Pacesetters Run on Private 5G Networks. You Should Too
Don't waste time with your Dad's internet.
To break free of the limitations of yesterday’s technologies, the oil and gas industry is accelerating its adoption of private 5G networks.
The Power of Advanced Technologies
Some time ago, I helped an oil field logistics company respond to customer feedback that its services were “in the Stone Age”. Its systems were entirely manual, inaccurate, slow, and error prone. Virtually every invoice was disputed, causing cash flow problems. Worse, its multi-year contracts were coming up for renegotiation, and there was a real risk that the contracts would not be renewed, stranding an enormous fleet of 750 vehicles.
We decided to create a fundamentally new business model that would upend the prevailing customer service standards in the industry, dramatically improve the utilization of the fleet of assets, staff, and facilities, and transform for the better its overall competitive position.
The program had three pillars:
Install GPS on board the vehicles (the front office), to collect real time positioning and operator safety data, a WiFi router to provide workers on-line services, and a network transmitter to send service and usage data directly to the back office;
Deploy a new ERP system in the back office to streamline invoicing based on the sensor data collected in the vehicle; and,
Exploit an algorithm that optimized the mix of available vehicles, operator staffing, routes, costs, and customer demand.
At the time, satellite services were simply not up to the task, suffering from high cost, high latency, very low bandwidth and low reliability in cloudy weather. Fortunately, the local telecommunications utility had recently extended terrestrial cellular service across the company’s geographical range of operations which enabled all of the new front office services. It took several weeks to pull the equipment out of service, add the new sensor and network gear, and update the commercial systems to take advantage of the new positional and usage data.
The results were startling. Invoice timing accelerated from 90 days to same day. Error rates vanished. Optimization of the fleet freed up 15% of capacity, allowing the company to capture new contracts with no capital outlay. Safety improved dramatically because of the availability of real time operator vehicle performance.
A couple of months after go live, the customer commented that the logistics company was suddenly “light years ahead” of both the competitors and the customer’s own business, a true pacesetter for the sector, and the company was able to salvage an at-risk 10-year $1b contract.
This little story illustrates the power of new digital technologies that can both solve specific business problems as well as transform entire segments of the value chain.
Today’s Oil and Gas Challenges
Today, the oil and gas industry faces three interrelated problems that cannot be solved simply by making adjustments to the business-as-usual model.
Energy Transition
First is energy transition, a multi-faceted challenge at the heart of the industry. Oil and gas energy products account for almost all transportation emissions, and much residential and industrial emissions. Its operations are the largest controllable source of methane emissions, originating from storage tanks, intentional venting, and leaky equipment. Measuring and accounting for carbon is a net new and costly function that, because of the scale and distributed nature of operations, cannot be done manually, and requires whole new solutions.
Capital Constraints
Many capital market participants have tempered their exposure to the fossil fuel sector, driven by uncertainty of demand beyond 2030 (a date targeted by many countries and industries for net zero operations), and the threat of litigation for the continued funding of fossil fuel companies. Capital has shifted fundamentally to the digital industry, reflected in price earnings ratios for digital companies that are triple the value of the leading oil and gas concerns. With less capital available to fund growth, the industry is compelled to improve the utilization of existing assets and delay their retirements as long as possible.
Talent Shortages
The shortage of talent is starting to bite hard. The recent pandemic already forced some 700,000 senior hands to exit the US industry permanently. Presenters at the recent World Petroleum Congress estimated that 14m oil and gas jobs will either change or be eliminated from the industry in the next 10 years. Young people in many countries have turned away from careers in the industry, in response to the decarbonization narrative that puts the fossil fuel industry on a dead-end path to oblivion. Government policies such as the IRA in the US, the Green Deal in the EU, and China’s five year plans, are creating 5 million new jobs in various new energy fields, such as sustainable fuels, hydrogen, carbon capture and storage, geothermal, biomass, and renewable energy. The industry must find ways to augment its dwindling talent pool using automation.
The Potential of Digital Innovations
The industry has concluded that digital innovations rank very highly, if not at the very top, of the possible solution pathways available to crack through these challenges. Digital innovations are unique in that they offer a triple bottom line impact, by simultaneously lowering costs, improving productivity, and lowering emissions. In addition, technology innovations are both highly attractive to talent, and very bankable for capital. Suppliers to the industry are already showcasing such innovations as:
Integrated remote operations centers that lower costs, and improve safety outcomes
Connected vessels, rigs, turbines and platforms. For example, Telenor Maritime uses mesh radio and microwave telecoms from Ericsson to bring mobility solutions to off-shore workers and equipment.
Robotic, semi autonomous, and fully autonomous equipment, such as remotely operated subsea vehicles (ROVs), aerial inspection drones, and automated haulers in oil sands, that have dramatically lower manning requirements
Continuous equipment monitoring for both mobile and fixed assets to predict maintenance and servicing requirements. As an example, Grundfos, a Danish company, equips its pumps with IoT sensors to collect pressure and temperature data, creating an IoT ecosystem that leverages Telenor Connexion and Ericsson IoT Accelerator.
Satellite remote sensing that provides for environmental monitoring of assets including pipelines, plants, fields and wells, regardless of location
Persistent and continuous sensing of emissions across a fully distributed asset base
Multi-variable continuous optimization of service assets to maximize productivity, minimize emissions, and lengthen in-service cycles
Mobile worker connectivity, including intrinsically safe smart phones and wearables, which brings operational data directly to the front lines where it is needed. An example is Centrica plc, a UK multinational energy supplier who has deployed an advanced network from Ericsson to connect its front line workers.
Machine-learning and artificial intelligence applications to augment human decision making, and improve and accelerate time-sensitive business decisions.
As with SCADA technology from years ago, the oil and gas industry will readily embrace these solutions provided they also satisfy the demanding operational requirements of the sector:
High reliability
The industry’s assets run continuously, in energized states (high power, high pressure, high heat, high movement), in locations not well served by networks. Solutions must also run continuously as any interruption leaves these high energy assets unsupervised.
High capacity
The industry will not compete for access to shared solution capacity because its energized assets cannot be compromised. Solutions must be inherently private to capture all the available capacity and remove the possibility of curtailment and constraint.
Low latency
The safe management of energized assets requires millisecond response time to fluctuations in condition. Delays in transmission of condition data caused by slow networks can be catastrophic.
High security
The energy industry is among the top 3 most targeted industries for cyber attacks, because its energized assets force swift response, it has deep pockets, and its disruption triggers broader societal impacts. Solutions must be secure and resilient to the dynamic cyber environment.
However, candidate networking solutions for these digital innovations, such as public networks, share the features of the satellite networks of the past:
They are most often consumer grade, with shared capacity and access, creating resource contention
They offer inexpensive low bandwidth, or high cost high bandwidth
They experience higher latency because of their compromised network design which tries to accomodate as wide a market as possible
They offer light security as heavy encryption is a drag on performance
Upgrading the huge installed base of SCADA networks is also impractical, because of the age of the technology, its one-way directional architecture, and its high cost. Taking productive assets out of service to update SCADA, even for short periods, destroys the economics.
Pacesetters Use Private 5G Networks
Market-leading companies in oil and gas recognize that the status quo industrial network (SCADA) and public networks are simply not fit for the purposes of responding to the pressures. Private 5G networks offer a highly appealing alternative.
As private networks, they eliminate the problem of contention for third party access or bandwidth. Solutions are free to run as designed delivering continuous near real time service. 5G networks run at much lower levels of latency compared to other network technologies such as 4G, and private 5G networks lower the latency further. Private 5G networks offer dramatically improved bandwidth compared to 4G, operating at gigabits per second, versus megabits per second. Private networks are far more secure as network access is under much tighter control. 5G networks can be deployed far more quickly than wired networks, and offer improved future-proofing for assets intended to run for years.
Pacesetter oil and gas operators use private 5G networks, and of the suppliers of this technology, Ericsson offers the optimal combination of global support, advanced technology, industrial expertise, and an ecosystem of key suppliers and solutions for the oil and gas industry. If you aspire to be a pacesetter in the industry, you should be using private 5G network technology.
Artwork is by Geoffrey Cann, and cranked out on an iPad using Procreate.
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Geoffrey Cann writes about, speaks to and teaches the energy industry about digital innovation. For more about Geoffrey Cann, click here.