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Next Generation Sensor Network Solutions for Offshore Oil and Gas Operations

S P E C I A L R E P O R T

Published by Global Business Media

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

NEXT GENERATION SENSOR NETWORK SOLUTIONS FOR OFFSHORE OIL AND GAS OPERATIONS


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Contents

Foreword 2 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

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 8 Tom Cropper, Editor

The Big Price Crash

The Role of Data

How Internet of Things Technology is Revolutionizing Offshore Oil 10 Jo Roth, Staff Writer

The Rise of IoT

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

References 16

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Next Generation Sensor Network Solutions for Offshore Oil and Gas Operations

S P E C I A L R E P O R T


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

mailto:[email protected]

www.globalbusinessmedia.org

www.globalbusinessmedia.org

www.offshoretechnologyreports.com


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Foreword

THE OFFSHORE industry is at a crossroads.

The world still contains enough oil to last for

decades, but there’s no guarantee it will be able to

tap all these resources. Money is tight. Exploration

is expensive. If offshore oil companies are to

survive, they will have to find a way to balance these

conflicting demands. How? Increasingly it looks

as if the critical factor of the next few years will be

the way in which the industry makes use of data.

The industry is collecting more information

than ever before. Doing so allows them to make

savings, improve production, maintain safety and

conform to more stringent environmental regulations.

In the first article in this report, we hear from Mojix

Inc., one of the leading names in this space. They

outline the different technologies coming to market

which are revolutionizing the way the industry

does business. We will then look more closely at

the growing role of data in the oil industry. We are in

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

which can place the more proactive companies at a

crucial competitive advantage.

One of the stock phrases in this new environment

is the ‘Internet of things’ (IoT). Jo Roth investigates

more about the evolution of IoT technology and

how this is driving forward innovation.

Even with this, though, making sense of all the

information harvested remains a major challenge.

James Butler looks at the developments needed

in data management software. In particular, he’ll

analyze Mojix’s own ViZix software which provides

intuitive real time access to multiple data streams.

By doing so, it offers critical improvements over most

existing IoT technology.

Lastly, we’ll take a look to the future. The importance

of data is shaped by the uncertain environment

in which oil and gas companies operate. We’ll examine

where the market is going and what technologies

will be key in driving innovation going forward.

Tom Cropper Editor

2 | WWW.OFFSHORETECHNOLOGYREPORTS.COM

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.

Internet of Things – A Good Investment While Prices Are LowScot Stelter, Sr. Director, Product Marketing - Mojix, Inc.

Crude Prices Put Capex Budgets Under PressureIn 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 BackBut 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 AdvantageAmong 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.

Investments in IoT will give firms a competitive advantage when prices snap back

FIGURE 1: CATEGORIES WHERE THE IoT ENHANCES OPERATIONS FOR OIL AND GAS FIRMS



NEXT GENERATION SENSOR NETWORK SOLUTIONS FOR OFFSHORE OIL AND GAS OPERATIONSNEXT GENERATION SENSOR NETWORK SOLUTIONS FOR OFFSHORE OIL AND GAS OPERATIONS

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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

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 standards-based 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 RFID8 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

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. User-configurable 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,

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 siteA 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 PlatformsThe 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 machine-

to-machine (M2M) communications

User-configurability enables the system to deliver value faster, scale easily and evolve rapidly with less costComplex 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

FIGURE 2: MOJIX ViZix IoT PLATFORM DISPLAYS COLOR-CODED CREW LOCATIONS IN AN EMERGENCY

FIGURE 3: IoT SYSTEM COLLECTS DATA FROM MULTIPLE SENSOR TYPES TO SYNCHRONIZE RIG

CONSTRUCTION MATERIALS





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

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

Multi-tenancy support with tenant group hierarchy (TGH) simplifies fitting the system to the businessMulti-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 over-rideable – 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 businessAn IoT system should easily scale with data volume. Look for systems that support:• Linearly scalable data storage, typically

implemented in the cloud. This means that the dataset can grow indefinitely, and the cost of

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 ongoingA 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. Well- chosen 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 l ightweight communications mechanism that tolerates intermittent wireless communications.

The rules engine should have a direct connection to external APIs – data or schedule-driven 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 investmentSecurity should be addressed on three levels:• Inter-process communications – Internet Transport

Layer Security (TLS) with strong encryption for access of systems across the internet.

• 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.

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) actionThe 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:• The crewman’s avatar on the graphical

representation of the rig turns red• A text notification is sent to the safety officer• The local edge box turns on a red strobe light

at the last known location (M2M)• The event severity code is escalated in the

on-shore control roomNeedless 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 Trefis team, “Estimating The Impact Of Different Oil Price Scenarios On Large U.S. Independents,” Forbes Magazine, http://tiny.cc/4s8w5x

2 Signatories to the Convention on the Organisation for Economic Co-operation and Development3 Francesco Cigala, John McCreery, John Norton; Operational excellence: Maintaining focus in a time of oil price

volatility, May 27, 2015, http://www.bain.com/publications/articles/operational-excellence-maintaining-focus-oil-price-volatility.aspx

4 Eric Richards, Assessing the Impact of Declining Oil Prices on the Energy Sector, retrieved August 30, 2015, http://www.alger.com/media/articles/AlgerEnergy_121714.html

5 Stacey Higganbotham, Fortune Magazine. “BP teams up with GE to make its oil wells smart,” retrieved August 31, 2015, http://fortune.com/2015/07/08/bp-teams-up-with-ge-to-make-its-oil-wells-smart/

6 The names of the companies deploying these solutions have been omitted to comply with confidentiality obligations. Please contact Mojix Inc. at [email protected] for more information about the applications.

7 MRO: Maintenance, repair and operations8 Radio frequency identification9 MES: manufacturing execution system; WMS: warehouse management system

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





The industry needs

cheaper, and more cost

effective methods of

production. Big data

will play an important

role in all these aims

Big Data and the Future of OilTom Cropper, Editor

FINDING 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:

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 DataIn 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.

Why big data is increasingly central to the success and operation of an oil and gas rig.

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.





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

How Internet of Things Technology is Revolutionizing Offshore Oil Jo Roth, Staff Writer

NEVER 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.

The Rise of IoTThe 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

As data plays an increasingly important role in offshore oil and gas production,

the moment has come for the Internet of Things.

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.





ViZix is in every respect,

the sophisticated, flexible

and agile system which

promises to deliver a

significantly enhanced

experience to its users

New Software for a New AgeTom Cropper, Editor

THE 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 TechnologiesThe 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

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.

New DevelopmentsA 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

The next generation of sensor monitoring systems promises to finally deliver

the sophistication and usability the industry has been crying out for.

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.





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

Converging Technologies Make for an Exciting FutureTom Cropper, Editor

PREDICTING 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 MarketA 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

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 FutureThe 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

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.

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 decision-making 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.




16 | WWW.OFFSHORETECHNOLOGYREPORTS.COM

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 EIA Sees Tighter 2016 Oil Market: http://www.reuters.com/article/2015/10/06/usa-eia-crude-idUSL1N1260ZH20151006

5 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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