Ample data coupled with low-cost sensors, advanced wireless networks and more computing power could mean the oil and gas sector is better positioned to tap digital technology to grow production and profit.

But weak data management, limited data flow that hinders analysis and the lack of standardized or common infrastructure are among the issues blocking the way, according to a report released recently by the Deloitte Center for Energy Solutions.

The report, co-authored by Andrew Slaughter, Gregory Bean and Anshu Mittal, highlighted how integrating sensing, communications and analytical capabilities, or essentially the Internet of Things (IoT), could help oil and gas companies optimize operations. For the upstream sector, successfully linking diverse datasets is the key.

Talk about the IoT’s potential has grown as the industry has embraced new technology in hopes of increasing bottom lines amid continued oil and gas price volatility. Market conditions, the result of too much supply and not enough demand, has sent commodity prices down and caused companies to regroup by reducing spending and/or merging with their peers.

Among the latest headlines was the move by Schlumberger to acquire Cameron. Although the companies’ top executives did not give specifics about what is to come on the technology front, Schlumberger CEO Paal Kibsgaard said the company is eyeing new surface sensors and instrumentation to feed into common optimization software.

Pointing out the growing complexity of some E&P operations, Deloitte noted how some companies are putting more equipment on the seabed and working in HP/HT conditions while older oil and gas fields demand more maintenance and downhole shale activity grows.

“This increased complexity, when captured with the tens of thousands of new sensors now deployed, has driven a data explosion in the E&P segment,” the report said, adding that some estimates show the data generated is more than 1.5 terabytes a day. “This surge, however, has yet to generate the hoped-for economic benefits.”

Among the challenges are data-processing capabilities, especially when faced with more data that is also arriving more frequently, and limited data flow. Value could also be gained when analytical data—exploration, development and production—is integrated. But additional problems and expenses could arise when switching to a new system, specifically when the old system has proprietary data not accessible by a different vendor.

“Ample opportunities exist for upstream oil and gas companies to improve performance via advanced analytics, but weak information management is inhibiting the progress for many,” Gartner, an IT research and advisory firm, said in the report.

Deloitte offered examples of how IoT technology could help companies find information sources to analyze and identify where change is needed.

  • By applying analytics to seismic, drilling and production data, for example, reservoir engineers can map reservoir changes to help determine whether production engineers should change lifting methods. “By some projections, IoT applications could reduce production and lifting costs by more than $500 million of a large O&G integrated company with annual production of 270 million barrels,” the report said.
  • Oilfield service companies could tap their physics and data management expertise to help standardize and integrate data, Deloitte said.
  • To address compatibility problems and related incurred costs, Deloitte encouraged collaboration among the industry, vendors and others involved.

Deloitte warned that adding more sensors alone does not create value. That comes after business objectives have been identified, data gathered and integrated without bottlenecks, and analysis.

Deloitte summed up the process in what it called the “information value loop” in which information passed through certain technologies and networks enable the information to be communicated, aggregated for applicable standards and analyzed.

Collaboration and standardization among the industry also has its benefits, the report suggested.

“If common data standards are able to integrate diverse sets of data, companies can likely gain insights into previously invisible aspects of operations and adjust how they make decisions,” the report said.

Velda Addison can be reached at vaddison@hartenergy.com.