Industrial internet solutions increase operational efficiencies, lower costs

While significant hurdles must still be overcome, operating companies and oilfield service companies alike should not dismiss the performance improvements promised by emerging industrial internet of things (IIoT) solutions.

Tim Shea
ARC Advisory Group

While significant hurdles must still be overcome, operating companies and oilfield service companies alike should not dismiss the performance improvements promised by emerging industrial internet of things (IIoT) solutions. The potential operational and business process improvements and cost reductions that can be unleashed through enhanced instrumentation, connectivity, and analytics in upstream oil and gas promise to be more than sufficient to overcome the obstacles.

The industry is already seeing the beginnings of a complete transformation as the digital oilfield becomes a reality and the IIoT emerges to find its place in production. But even though the technical possibilities are becoming clear, real movement in this direction will depend on business benefits and business cases coming into clear focus. With the economics of the industry under significant pressure, now is a good time to consider new solutions with the potential to improve performance and drive down costs.

Along with Arctic operations, subsea oil and gas represents one of the final frontiers for owner-operators, independent E&P companies, drilling contractors, and oilfield service providers seeking new sources of hydrocarbons to extract.

Industry data show there were almost 10,000 operational offshore platforms and another 2,000 platforms that could be developed in the coming years. The same sources indicate that there are more than 4,500 operational subsea wells and another approximately 6,400 wells that could be developed in the coming years. Many of these offshore and subsea wells are operating with much larger volumes than those in onshore applications as the larger volumes are needed to justify the typically hundreds of millions of dollars of cost per well. ARC believes that offshore platform operations can benefit significantly from IIoT-enabled solutions as the number of projects leveraging tiebacks is growing along with the need for increased collaboration, petro-technical data integration (PTDI), and operational visibility.

Mobilizing assets and materials

Many specialized equipment and offshore vessels are required to make a subsea well or field (composed of multiple subsea wells with tiebacks) fully operational. In many cases, companies rely on a number of different vessels including OSVs, PSVs, FPSOs, pipelay vessels, and FLNGs to either help deliver the required equipment or recover and process the hydrocarbons extracted from the ocean floor. Given the large number of different stakeholders involved (owner-operators, drilling contractors, vessel providers, oilfield service suppliers, and other third-party contractors), the logistics, collaboration, communication, and information-sharing challenges can be immense. The resulting inefficiencies raise the project costs for all involved.

Drilling and completion

Employing subsea equipment such as BOPs, pumps, compressors, separators, and/or multi-phase flow meters at water depths of 10,000 ft (3,280 m) or more subjects the equipment to extreme pressures and temperatures, necessitating special materials and design to operate reliability for years without human intervention. Specialized connected subsea equipment, communications, and analytics can enhance operational visibility, agility, and flexibility to help make the "subsea factory of the future" a reality today.

In one example, GE Oil & Gas has been able to leverage its BOP program that will help make offshore oil and gas exploration and development viable in 20,000-psi (20-ksi) subsea formations. Key features of the new 20-ksi BOP system include:

  • Upgraded ram and annular BOPs designed for the specific demands of containing high-pressure/high-temperature reservoirs
  • A BOP control system, based on mission-critical GE Power & Water systems, designed to provide maximum system uptime
  • BOP Advisor software designed to provide real-time performance and maintenance data to significantly reduce unscheduled BOP maintenance requirements.

The new 20-ksi BOPs will be manufactured at GE Oil & Gas Drilling Systems facilities in Houston. According to the company, its new BOP system uses its latest communications software solutions to allow real-time remote monitoring of equipment status and performance, thus promising new degrees of reliability and performance.

Uptime and reliability

Reliability is one of the most critical requirements for equipment used in subsea processing and production. Subsea assets are expected to operate maintenance free for years. In many cases, the vessels being deployed may be on site over the subsea well for decades. Multi-phase flow metering solutions need to be designed to operate for years prior to being retrieved for repair and maintenance. Solutions with embedded intelligence for self-calibration and/or remote diagnostics and repair capabilities can help enable the equipment to continue to operate for extended periods of time, minimizing lost production.

Most upstream oil and gas operations must operate with disparate and often widely distributed assets by different groups (reservoir engineers, production engineers, etc.), each with their own agendas, types of data (structured, unstructured, reservoir data, drilling data, production data, etc.), and means of accessing and analyzing their respective data. Often, a lack of collaboration between these groups and inability to access data in a timely manner can increase nonproductive time, reduce efficiencies, delay time to first oil and/or lower than desired production rates. IIoT-enabled solutions can increase operational visibility and collaboration among personnel by enabling real-time data to be transformed into actionable information that can be shared across groups and across assets (wells, vessels, etc.) to help optimize production, improve operational efficiency, and increase profitability.

Transportation and storage

IIoT-enabled subsea pipelines can be equi-pped with sensors and predictive analytics to monitor pipeline integrity in real time for leaks or detect corrosion or pending structural defects that may require repair or replacement. Subsea factories of the future will be designed to operate with self-contained subsea storage facilities that will also benefit from IIoT-connected sensors and instrumentation to detect potential problems before they can negatively impact safety or environment.

One of the biggest causes of nonproductive time is people not being able to find the right data, inability to integrate different data types (WITSML, PRODML, RESQML, MICROML, etc.) and data structures, and the complete lack of collaboration among operational groups (reservoir/seismic, drilling, production, operations vs IT, etc.). Assuming increased standardization and data type and communications network interoperability, IIoT can be an empowering solution that helps make the holy grails of petro-technical data integration and smart oil fields practical realities.


Currently, the global oil and gas industry is experiencing an unusually volatile period with oil prices plunging more than 50% in six months. ARC believes that there has never been a better time for the oil and gas industry to consider targeted investments in IIoT technologies.

While it is likely that some marginal production will not remain viable at these prices, IIoT-enabled collaboration between previously siloed groups and IIoT-enabled intelligence and predictive analytics for key decision makers can go a long way toward reducing costs and maximizing production.

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