Kay Rieck: Embracing the future: the evolution of E&P in the oil and gas sector (Part three)

The oil and gas sector is going through a period of change and operators at every stage of the process need to examine how they respond. It is unlikely that those that try to hold back the tide will enjoy success because while the need for change has been apparent for some time. The economic impact of Covid-19 has made it pretty much inevitable.

Change is taking several forms, and in the last two articles we have discussed artificial intelligence, blockchain, enhanced mapping and drones. In this final article, we are going to focus on 5G telephone networks, which have the potential to bring it all together.

The recent announcement by Saudi Aramco [Aramco, STC & Huawei to Explore 5G Uses in Oil and Gas Industry | Al Bawaba] that it will be launching an innovation partnership focused on bringing the benefits of 5G to the oil and gas sector might not seem at first glance to really have very much relevance. On closer examination it could point to a significant development in the way that the oil and gas sector operates at every level in the future.

IoT and making the hype real

This is about more than just telephone masts and the ability to make and receive calls.

The amount of data a 5G network can carry delivers significant advantages for the oil and gas sector, not least of which is the fact that it will be far cheaper than a satellite link-up for remote operations. And because of its capacity, it can carry data as well as voice information. This makes it possible for the internet of things (IoT) to move far closer to reality than it has been in the past.

The IoT has been widely discussed, but in the context of E&P projects, it would mean that sensors could be constantly in communication with each other, ensuring that, for example, emission data or pressure changes in a pipe could be reported quickly and accurately. When dealing with volatile substances such as oil and gas, it is important to understand why changes could be happening and be alerted before potential issues evolve into genuine problems. Issues can be fixed, but problems tend to damage hardware, delay projects and add cost.

It’s not the miles, it’s the road that they are travelled on

5G delivers the bandwidth that can significantly enhance the way that hardware interacts and reports. Using a 5G network, projects will be able to get a far more accurate picture of wear and tear on a drill, for example, ensuring that it can be changed close to the point that it reaches the end of its working life. This is different from changing it after a specified number of revolutions. It’s about knowing when the optimum replacement point is reached based on information about terrain, underlying conditions, the performance of the drill itself and a myriad of other factors. Getting that right can help projects manage their costs efficiently.

In a capital-intensive industry where both people and equipment are exposed to extreme environments, operational efficiency is at the centre of most strategies. The fact that 5G is set to deliver significant enhancements to this aspect of a project is likely to be exceptionally important as the industry moves into its post-Covid-19 recovery phase.

It’s not brain surgery… but there are parallels

Equally, 5G will make collaborative working significantly simpler through a variety of tools including augmented reality (AR). While the retail hype around AR died down shortly after Google Glass was first released in 2013, AR has some specific benefits in highly technical roles where it can enable people with expertise to oversee work being carried out without the need to be physically on site.

It proved its worth in the field of medicine during the global pandemic by letting surgeons oversee each other’s work without the need to have as many people physically in an operating theatre. It could well perform a similar role at a remote extraction site, letting people on the ground use AR to accurately compare how a set-up currently looks with how it should look according to an overlayed AR schematic. It would also let them consult an expert on a particular piece of technology anywhere in the world and have the expert base their advice on what they can observe about a live but virtual environment.

5G could also support the deployment of more robots on a project site. These could carry out much of the repetitive or dangerous work currently undertaken by people, as well as significantly enhance security by adding protocols such as only allowing gates or doors to open for authorised personnel.

While 5G makes all of these functions considerably easier, there is still a significant data processing requirement, but as we discussed in the second part of this linked group of articles [LINK], there is already a solution in this regard: take waste gas and turn it into energy to power onsite servers.

Ultimately, the oil and gas industry requires people to work in remote and often harsh environments and will benefit significantly from technology that will enhance sensors and make it easier to keep projects moving.

After the challenges of 2020, it is going to be important that the sector incorporates any technology that will enhance its efficiency, and 5G appears to be a key part of the foundation that will help increase efficiency and safety at the same time as keeping costs low.

This is the final part of a three-part article focused on technology and the evolution of the upstream oil and gas sector. Follow this link [LINK] to read the first part or this link [LINK] to read the second part.

About the author

Kay Rieck has been active on the investment side of the oil and gas sector for more than two decades. Starting his career as a financial adviser and stockbroker on the New York Stock Exchange, he quickly developed an interest in natural resources and associated assets building his expertise with investment banking and asset management roles at the New York Board of Trade and the Chicago Board of Trade. Utilising his exceptional network of global contacts, he started his first exploration and production company in the US in 2008, selecting investments across the Haynesville Shale, Permian basin, Eagle Ford shale, Dimmit county and elsewhere that offered exceptional prospective returns.