This story by Emerson’s Peter Zornio originally appeared in Oil + Gas Monitor.

The oil and gas industry is in the midst of a seismic shift. A recent Wall Street Journal article summarized the challenge and opportunity: “When a barrel of oil fetched $100 or more, energy companies were focused on drilling wells and pumping crude as fast as they could. But now that prices have settled around $50 a barrel, companies are focused on optimization, efficiency and reliability—getting the most petroleum for the least amount of money. And many are turning to advanced technology for help.”


Other trends that are uprooting the status quo include the exodus of experienced employees through retirement and attrition; increasing depletion rates, which thwart production growth; and legacy or outdated automation technology.

One of the most promising solutions can be found in continuing to harness the power of Internet of Things (IoT) technology.

While the buzz around the IoT is deafening, the oil and gas industry has been reaping its benefits for years, yet the upside potential remains significant. According to Upstream Analytics, it was estimated that 50 percent of oil and gas companies would have advanced analytics capabilities in place by 2016.

Given today’s sector realities, companies no longer seek incremental improvements: They need significant paradigm shifts that will fundamentally change their business. The goal for the use of IoT in the oil and gas industry is to overhaul long time manual processes for total efficiency to truly make a game-changing impact.

Here are three elements of IoT that will create these measurable, meaningful differences:

1. Remote monitoring

Sensors are widely deployed to allow companies to monitor and manage assets in remote locations – but today’s modern sensors and wireless communications offer new areas of real-time “pervasive sensing.” Factors such as energy consumption, environmental conditions, safety and security parameters, and process performance can all be remotely monitored and adjusted, providing valuable data that can enhance reliability, safety, security, and energy efficiency. This is particularly important in the oil and gas industry’s 4-D environments (dangerous, dirty, distant and dull), where staffing is challenged.

Where equipment and production used to require manual operation and monitoring, new easy-to-install sensors enable assets to be monitored, recorded, and adjusted remotely as needed. Pervasive sensing has a strong impact on environmental parameters, such as gas emissions, leaks, and spills.

The return on investment can be realized quickly. For example, new sensors enabling remote monitoring of steam traps allow companies to determine which are malfunctioning, saving as much as 5 percent of a plant’s energy cost for steam production.

Energy management will continue to be an important emerging field as real-time energy management information systems are utilized to automate the process of monitoring and managing energy consumption. Meaningful information about a site’s energy performance will allow process manufacturers to identify inefficiencies and irregularities and take corrective action, saving an average of 5 to 10 percent in energy costs annually.

2. Decreased downtime

Unplanned downtime due to equipment failure leads to lost time and revenue, but reductions can be accomplished by implementing true, real-time condition monitoring through IoT technology as well as utilizing prognostic analytics for predicting future condition and failure—putting “Big Data” to use.

Cost savings are significant if companies can determine when equipment needs to be serviced before it goes offline. Global resources company BHP Billiton has found that predictive maintenance of its gas compression equipment has helped decrease unscheduled downtime, which in the past has cost as much as $20 million per incident.

For example, compressor condition monitoring and prediction is done through sensors combined with data analytics, allowing engineers to monitor compressor performance. This helps them anticipate when a refurbished compressor is needed before it shuts down, reducing down time and saving money across multiple assets. This is yet another example of pervasive sensing providing valuable benefits in addition to the cases cited above.

3. Improved data analysis 
Businesses need actionable information that can make their plants safer, more predictable, and more cost-, risk- and time-efficient. Real-time data can inform decisions and boost performance, but the key to successfully harvesting it is in the interpretation and analysis that ends in profitable action. Data alone isn’t enough.

Integrated Operations Is the Answer

But these three elements on their own don’t fulfill the promise of IoT. That’s where the Integrated Operations (iOps) approach comes in, using the functions of IoT to connect the right people to the right processes—regardless of their physical location.

Combining different data streams that have historically been separate can create new organizational workflows. Many companies have formed these cross-functional collaboration centers that bring together previously decentralized expertise to enable better, faster decision-making.

An Integrated Operations Command Center can help companies move their IoT strategy to the next level. The team who staffs the iOps Center has a holistic view of the entire operation as they garner data from multiple information sources, enabling superior decision-making in today’s business environment, which places a premium on speed and efficiency. It allows cross-functional teams to process and assess data in real-time to encourage interchange, promote better-informed decision-making and mitigate the silo effect, which can hinder big-picture, innovative thinking.

Missed Opportunities?

So merely collecting data is not the answer: The major gains are realized when these elements are integrated for a cohesive solution. A report from the Economist Intelligence Unit found that 62 percent of respondents said they are not sure they can keep up with the large volumes of data they collect, and half are unsure they can generate useful insights from it, due to the various sources, formats, and speeds.

The value is in the aggregation that allows decision makers to spot patterns and make predictions – turning the information into actionable results. The companies that are seeing the most compelling benefits are those that are looking at IoT technologies as an enabler for new, more holistic, operational paradigms.

It’s clear more can be done: According to MIT Sloan Management Review and Deloitte’s 2015 global study of digital business, the oil and gas industry’s digital maturity is among the lowest, at 4.68 on a scale of 1 to 10, with 1 being least mature and 10 being most mature.

Estimates show that merely 1 percent of the information gathered is being made available to oil and gas decision makers, meaning that increased data capture and analysis could save millions of dollars by eliminating up to half of a company’s unplanned well outages and boosting crude output by as much as 10 percent over a two-year period.

While the IoT— and all the data, analytics, sensors, equipment and applications that are associated with it—is clearly a significant technological shift that will lead to better practices and insight, we see that, much like the Industrial Revolution, its maturation will be prolonged, checkered and evolutionary.  Changes won’t come from small actions; they’ll need a huge overhaul to redefine processes and bring it to the forefront of a new, technologically improved industry.

The IoT has the capacity to create the major impact that the oil and gas industry needs to increase operational efficiencies in light of changing circumstances. Knowing how to translate technology into measurable, game-changing business performance is an ongoing challenge and one that can be addressed through a more integrated approach to IoT.