- Oil and gas is one of the largest industries in the world.
Accounting for revenues exceeding two trillion dollars.
Given some of the industry's unique characteristics
oil and gas companies have been among
the earliest and most enthusiastic adopters
of IoT technology.
Let's see why.
First, oil, gas, and petrochemicals are commodities.
Every company, no matter how large
is at the mercy of market prices.
Thus, operational efficiency
is the primary determinant of profit margins.
Second, unlike other process industries
such as steel or paper, accidents in oil and gas
can be not only deadly but extremely expensive.
In terms of cleanup operations and lost production.
Third, many segments of the industry, for example
oil drilling and refining, can have significant
and very costly environmental consequences
thereby requiring extreme preventive action.
Here are some of the ways in which oil and gas companies
use IoT technology to address the imperatives
of operational efficiency, accident prevention,
and environmental sustainability.
A large oil and gas company can have over 50,000 wells
and multiple pieces of equipment at each well.
The failure of a single machine at a well
can lead to lost production
while also falling foul of regulations.
Internet connected sensors can give early warning
of impending failures or immediate alerts
in case of actual failures.
Something that would be impossible to do
with in person field inspections.
Aggregated over all wells, data from sensors
can also help managers learn why some wells perform
better than others so that the best practices
can be diffused company wide resulting
in improved efficiency.
In refining operations, IoT sensors
can monitor emissions, waste, and environmental conditions
on a 24 by seven basis.
This approach not only reduces the cost
of onsite inspections but is much more thorough.
It also enables the company
to be highly responsive thereby reducing penalties
in the event of a mishap.
IoT sensors embedded in pipelines, trucks, tanks,
and in the case of home heating oil
even customer's homes, can enable the company
to manage its entire supply chain
far more efficiently and with greater responsiveness
to fluctuations in market demand.
Industry insiders estimate that IoT implementation
is already adding several billion dollars
in economic value to the oil and gas industry.
The global demand for IoT sensors
and related software and services for this industry
is predicted to exceed 30 billion dollars in 2025.
Similar implementations of IoT are underway
in other industries from steel mills,
to forestry and paper, to auto factories.
Ongoing developments such as cheaper,
smaller, and more powerful sensors
that are connected to the internet
where 5G and can leverage the growing power
of data analytics in AI seem set to make IoT
as ubiquitous as the clothes we wear or the air we breath.