Case study: How the oil and gas industry has embraced IoT

- 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.