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Connectivity Technologies : Oil and Gas higher Performance

April 7th, 2021
Oil and Gas

Connectivity Technologies : Oil and Gas higher Performance

April 7th, 2021
Oil and Gas

Some factors like price and demand have high pressure on the increasing value of the connectivity in exploration and production of oil and gas more than ever.

Although we have many technologies in the oil and gas industry, we haven’t realized the potential of connectivity in this matter. We estimate that by using connectivity we can increase the value of production by more than 250 billion USD by the end of 2030 which 160 up to 180 billion USD could be done by nowadays infrastructure and about 70 billion USD could be done by satellite and 5G technology. By relying on connectivity we may save the cost from 20 up to 25 percent per barrel.

The oil industry has faced its third collapse in the last 12 years and is experiencing a hard time indeed. There is no match between supply and demand so the price has dropped a lot. On the other side, there are some health problems like making the seas and oceans dirty, threatening the lives of animals, and emission carbon into the air, so new technology is demanded indeed.

New technology can deliver increased value fast and quickly. They enhance the connectivity to the global network to small subnetworks called backhaul. The developed technology can easily connect service providers to these backhauls. Many of these technologies exist nowadays but again we have to work on them.

Current connectivity in the oil and gas industry

This industry is so divergent but some new platforms have been connected to fiber and microwave. About 40 percent of oil and gas companies in Norway, Canada, and the united states are connected via fiber and the rest are connected via microwave connections. The reveals the capability of having a 4G connection. Already 4G is being used in 95 percent of areas in North America but still, 5 percent are using very small aperture terminals (VSATs).  But some countries like Mexico or in the middle east or south America which are the big sources of oil and gas have poor connections and most of them are connected to VSAT instead of 4G LTE. We estimate that 30 percent of the globe onshore be connected to low bandwidth connections.  

Opportunities to increase the value of utilizing the connectivity

New technologies have good potential to increase performance in the oil and gas industry by using optimization and automation.

Optimizing means that we have to develop our technology and transformers so the circulation of data would become easier and better certain decisions can be made as quickly as possible but we are going to need some facilities like more developed sensors to collect data, bandwidth and computer capacity.

Automation means involving full and semi-automatic machines to do the dangerous jobs themselves quicker and without the intervention of humans. Humans can just survey the process of the job.   

To use these facilities and new technologies we have listed five cases: drilling time, production, smart maintenance, field operation, and logistic enhancements. With these technologies, the value will be increased by about 250 billion USD and also the emission of greenhouse gas will be reduced as well.

Case 1: Drilling optimization and automation

Optimization: Drilling is one of the most important parts of excavating and 20 to 30 percent of the whole coast belongs to the drilling. By optimizing this case we can reduce a lot in time and also the cost. The speed can be augmented by more than 25 percent even some companies confirm that using these new technologies can reduce the speed and the cost up to 50 percent. The value of optimizing the drilling could reach 30 billion USD.

Automation: By full and semi-automation we can reduce the people involved in drilling, save money and easily drill some spots that are considered dangerous. Automation can also reduce human error so again it will reduce the possibility of doing things in the wrong way so in the next level the cost and the time will be decreased a lot. We estimate that automation will have a high value of 50 billion USD. 

Case 2: Optimizing production

By using a major developed production facility in one of the grand oil companies, the rate of production was increased by 2 percent and it is said that it might get higher than 3 percent soon.

These facilities can be used to reduce energy consumption and bring a higher output but again it depends on some variables like bandwidth and networks and new sensors to transfer data.

With these developed facilities we can reach a good value of 30 billion USD and also using high-bandwidth connectivity and 5G networks can improve the rate of prediction 3 percent for us.

Case 3: Smart maintenance

In this case, our sensors deliver and transfer the data as soon as possible so the authorities can predict the unforeseen problems that might occur in the future and eliminate the unwanted delays so they can reduce the cost and time. Current technologies such as VSAT can assist and enhance this case but still, they need to become widespread.

Case 4: Enhanced field operations

Optimization: By using advanced tools we can save almost 40 percent of the time which is being utilized to produce oil and gas. Advanced tools such as smart monitoring can detect unpaired and broken components that are not easily detectable. The fiber connectivity which is being used nowadays can solve some of these problems but to augment it we have to use high-bandwidth and 5G connections. We estimate that it will bring us a value of 10 billion USD if it’s used worldwide.   

 Automation: Using surveillance cameras and drones can be quite helpful. With these technologies, we can reduce or even eliminate the presence of a human in the field and the authorities can watch everything that is going on remotely. It guarantees the safety of workers and reduces the cost by more than 35 percent. Even nowadays it is possible to do remote inspection by utilizing fiber cable and microwave connectivity. It can enhance health, safety, and environmental improvements.

Case 5: Digitally enabled logistics

Oil and gas companies can make some applications for the users to inspect the processing of the product. For example, whether the goods are being transferred or they are stuck in some kind of stockpile or they are near to be delivered completely. Again this can be watched online. The value of this case can reach 30 billion USD.

The initial steps

We are looking forward to companies accelerating the usage of smart intelligence, new technology, and digitalizing in oil and gas production. Some pioneer companies mostly in North America and Europe are expected to invest in these categories so they can be beneficial to all the involved parts such as safety of workers, environment, consumed time, and the cost. We assume that as much as new connectivity technologies such as 5G develops, can not only aid the companies but also persuade them to invest in these cases.

obstacles:

Lack of information for many bug companies is one of the main problems. They have to gather so much information about the benefits of the new technologies. On the other hand, they need to work a lot and invest some of their sums of money to develop and buy new technology pieces such as 5G receivers or changing the cables or installing cameras and sensors or learn how to use drone because we can admit that these developed technologies can be complex to work with and they need to be taught. Also, some workers may get unemployed and jobless because robotic and smart technologies will gain their spots.  

Strategic steps

  1. Invest in the capability of humans and future and modern technology

This requires new skills and talents like translators so they can connect the companies and users all around the world to each other so people can solve their problems easily and also some robotic expertise and new designers are going to be needed.

To augment the potential of connectivity a large investment is required in data transformation, automatic machines, and instruments that are connected via wireless networks.

  1. Rethink business models

Unlocking digital value requires a new model and some modifications in the structures and infrastructures. By using modern connectivity technologies, companies and enterprises must get used to sharing logistics and inspections.

  1. Encourage digitalization

Rules and regulations can encourage digitalization capabilities in these industries. For example, more difficult rules for the emission of greenhouse gases can encourage companies to use new technologies. Also, some particular laws can patronize data sharing and help the labor education and inform all the authorities of the benefits of digitalizing the crafts and industries.

Article by: Amir Masoud Navidi

Adapted from: Mckinsey and Co.

https://www.mckinsey.com/industries/oil-and-gas/our-insights/how-tapping-connectivity-in-oil-and-gas-can-fuel-higher-performance

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