The Dawn of the Digital Oilfield

Rapid Growth in Cellular Communications

Starting in the mid-1980’s, mobile phones rapidly evolved from simple, clunky analog voice-only devices to today’s advanced, internet-enabled, sleek, handheld computers supporting both voice and data calls. This dramatic transformation was driven by consumer demand for data and billions of dollars of 3G/4G carrier infrastructure build out to support broadband data everywhere. Today, we are at the point where the mobile 3G/4G device market is becoming saturated and carriers are looking at new ways to capitalize on this existing infrastructure and even expand it further. As a result, national cellular carriers are now increasingly focused on the exploding machine-to-machine (M2M) and internet of things (IoT) communication markets to drive their future growth. Oil and gas production is the ideal market to realize the operational efficiencies possible with the new M2M and IoT communication technologies given its reliance on manual processes and decades-old automation technologies. I propose we are at the dawn of the digital oilfield.

Slow Growth in Industrial Automation

Industrial automation technology has been much slower to evolve as compared to mobile phones though the first Supervisory Control and Data Acquisition (SCADA) systems using basic computers for hardwired industrial monitoring and control were built in the mid-1960’s. If we fast forward a half century, similar systems are used today to remotely monitor and control oil and gas production sites with the main improvement being wireless sensors for communicating over low data-rate, proprietary SCADA networks. Since these networks are proprietary, they are very expensive both for installation and maintenance and are not inter-operable with other networks. Due to the high cost, only the largest oil and gas operators can afford these multi-million dollar systems, so most production sites have no automation at all relying, instead, on manual monitoring and control.

The Digital Oilfield for Oil and Gas Production

The new digital oilfield utilizing a combination of M2M and IoT communication technologies and existing 3G/4G carrier infrastructure is a game-changer for oilfield automation. By using the pervasive 3G/4G infrastructure for backhaul communications, there is no longer any need for oil and gas operators to pay for the build out of their own SCADA network making remote monitoring and control inexpensive even for the small operator. This allows operators to affordably automate their remote sites monitoring tanks, flow/turbine meters, pump controllers, as well as any legacy SCADA devices. Moreover, the low latency and increased bandwidth of the 3G/4G networks enables both useful data analytics to optimize production and new site security applications like real-time two-way control and monitoring as well as high-definition video surveillance.

The new digital oilfield is more relevant than ever with the drop in oil and gas prices compelling operators to make their current processes more efficient and reduce fixed costs to preserve margins. The U.S. is now the biggest oil producer in the world and is on track to be the dominate player in global oil politics. The operational efficiencies enabled by the digital oilfield can reduce fixed costs, increase margins, and keep U.S. operators competitive in the global oil market.