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A better connected world

The more we connect, the better our world

This eight part series will reveal how cutting-edge technology is changing the way we conduct our lives and connect with the world around us

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Harnessing the digital oil and gas field

Oil and gas is harder to find, and more complicated and expensive to extract. At the same time, the industry faces unprecedented pressure on margins. The role of technology in oil and gas production has never appeared so essential, and solution providers like Huawei are enabling the industry to be leaner and more agile.

There’s an old joke in the energy industry that if you ask an oil man whether the well they’re drilling is going to be a producer, the answer you’ll likely get is you can see as far underground as they can.

Not much has changed, it seems. Prospecting for oil and gas is, by nature, speculative, and it’s getting harder. There is no ‘easy’ oil and gas left. The same oil ‘man’, now, has to navigate savage wastelands and strange submarine landscapes before he even starts drilling.

The industry has been doggedly innovative in its pursuit of new energy reserves. The most dramatic example of this is in the Santos Basin, off the coast of Brazil. There, the industry reckons 50 million barrels of oil are buried deep beneath the ocean floor – beneath three km of water, two km of salt and two km of rock. Without question, the Santos Basin is a ‘producer’; Petrobras reckons production is up 13 per cent on the back of its new Atlantic oil fields.

But this pre-salt layer doesn’t follow the normal rules of sedimentary rock. As with recovery of other new oil and gas reserves, its exploration is highly speculative, and highly expensive.


Cost is a defining issue for the industry. In recent months, the price of oil has plummeted as US production has surged and markets have dictated that supply has outstripped demand. This has, in turn, forced the industry to make tough decisions. Jobs have gone, and new projects have been postponed. With such dynamics at play, the role of technology in oil and gas production has never appeared so essential.

“These uncertainties create a scenario where IT and communications have an even greater strategic value because they can bring far greater efficiencies. But it’s a conservative industry; one that is over 150 years old, which has been tremendously successful in finding, developing and producing hydrocarbons. There is a gap, however, between what IT can do and what is standard practice in the oilfield today,” says Ovum lead analyst for oil and gas Warren Wilson.

Beyond cutting-edge 3D visualisation tools that can help illuminate the depths of the Santos Basin, there are other things the industry can do to improve efficiency. Like many other industries that have a long history, oil and gas companies tend to be fragmented in terms of their business processes.

“Producers are managing many wells – big ones, in large numbers – and they don’t have a clear and immediate sense of their profitability. Things like production volume, cost, revenues; these data streams live in silos, and it can take weeks to run a profitability report. It’s not real time, and it’s not a steady state,” explains Wilson.


This is pertinent to current US productivity, which relies on shale oil and gas. In-land shale beds present their own geological challenge; they often run in narrow layers that undulate underground. Multiple drill holes are required to get a handle on their behaviour. Even then, having drilled horizontal pipes at great cost through hydrocarbon-bearing rock, wells can run dry without warning.

“The stakes are high, and the industry is drilling on the basis of relatively scanty information. It has to drill a lot of holes to maintain its revenue stream. There is an awful lot of money spent upfront,” says Wilson. With properly integrated IT and communications systems, these organisations can make sharper decisions about each new well, he argues.

For Chinese technology firm Huawei, a partner of many of the world’s biggest oil and gas companies, IT integration must come first if businesses are to drive out operational efficiencies. “The biggest shift for the industry is towards integrated IT infrastructure,” says Chen Cailin, energy solution principal of Huawei’s Enterprise Business Group.

“And that has to be the first stage in any kind of operational transformation. These companies need real-time data to make real-time decisions. That data has to sit on a single platform for it to be really powerful.”

In simple administrative terms, integrated systems enable slicker operations. In the United Arab Emirates, Huawei has transposed the myriad IT systems and applications of state-owned oil firm ADNOC onto a single cloud-based platform. It is estimated ADNOC will reduce its running costs and headcount as a consequence. It can now deploy new applications in days, rather than weeks.

“That siloed approach to IT has gone; the business works off a single shared resource, which sits in the cloud,” says Cailin.


In the context of a more complex engineering project, integrated systems can transform a business entirely. Huawei was appointed to overhaul the communications infrastructure for a 2,000km stretch of the Central Asia-China Gas Pipeline, the longest gas pipeline in the world.

Huawei has connected a cross-country network of compressor, monitoring, shut-down and metering stations along its often-barren course to a fibre optic cable network, backed up by satellite communications.

The project has afforded its main protagonists, based in Turkmenistan, Uzbekistan, Kazakhstan and China, certain other major benefits. The whole system is monitored, around the clock, with an alarm system to signal any breach or malfunction. All parties now have full sight of the structure’s performance metrics in real-time. A number of valve chambers along the pipeline can now be operated even when unattended. The headcount in its compressor and metering stations has reduced by 50 per cent.

“The timeliness and accuracy of data was improved greatly. In the past, gas metering was operated manually, and the differences in measurements among different countries brought disagreements among owners, customs and commodity inspectors. But after this project, the unified access made the data consistent and timely,” says Cailin.

In the past, gas metering was operated manually, and the differences in measurements among different countries brought disagreements among owners, customs and commodity inspectors. But after this project, the unified access made the data consistent and timely.
Chen Cailin

The Central Asia-China Gas Pipeline project wraps in certain other functions of the newly connected oilfield. Ovum’s Wilson makes the point that oil and gas companies can be increasingly agile in response to irregularities in their systems because they are hooked up to an increasingly elaborate network of sensors and monitors.

“Think of a worker on a drilling rig, or an inspector on a pipeline. He notices something’s amiss so he opens an app on his smartphone, snaps a picture, fills in some basic info and hits send. The app alerts the incident manager or response team based on their availability and proximity,” he explains.


Of course, you need a data connection in the first instance and, ultimately, many of these operational gains hinge on connectivity.

A choke point for the industry today is that satellite, the de facto standard for offshore communications, affords low bandwidth and high latency – to the point that it can take several minutes for data to make the round-trip between an offshore platform and an onshore data centre. Some offshore exploration is near enough to shore that cable can be laid, but such cases are rare.

There is also a cost factor associated with satellite communications – typically, $300,000 per year per satellite connection, and several millions for a whole oilfield. At the same time, the initial stop-start of upstream exploration means satellite receivers have to be dismantled, moved, reassembled and checked with each new drilling operation. Alternatives are limited; WiMAX has dwindling industry support, and a Wi-Fi mesh network provides only limited coverage.

Where feasible, 4G LTE is a boon for the industry, affording high bandwidth, low latency and wide coverage off a single licence. Huawei has deployed a number of private 4G LTE networks, demonstrating considerable engineering prowess in the process, for oil and gas companies in remote regions of Iraq, the United Arab Emirates and China’s Xianjiang province.

More impressively, perhaps, Huawei has worked with broadband provider Tampnet to connect around 75 platforms, vessels and mobile units in the North Sea to super-fast mobile broadband.

Tampnet has so far installed Huawei base stations on eight North Sea platforms, each providing a coverage area of around 40-50km from the rig, and speeds of 10Mbps in range and 50Mbps close to source. These are connected to 2,500km of sub-sea optical fibre between the UK and Norway.

“Nowhere else in the world has the same density of fibre as the North Sea, nor the connectivity options that spring from it. It is a very special situation, and the recovery rate for oil in the North Sea is very good as a result,” says Tampnet managing director Per Helge Svensson.


High-speed wireless broadband is allowing North Sea firms to utilise remote collaboration systems, allowing technicians in control centres on shore to work more closely with specialists on the rigs during technical manoeuvres. More than this, they are able to take full charge of certain operations without any on-site assistance at all.

“They can do almost the same onshore as they can do offshore. North Sea oil and gas companies are at the forefront in terms of utilising high-capacity bandwidth to improve oil and gas production, as well as drilling operations, which is where the major costs are,” says Svensson.

In upstream production in the North Sea at least, it is a glimpse of the future.

Svensson explains: “The new platforms in the North Sea are essentially made to be unmanned – or, at least, to be operated from shore. It impacts productivity in a big way. And with networked sensors, this Internet of Things, to monitor systems, the industry is also able to make best use of its equipment – to replace it when it actually needs replacing, rather than as part of regular upkeep. It’s about how technology can help the industry make better use of resources and better decisions.”

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