capital and ensure
proper maintenance and certification for
safe use at the rig site
A Gulf-Coast equipment supplier provides
oil companies with specialty oil equipment to
support drilling and production. Among the
many items leased are subsea trees similar to
the one shown in Figure 5. Prior to implementation
of the system, upon return by a lessee, equipment
was manually received and laid down in a
yard until needed again. As a result of this
error-prone manual process, equipment
sometimes laid idle after return due to errors in
receiving. This impacted the economic life of
the asset, led to invoicing disputes and eroded
customer relationships.
When the equipment was needed by a new
renter, manual processes were used to record
the process of retrieval from the yard, delivery to
and staging in the slip and loading on the vessel.
These manual processes were labor intensive
and error prone, involving expensive personnel
from the equipment firm, the logistics operator,
the crew of the ship and the lessee to verify the
shipment at multiple stages.
Implementation of an RFID-based tracking
solution automated the process, reducing
errors, creating accountability and saving labor
costs. Precision tracking of rental equipment as
it comes and goes boosts return on invested
capital, protects customer relationships and
improves revenue collection.
Common Characteristics
of Effective IoT Platforms
The right IoT platform can be used to implement
all of these use cases. Here’s a rundown of what’s
important in selecting an IoT platform:
• User-configurability
• Hierarchical multi-tenant support
• Scalable support for big data
• Designed for seamless integration
• Security
• Complex event processing (CEP)
• Rules-based support for workflow and machineto-machine (M2M) communications
User-configurability enables the
system to deliver value faster, scale
easily and evolve rapidly with less cost
Complex technology deployments rarely hit the
mark perfectly at deployment. As the new system
is understood and requirements evolve, changes
are required. But reacting to these learnings often
requires custom software work, and money to pay
for it. The ideal IoT system will maximize the ability
for users to optimize the system without code
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NEXT GENERATION SENSOR NETWORK SOLUTIONS FOR OFFSHORE OIL AND GAS OPERATIONS
Systems that meet these
characteristics make it
possible to implement
cost-effective solutions
that enhance operational
excellence, leading to
confidence that you’re
operating your assets
and your teams safely,
reliably, sustainably and
cost–effectively
FIGURE 4: USER-CONFIGURABLE REPORT SHOWS LOCATION OF SUBASSEMBLIES AND MATERIALS IN THE WAREHOUSE
FIGURE 5: A SUBSEA TREE, AN EXAMPLE OF EQUIPMENT TYPICALLY LEASED TO OFFSHORE OIL FIRMS
development. This enables the system to deliver
value faster, scale easily and evolve rapidly with
less cost. Users should look for configurability in
a variety of areas, including these:
• User roles and privileges
• Hierarchical multi-tenant support – heritable
configuration
• Complex event processing rules engine
• Types of “things” generating a data stream,
and their attributes
• Graphical and tabular report structure, content
and presentation
• Notification mechanisms and triggers
• Intrusion – vulnerability and penetration testing
based on a comprehensive test plan such as
defined by the Open Web Application Security
Project (OWASP)
• Sensor/device communications – Security
between sensors and the IoT platform.
Multi-tenancy support with tenant
group hierarchy (TGH) simplifies
fitting the system to the business
Multi-tenancy is familiar to those who use
cloud services or software as a service (SaaS)
offerings. But multi-tenancy also has applicability
in complex deployments with multiple sites or
facilities – multiple oil rigs for example – where
separation of data between facilities is important.
Multi-tenancy needs to be hierarchical – that
is, it works up/down the organization, between
companies, facilities, departments and teams.
For a given tenant, the settings for security, data
separation, business rules, integration options,
localization, etc. need to be inherited – and overrideable – down the hierarchy. For example,
security settings for the organization might
be set at the top and maintained consistently
down the line, but business rules might be
different for a barge and a deepwater rig, or two
rigs in different geographies.
Scalable support for big data means
costs are under control as the system
grows with the business
An IoT system should easily scale with data
volume. Look for systems that support:
• L inearly scalable data storage, typically
implemented in the cloud. This means that the
dataset can grow indefinitely, and the cost of
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added storage grows no faster than the data
volume
• Storage for unstructured data sometimes
inaccurately referred to as a “noSQL” database.
This is where sensor data streams in real time,
and from where it can be retrieved later
• A traditional data warehouse – as unstructured
data is interpreted and translated into
recognizable business events, those events
are stored in traditional databases holding
traditional “structured” data that is accessible
by higher-level systems
Designed for seamless integration
means lower costs now and ongoing
A modern system will support non-proprietary,
standards-based interfaces that enable
rapid development of scalable, web-based
interfaces. Application programming interfaces
(APIs) based on Representational State Transfer,
or “ReST” are a good option because they can
communicate using the familiar and ubiquitous
HTTP protocol as web browsers do. Wellchosen interfaces lead to more maintainable,
higher-performing architectures.
At the level of the physical interface with
edge sensors, standard IoT device protocols
such as MQTT provide a lightweight
communications mechanism that tolerates
intermittent wireless communications.
The rules engine should have a direct
connection to external APIs – data or scheduledriven events should be able to trigger external
actions not only in both modern business
systems such as SAP and SFDC, but also
legacy systems such as mainframe job control
language and batch.
Security protects people,
assets and investment
Security should be addressed on three levels:
• Inter-process communications – Internet Transport
Layer Security (TLS) with strong encryption for
access of systems across the internet.
Complex event processing (CEP)
Complex event processing is the drawing of
inferences from one or more data streams
coming from sensors by performing intensive
computation and manipulation of the data.
Such an engine might use windowed time
series analysis, pattern matching, comparison
of multiple streams and other methods to derive
meaning from binary data flowing from sensors.
Esper is an example of open source software that
performs many of these functions and might be
leveraged by an IoT platform vendor. CEP should
be driven by user-configurable rules.
Rules-based support both for workflow and
local, machine-to-machine (M2M) action
The events recognized by the CEP engine may
need to trigger a variety of responses. A good
IoT system provides rule-based mechanisms for
associating actions with events both as workflow
and as M2M. Workflow is typically routed through
the core system, but M2M often is intolerant of
communications latency and interruptions. For
this reason a good IoT system supports rules at
the edge as well as in the cloud.
Using the oil rig crew safety example above, if
a crewmember does not appear at the muster
point, rules might trigger these actions:
•T
he crewman’s avatar on the graphical
representation of the rig turns red
• A text notification is sent to the safety officer
•T
he local edge box turns on a red strobe light
at the last known location (M2M)
•T
he event severity code is escalated in the
on-shore control room
Needless to say, all of these rules should be
configurable by the user so that they can evolve
with the business without the expense and delays
of additional code development.
Systems that meet these characteristics
make it possible to implement cost-effective
solutions that enhance operational excellence,
leading to confidence that you’re operating
your assets and your teams safely, reliably,
sustainably and cost–effectively. During this
period of low crude prices, firms should
investigate how IoT technology can help them
position for competitive advantage when the
inevitable price snapback comes.
1
refis team, “Estimating The Impact Of Different Oil Price Scenarios On Large U.S. Independents,”
T
Forbes Magazine, http://tiny.cc/4s8w5x
2
Signatories to the Convention on the Organisation for Economic Co-operation and Development
3
rancesco Cigala, John McCreery, John Norton; Operational excellence: Maintaining focus in a time of oil price
F
volatility, May 27, 2015,
http://www.bain.com/publications/articles/operational-excellence-maintaining-focus-oil-price-volatility.aspx
4
ric Richards, Assessing the Impact of Declining Oil Prices on the Energy Sector, retrieved August 30, 2015,
E
http://www.alger.com/media/articles/AlgerEnergy_121714.html
5
tacey Higganbotham, Fortune Magazine. “BP teams up with GE to make its oil wells smart,” retrieved August 31,
S
2015, http://fortune.com/2015/07/08/bp-teams-up-with-ge-to-make-its-oil-wells-smart/
6
he names of the companies deploying these solutions have been omitted to comply with confidentiality
T
obligations. Please contact Mojix Inc. at [email protected] for more information about the applications.
7
MRO: Maintenance, repair and operations
8
Radio frequency identification
9
MES: manufacturing execution system; WMS: warehouse management system
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NEXT GENERATION SENSOR NETWORK SOLUTIONS FOR OFFSHORE OIL AND GAS OPERATIONS
NEXT GENERATION SENSOR NETWORK SOLUTIONS FOR OFFSHORE OIL AND GAS OPERATIONS
Big Data and
the Future of Oil
Tom Cropper, Editor
Why big data is increasingly central to the success and operation of an oil and gas rig.
The industry needs
cheaper, and more cost
effective methods of
production. Big data
will play an important
role in all these aims
F
INDING AND extracting oil is operationally
challenging and economically risky –
never more so than now. Oil is becoming
harder to extract. In existing fields operators
are relying on increasingly sophisticated
extraction techniques while new and more
extreme fields are being explored and tapped.
These inevitably bring an associated increase
in the challenge, risk and cost of exploration and
production. Moreover, all this comes at a time
when the oil price is hardly in its most robust state.
So at a time when the commercial proposition of
extracting oil is under pressure, the cost of getting
it out of the ground is growing. The industry needs
cheaper, and more cost effective methods of
production. Big data will play an important role
in all these aims.
The Big Price Crash
The price fluctuations within the oil and gas
industry have caught almost every expert
by surprise. Early in 2014 predictions for the
future of the offshore industry were optimistic.
Prices stood higher than $100 per barrel and
with a global economic recovery expected,
demand was forecast to increase. However,
this never happened. Throughout 2014 forecasts
were progressively slashed as the recovery
failed to materialize. The rise of US shale
contributed to a glut of supply and, when
OPEC refused to slash production in order
to sustain the global price, the market went
into meltdown.
The oil price crashed by more than 50%,
eventually bottoming out close to $40 per
barrel. Even then many analysts were reasonably
bullish, placing their bets on a strong recovery.
Although that appeared to have arrived in
the early part of 2015 as prices rebounded to
around $60 or $70, a crisis in the Chinese
stock market sent prices tumbling once
again. In time, analysts expect prices to recover
– it’s simply taking a little longer than expected.
The question for major oil and gas companies is:
8 | WWW.OFFSHORETECHNOLOGYREPORTS.COM
how should they react to this new environment?
The instinctive reaction is to cut expenditure.
In March 2015, Shell announced job cuts in
the North Sea1. By then BP had also cut jobs2.
However, deep sea exploration is a long term
venture. Even with a depressed price, offshore
drilling remains an important and viable
proposition over the longer term. The question
is: do drilling companies contract to weather the
storm or invest to ensure they are in the strongest
position when prices rebound?
The Role of Data
In addressing their challenges, one of the
biggest issues is the way in which companies
use data. The industry has been collecting
information via sensors across the span of rig
operations for many years. They are collecting
information on the make-up of hydrocarbons
allowing companies to find out more about the
nature of the oil and the lifespan and productivity
of the oil rig. Downhole sensors can detect
flowrates and conditions within pipelines. They
can identify corrosion rates and monitor the
condition of infrastructure. The net result is the
ability to forewarn operators of issues, pre-empt
failure and reduce maintenance.
The amount of data available in the oil field is
growing rapidly. Writing for Analytics magazine,
Adam Farris points out that data volume
is predicted to double within the next two
years. Increasingly, it’s not the ability to gather
information which is the limiting factor on oil and
gas operations, but to collate and analyze it
effectively. This, he believes, creates an exciting
market for analysts and producers of analytic
tools, if only they can overcome resistance within
the industry.
How can they do this? The key – as with
anything else – is demonstrating a positive return
on investment. Wherever it is used, big data can
save money and improve production and revenue
flow. To highlight the issue, here are three key
areas in which improved data can be of use.
Locating oil: Discovering oil is a difficult
business. Shell recently launched an exploration
in the Arctic to tap what they hoped would be
vast potential resources. However, the mission
ended without success. Exploratory holes
yielded no oil.
Reducing the need for exploratory drilling can
cut costs significantly. Doing this requires an
enhanced view of seismic data. Technology
has advanced significantly in this area with the
advent of 3D seismic data, which produces an
enhanced view of the reservoir. Managing this
data is a significant challenge – billions of data
points consisting of different types of information
in different scales. Making this coherent and
intelligible in one easy space is challenging.
Producing oil: Oil companies are collecting a
vast array of data on flow rates, composition,
the state of infrastructure, corrosion and much
more. All this can help them maximize the
production process, manage maintenance more
effectively and avoid failure of equipment. As
oil exploration pushes further into the depths,
the amount of data – as well as the cost of
extraction – increases exponentially. Harvesting
this and presenting it in a coherent manner, plays
an important role in the profitability of an oil field.
Workforce management: Improved data on
the location and flow of workers on board a rig
enables operators to improve work efficiency –
and more importantly – improve safety. It helps in
the transfer of workers from supply ships and onto
rigs, and it enables faster and safer processing
of evacuations. This is one area in which the oil
and gas industry has been relatively slow on the
uptake. Such data is viewed as being the reserve
of other, softer industries. For example, data which
shops use to track visitor movements can also
help rig operators to identify bottlenecks, improve
movement around the rig and facilitate fast and
safe evacuation.
The industry is undergoing a period of change in
the way it uses data. As it pushes further into deep
waters, the cost of oil production is growing, as is
the amount of data it can collect. Identifying ways
in which the industry can collect and process
data will play an important role in how it performs
now and in the future.
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NEXT GENERATION SENSOR NETWORK SOLUTIONS FOR OFFSHORE OIL AND GAS OPERATIONS
NEXT GENERATION SENSOR NETWORK SOLUTIONS FOR OFFSHORE OIL AND GAS OPERATIONS
How Internet of
Things Technology is
Revolutionizing Offshore Oil
Jo Roth, Staff Writer
As data plays an increasingly important role in offshore oil and gas production,
the moment has come for the Internet of Things.
There will be a clear
difference between
those companies which
are able to adapt and
turn technology to their
own advantage, and
those which remain
stuck in the past
N
EVER BEFORE has information been
more important to the offshore oil and gas
industry. With oil becoming more difficult and
expensive to produce, profit margins are being
squeezed by volatility within the global oil
price. In situations such as these there will be
a clear difference between those companies
which are able to adapt and turn technology
to their own advantage, and those which
remain stuck in the past and so struggle to
remain commercially viable. The key difference
between these two types of companies is likely
to be their capture and use of information.
The petroleum supply chain is vast and
complex. It includes the movement of people,
delivery of components, construction of
infrastructure, production of hydrocarbons
and much more, all of which produces a near
infinite number of variables which can have a
significant impact on production. A fault in a
pump, for example, could slow production and
lead to costly downtime. A small leak will affect
the amount of oil recovered and impact on the
environment, while inefficiencies in equipment
can lead to increased fuel consumption. The
more operators and engineers know about
what’s happening, the easier it will be for them
to make important adjustments, which benefit
the entire operation.
Historically, the industry has been impeded in
the amount of information it can gather by the
technology at its disposal. Today, though, it is
becoming cheaper, smaller, more effective and
above all more connected. A new buzzword
has entered the lexicon of the oil and gas
industry over the past few years – ‘the Internet
of Things’ (IoT). The speed with which oil and gas
companies get to grips with this will be key in how
they fare over the coming years and decades.
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The Rise of IoT
The concept behind IoT technology is to create
a network of physical objects embedded
within sensors, software and electronics which
enable information to be gathered and shared,
to expedite the decision-making process.
When used effectively, it can deliver telling benefits
to the industry.
An example of IoT technology can be seen
in Alaska where Hill Corp Energy’s rig runs
24 hours a day in some of the more inhospitable
climates the industry is likely to face. Equipment
faces rough seas, toxic and corrosive chemicals
and extreme cold. Failure of equipment can
cost hundreds and thousands of dollars. For
example, Hill Corp estimates that a failure of its
pumps could cost the company up to $300,000
a day in lost production – that doesn’t even factor
in repair and replacement equipment costs.
To monitor production, therefore, the company
uses sensors throughout the pumping system
which are then fed into the Microsoft Azure Cloud,
from where data is pushed to engineers working
on digital dashboards who are able to monitor
the pump’s health and performance. Problems
can be identified and rectified swiftly.
“The last time we had a well trip offline, within
five minutes we had a phone call telling us
what broke, what to look at, and how to test it,”
Hilcorp’s facilities engineer Mark McKinley says.
“It saved six hours of troubleshooting or more,
and we got right back online. The staff is ecstatic,
because they get support before they have to
break out manuals and figure it out on their own.”
Elsewhere, BP has teamed up with GE to
connect its oil rigs to the internet. Six hundred
and fifty of its wells will use up to 30 sensors
to gather data, well flow and other information.
This information can be analyzed in real time and
uploaded to the Cloud where trained engineers
can make further analysis. This information
can be used by BP to predict well flows,
plan extractions, identify issues and prevent
downtime. Depending on how this project fares,
the company says it plans to roll it out across all
wells it owns around the world.
Iot and the Oil Field of the Future
The IoT concept feeds into the wider notion
of the digital oil field in which automation and
connectivity drive greater efficiency savings and
operational improvements. Such gains are vital
if oil companies are to make the giant leap in
performance required to maintain profitability in
a cash constrained environment. None of this
is entirely new. The Digital Oil Field has been
around as a concept since the 1980s. It is only
now that the technology is coming together to
deliver truly transformative functionality in the oil
and gas sector.
A report by SAP highlights that IoT technology
can be used across oil and gas operations
in areas such as connected fueling, asset
management and tracking, and monitoring
remote services. However, the report goes further
and suggests it can also be used in allowing
companies to push back the boundaries of
exploration and production even further than
they have already.
“The Internet of Things (IoT) will touch nearly
every area of O&G operations and customer
engagement,” it states. “With IoT, the O&G
industry could tap the utility of autonomous
vehicles to explore, develop, and produce under
the Arctic ice pack. IoT could help optimize
injection and production across horizontal well
completions for maximum recovery of original
oil in place4.”
The possibilities appear to be as limitless as the
imaginations of sales people in this field. Even so,
there are problems to be ironed out. A key issue is
the connection between the sensor networks and
the analytics software used to evaluate gathered
data. The more advanced IoT technology
becomes the more information it will be capable
of creating. However, the key to its success
will be the way in which all that information is
processed. It needs to be presented in a way
which opens up the information to engineers
across the company and enables prompt and
timely decision making. It needs to be in real time,
offering up-to-the-minute reporting on conditions
for any decision to be effective. Despite all the
advances in technology, this is one area in which
variability remains. As such there will always be
a difference in the way in which companies are
able to leverage the data they gather. Those that
do so will be at a critical advantage in an industry
which is becoming ever more competitive.
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NEXT GENERATION SENSOR NETWORK SOLUTIONS FOR OFFSHORE OIL AND GAS OPERATIONS
NEXT GENERATION SENSOR NETWORK SOLUTIONS FOR OFFSHORE OIL AND GAS OPERATIONS
New Software
for a New Age
Tom Cropper, Editor
The next generation of sensor monitoring systems promises to finally deliver
the sophistication and usability the industry has been crying out for.
ViZix is in every respect,
the sophisticated, flexible
and agile system which
promises to deliver a
significantly enhanced
experience to its users
T
HE OIL and gas industry is becoming
more ambitious – both in terms of where
it is going to extract oil and how it is doing
so. In turn, this is making the process more
risky, expensive and challenging. In order to
ensure the offshore oil industry can continue
to operate in a commercially sustainable
manner, while also meeting increasingly
tough environmental obligations, it needs
processes which are more sophisticated,
cheaper to run and effective. Many of
these goals are being met by the adoption
of advanced sensor and data monitoring
systems, which help improve safety and
efficiency across a platform’s operation.
Evolving Technologies
The offshore industry is constantly in a state
of evolution. The business is becoming more
demanding, challenging and expensive, as oil
becomes harder to locate and extract. Profit
margins are being squeezed and regulatory
oversight places further demands on the
performance of offshore platforms. As the
challenges grow, though, the technology
becomes increasingly sophisticated to meet
the industry’s changing needs.
The offshore industry has long deployed
sensors across the operation. These can
perform jobs such as detecting leaks, monitoring
flows, assessing the condition of infrastructure
and much more. In the past, such sensors
have been cumbersome, expensive and difficult
to install. However, the technology is now
moving in a more positive direction. Individual
sensors are becoming smaller, lighter,
cheaper and more effective. Increasingly
powerful computers and the advent of
wireless sensor networks have increased
massively the amount and range of data
operators can gather.
Furthermore, a more proactive attitude to data
analysis is seeing operators seek increased
12 | WWW.OFFSHORETECHNOLOGYREPORTS.COM
information about all aspects of the business.
This includes the position of workers on board
the platform, footfall tracking and supply
chain management, which can provide an
overview of an item’s location at every stage
of the supply chain.
The new stock phrase is the internet of
things (IoT) – the ability to integrate sensing,
communications and analytical functionalities
all into the same box. However, until now,
many of the existing technologies have been
unable to cope.
Many existing IoT technologies struggle to
process quickly multiple high speed sensor
streams. This is a problem for the offshore
oil and gas industry where vast quantities of
data are flying in from multiple angles in
real time. Information can date quickly, so
operators need as accurate as possible a
view of what’s happening across the operation.
These technologies are also costly to implement
and relatively cumbersome. Increasingly, the
amount of data the industry is harvesting
is beginning to outstrip operators’ abilities
to process it. In order to fully capitalize on
available data sets, operators need the capability
to view and analyze a wide range of data in
real time.
The drive is on to integrate data from numerous
sources in a smooth and intuitive away.
This has to be presented all in one place to a
single operator who is then able to comprehend
and act upon all the data as quickly as
possible. Any delay can result in issues being
missed and a reduction in the overall efficiency
of the operation.
used by the industry to provide enhanced
visibility over the supply chain.
For example, BP already uses Mojix’s RFID
technology to provide track and trace capabilities
to its Clair Ridge platform in the North Sea. This
allows the company to instantly monitor their
supply chain by checking the location of separate
items. In so doing, they can better co-ordinate
the entire supply chain, minimizing delivery costs
and wastage.
This is now being supplemented by ViZix
business intelligence software. ViZix is aimed at
industries which need to integrate multiple sets
of sensor data into one place. It is designed to
be compact, simple to install and to have the
flexibility to function with a range of different
sensor inputs. It offers high speed sensor fusion
and aggregation across the platform, real time
event processing allowing business metrics
to be viewed instantly and an advanced IoT
visualization system which yields a rich visual
context of connected things.
On top of that, the system is designed to be as
easy to use as possible. Operatives need only
basic IT skills to use and understand the system.
It uses features which mimic familiar items to all
computer users such as Google Earth to zoom
in and view locations. It offers flexible open
source software which is compatible with most
computing systems. ViZix is in every respect, the
sophisticated, flexible and agile system which
promises to deliver a significantly enhanced
experience to its users.
For example, rig operators can view the location
of workers through the use of wireless tags. This
can identify busy traffic bottlenecks, which can
help improve the flow of movement around the
rig. Meanwhile they can also monitor conditions
of subsea equipment, flow rates and nature and
manage their supply chain.
The result is multiple gains at every stage of
the process leading to a high number of small
but incremental cost savings and efficiency
improvements throughout the overall production
process. By utilizing data in the correct way,
operators can not only secure substantial
cost savings, but they can also improve the
productivity and profitability of a rig.
New Developments
A new generation of technologies is now
coming to market, which aims to solve this
problem. A prime example is ViZix from one of
the pioneers in business intelligence systems
Mojix Inc. Their RFID systems have long been
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NEXT GENERATION SENSOR NETWORK SOLUTIONS FOR OFFSHORE OIL AND GAS OPERATIONS
NEXT GENERATION SENSOR NETWORK SOLUTIONS FOR OFFSHORE OIL AND GAS OPERATIONS
Converging Technologies
Make for an Exciting Future
Tom Cropper, Editor
As sensors become more affordable, effective and connected, the oil industry
is experiencing a revolution in data management – one which can be critical
for the future.
When you have one
analyst predicting a
surge in prices while
others predict another
crash, the only sure thing
is that a year from now
at least one of them is
likely to look foolish
P
REDICTING THE future is almost
impossible – especially in the oil and
gas market. Over the past few years the only
consistency in predictions has been their
ability to shoot wide of the mark. Nevertheless,
in planning for future technology, oil and
gas operators must attempt to do just that.
Identifying the future shape of the market will
play an important role in determining what
direction new capabilities grow.
The Future Market
A major factor in the future is where oil prices will
travel. There is no clear indication. The Chinese
stock market crash in June prompted fears that
the world’s fastest growing economy would grow
at a relatively sluggish pace, dampening demand.
This, coupled with stagnating growth in another
Tiger economy, Brazil, is expected by some to
ensure global oil demand remains sluggish.
Even so, the US Energy Information
Administration’s latest forecast for demand in
2016 has grown slightly. It suggests demand will
rise by 270,000 bpd in 2016 to 95.2 million bpd.
That’s an increase of 0.3% on September’s figure.
The change is prompted in part by expectations
that China’s growth will be stronger in 2016 than
previously thought. At the same time, the surge
in US shale is expected to tail off. The report
suggests that growth in non-Saudi oil is expected
to be minimal.
Michael Wittner, an analyst at Societé Generalé
in New York, suggested Saudi Arabia’s strategy
of keeping production high in order to force
US shale producers out of the market may well
be working. “Non-OPEC growth dries up to
almost nothing; the Saudi strategy is working,”
he explained. “It is has never been about a
couple of months or a couple of quarters, but a
couple of years, and that is how it is playing out.”5
However, it has to be said that this is only
a forecast. These have been wrong before.
Forecasts are now being made in an extremely
14 | WWW.OFFSHORETECHNOLOGYREPORTS.COM
fluid and volatile market. The only certainty is
uncertainty. Analysts’ predictions for future oil
prices range from the optimistic who suggest
prices will bounce back to their plus $100 days
to the most pessimistic which suggest drops
to less than $40. Most split the difference and
suggest the industry should expect to cope in
an environment of $70 per barrel. Writing in the
Daily Telegraph, Liam Halligan concludes that
“only a fool or a liar14” would attempt to predict
the future of the oil price, before attempting to do
just that. He goes on to say that he believes the
current price is under-valued.
Conversely, Goldman Sachs has warned that
£20 a barrel could happen with over-supply
becoming worse once sanctions on Iran are
lifted6. So, when you have one analyst predicting a
surge in prices while others predict another crash,
the only sure thing is that a year from now at least
one of them is likely to look foolish.
In gearing up for the future, oil and gas
companies must prepare for a worst case
scenario. That means finding a way to improve
efficiency to the level at which a price of $20 or
$30 per barrel can be considered commercially
viable. At first glance, given the complexity of
offshore extraction, this appears impossible.
Technologies of the Future
The only real way to achieve this is to invest
now. The next generation of sensor network
technology promises much. The market has been
developing quickly over the last few years, and
now looks like it has the potential to take off. The
cost of sensors is coming down rapidly, while the
amount of information recovered by operations
is increasing exponentially. The more it does,
the more operators are able to drive significant
improvements into their businesses.
A key development is the introduction of
wireless sensor networks. Wired sensor
systems have expanded over recent years as
the cost of implementation has decreased. The
emergence of micro machining technology
has created smaller sensors with lower power
demands and higher capabilities. Even so,
the cost of installing a wired system remains
prohibitively high. A report on Plantengineering.
com suggests wired sensors can cost 20 to
30 times the amount of an accelerometer of an
offshore installation. Wireless sensor networks
can reduce that cost, while also ensuring a
more reliable connection and increased data
processing capacity.
All this technology feeds into the Digital Oilfield
of the future concept. This is a vision of greater
automation, connectivity and information flow
across the oil field. In 2006, Shell introduced
its Smart Fields based project around this
concept. In the future it expects to drive towards
fiber optic wells and more advanced well
monitoring techniques. BP is operating on a
similar level. Its Oil Field of the Future program
seeks to improve instant decision making through
advanced, real time data gathering capabilities.
When launching the program in 2010, BP
predicted it would help increase production by
100,000 barrels per day7.
However, there are challenges. Wireless
networks come with an additional data risk.
Malicious nodes can disrupt the flow of
information and the integrity of data. A report
into the use of wireless network sensors in the
Niger Delta outlines the considerable investment
devoted by companies into security of their
wireless network solutions8.
Managing the flow of data will also be a major
obstacle. The amount of information processed
by offshore oil and gas companies is predicted
to double within the next two years. The big
challenge will be how to use it. For this, a new
generation of analytic software is coming to
market, which enables operators to bring together
multiple data sets telling multiple stories from
many different sources. The aim of this data is
to present this information in real time, allowing
operators to make instant decisions. For example,
it can help them rotate machinery by spotting
deterioration in condition before a major failure
occurs. It can detect minor leaks, improving
productivity while reducing the carbon footprint.
It does all this while presenting the data in a
clear and easy to understand way which can
be accessed by all staff with minimal IT training.
By taking advantage of greater connectivity
throughout the organization, this information
can be shared between professionals in
different locations around the world. In so doing,
companies can significantly expand the decisionmaking resource to incorporate trained experts
located away from the rig.
Nobody should under-estimate the scale
of the task confronting the industry. It is being
asked to maintain increasingly complex and
sophisticated hardware in a more stringent
regulatory environment. Safety and environmental
performance must be paramount. At the same
time, commercial pressures mean they constantly
have to do more with less – in other words,
productivity and performance must improve
while costs are kept under control. It’s a difficult
ask, but sensor network technology can go a
long way to providing a solution.
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NEXT GENERATION SENSOR NETWORK SOLUTIONS FOR OFFSHORE OIL AND GAS OPERATIONS
References:
1
Shell cuts jobs in North Sea:
http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/11496273/Shell-cuts-jobs-in-North-Sea-as-low-oil-price-hits-Aberdeen.html
2
BP announces North Sea Jobs cut: http://www.bbc.co.uk/news/uk-scotland-scotland-business-30817678
3
The CEO Perspective. The Internet of Things for oil and gas:
https://www.sap.com/bin/sapcom/en_us/downloadasset.2014-10-oct-30-20.the-ceo-perspective-internet-of-things-for-oil-and-gas-pdf.html
4
5
Offshore Technology Reports…
the leading specialist combined
online research and networking
resource for senior upstream oil
and gas industry professionals.
EIA Sees Tighter 2016 Oil Market: http://www.reuters.com/article/2015/10/06/usa-eia-crude-idUSL1N1260ZH20151006
Why Oil Prices Have Scraped the Bottom of the Barrel:
http://www.telegraph.co.uk/finance/oilprices/11859148/Why-oil-prices-have-scraped-the-bottom-of-the-barrel.html
6
Oil at £20 a barrel? It Could Happen:
http://www.telegraph.co.uk/finance/commodities/11857719/Oil-at-20-a-barrel-It-could-happen-warns-Goldman-Sachs.html
7
BP Demonstrates Its Field of the Future Program:
http://www.scandoil.com/moxie-bm2/news/bp-demonstrates-its-field-of-the-future-program-at.shtml
8
Wireless network solutions in the Niger Delta: http://airccse.org/journal/ijdps/papers/3612ijdps06.pdf
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