Although often perceived as a sunset industry by outsiders, the truth is the oil & gas industry is very high tech. Over the past 20 years the industry has transformed itself by developing technologies that have unleashed vast new reserves, previously uneconomic to develop. Canada now has the third largest reserves in the world, and none of it would have been possible without technology.
The Situation Today: Layered Systems, No Integration
During this renaissance in the Canadian oil and gas industry new companies emerged, creating new and special technologies that would allow development of our previously untapped resources like oil-sands and shale gas. These reserves have been known since the earliest oil and gas development in Canada, but conventional extraction technologies could not release the hydrocarbons. As conventional resources began to decline, the industry began to develop technologies to produce this vast, unconventional resource. For example, steam-assisted gravity drainage (SAGD) and directional drilling technologies specifically designed to produce low viscosity bitumen have unleashed more the 1.7 trillion barrels of new reserves.
To support these technologies Operational Technology (OT) has historically deployed very proprietary solutions meant to solve specific problems. Unfortunately, these purpose-built systems have little or no economies of scale and the infrastructure requires significant support and cost to maintain.
Conversely over the same period, traditional or corporate IT has standardized, commoditized, consolidated and integrated solutions to support all applications on a shared infrastructure. This has resulted in dramatic economies of scale for the corporate side of the business.
The main reason for this movement to leveraged architectures? IT had to find ways to do more with less. From 2004–2010 Canadian operators have grown their business on average 32%, but IT budgets have averaged 1-3% annual growth. Now is the time for IT to bring economies of scale to the field.
Why now? Because the proprietary models of OT are inhibiting cost savings and limiting adoption of new horizontal technologies. With forecasted growth of 35% in the next 10 years we can’t spend more building and maintaining proprietary systems. It’s not sustainable.
New Opportunities To Transform
Beyond the opportunity to drive down operational IT costs and leverage one architecture for many solutions, horizontal architectures are becoming the backbone of the future technical innovation within oil and gas development. Companies are embracing IP-based architectures for their solutions and are embedding Cisco technologies directly into their systems. New trends like the Internet of Everything, M2M and sensor technologies will dramatically change how we manage digital oil fields of the future in Canada.
A recent study on oilfield sensor uptake predicts that oil and gas M2M devices will grow at a compound annual growth rate of 61.1% to 635,000 units by 2016. The top growth areas will be onshore brown fields and pipelines. These technologies are predominantly IP-based and will require infrastructure not currently mainstream in Canadian oilfields. New digital pipelines will transform how we manage and monitor pipelines while bringing the opportunity to connect remote communities. All within a single, IP-based fibre architecture.
In order for this transformation to become a reality, OT will need to embrace horizontal architectures and IT will need to get in the field to a much greater degree.
Do you agree that IT in the oil and gas industry needs to change? Leave a comment below.