Fueling efficiency: how to increase profits and streamline operations in the energy sector

Fueling efficiency: how to increase profits and streamline operations in the energy sector

/ Technology & Smart Cities / Monday, 25 March 2019 08:07

It has been a turbulent few years in the oil and gas sector. From crude oil hitting the dizzying heights of $110/barrel in 2014 before plunging to $30/barrel in March 2016, producers have gone through an extended period of belt-tightening to weather the storms, as margins and profitability take a hammering. With the oil price set to remain volatile through 2019 due to overproduction in certain territories and slowing economic growth reducing demand, producers need to adjust their business models to accommodate this level of volatility. They must operate with much greater efficiency and optimise their processes to enable them to increase their margins to pre-crash levels, without a significant boost from a higher crude price.

Further sharpening the need for energy companies to operate more efficiently is the greater pressure from governments, consumers and activists to reduce non-renewable energy consumption and humanity’s impact on the environment. This, in turn, places revenues, profits and margins under severe strain. With renewable energy uptake accelerating and innovations like electric vehicles gaining mainstream attention, traditional oil and gas businesses face an uncertain future.

Key to the energy sector’s efforts to protect margins and profitability will be the introduction of Industrial Internet of Things (IoT) technologies that enable energy businesses to gather data from anywhere, through connected sensors, and transfer that data across to cloud platforms for analysis by staff in control centres, often hundreds or even thousands of kilometres away. Indeed, research conducted by Inmarsat Enterprise into the adoption of Industrial IoT in the energy sector found that for 60% of businesses, improving the efficiency with which they use resources is a key driver of IoT deployment and that 48% are aiming to use IoT to reduce the cost of business operations.

While IoT is set to form the foundations for a more efficient digital future for the energy sector, it will also enable other the implementation of other, complementary technologies of the Fourth Industrial Revolution, such as augmented reality and real-time remote asset management, to extend the life of assets and improve operational efficiency.

Exploring with technology

The exploration of oil and gas fields is both immensely complex and expensive. Energy businesses looking for deposits of oil and natural gas have to survey significant areas undersea or on land, often in remote regions, before making a decision on how and where to drill into these deposits to extract the natural resources most efficiently. Businesses need the most accurate data available to them so that when they are drilling at test sites, the chances of them hitting oil or gas will be much higher.

This is a major challenge for the energy industry. There has been a substantial decline in the discovery of new oil and gas fields in recent years, with the levels of new discoveries at the end of 2017 the lowest since the 1950s. A report on the energy industry from PwC suggests that it is simply getting harder to make large discoveries and that most prospective areas have already been explored. With energy businesses now having to focus their exploration efforts on areas that are more difficult to access, and therefore more expensive and more hazardous, there is immense pressure to find a new approach.

Connected IoT sensors embedded in the ground or on sea beds can provide drilling companies with detailed seismic data to help them build 3D maps of deposits with much greater speed and to accelerate the decision-making cycle and help energy businesses drill with vastly improved accuracy. It is very costly to move drilling equipment around, either on land or at sea, so if a company can use IoT to significantly increase the accuracy of its drilling, it can dramatically reduce its exploration costs. In an industry where costs and revenues are under growing pressure and exploration is becoming increasingly difficult, connected sensors gathering key data points could be critical to improving margins and profitability.

IoT technology can also support much greater levels of automation at extraction facilities, with manual tasks that were previously carried out by staff on site now able to be controlled and monitored remotely through connected technology. This reduces the necessary staffing levels on site and can further help energy businesses to maintain their profitability and margins, with lower staffing costs putting less pressure on the bottom line.

Extracting value with remote maintenance and guidance

A significant cost to businesses extracting oil and gas, particularly in the remote regions where these operations are typically based, is the cost of maintenance. Sending large numbers of staff to perform basic manual maintenance tasks can be both costly and inefficient.

However, efforts to standardize wireless networks over the last decade have enabled operators to implement remote monitoring and maintenance strategies that can help avoid costly shutdowns and improve the efficiency of maintenance operations, with remote monitoring technology that takes data readings at set intervals and transfers this data back to head offices. Specialised companies like IEC Telecom Group have a range of solutions for remote monitoring and oil rig management for businesses. Their solutions significantly improve data visibility, allowing staff to constantly monitor machinery and other vital data and take action when necessary. This is particularly important on oil and gas rigs in remote areas, where a fault with mission-critical machinery could halt production and cost a business millions of dollars.

Another positive benefit of remote monitoring is that it enables predictive maintenance so that rather than send staff out every three months to inspect machinery, they can optimise maintenance schedules and improve the efficiency of operations. This efficiency will be critical to enabling energy businesses to improve the margins they can make at a consistently lower oil price.

While remote monitoring and asset management can handle a wide variety of issues on rigs, human presence is often the calming hand and the expert instruction when disaster strikes. With Remote Guidance, no matter how remote the location, or tough the challenge— help is at hand. Solutions with Augmented Reality (AR) enable offsite experts to guide the hands and see through the eyes of onsite technicians. This unique, hands-overlay technology lets the expert show, not tell, what to do—in real time, with a shared view and pinpoint accuracy. With no need for complex verbal instructions, Remote Guidance solutions with AR gives service teams the power of presence, anywhere, any time. A recent feasibility study on AR by the Service Council reported that 72% of service organisations are already using or evaluating AR right now.

Advanced remote maintenance enables field service providers to see through the eyes of experts and service technicians based in control centres, eliminating the cost of transporting these experts to site, resolving issues faster at the same time.

A more efficient future

The volatility in the oil price and a changing global market is forcing the energy industry to adapt to a fundamentally different landscape. Having come through an exceptionally lean period without returning to previous highs, energy businesses across the world are looking to new ways of working to bolster revenues and margins and deliver value to shareholders. IoT will play a critical role in enabling the future of the energy industry, improving efficiency by automating key manual processes, ensuring vastly improved data visibility over critical assets and supporting more informed, faster decision-making.

By Gary Bray, Director of Energy at Inmarsat Enterprise
and Nabil Ben Soussia, Managing Director, IEC Telecom Middle East

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