Oil production in the US has skyrocketed since 2010, primarily due t0 due to hydraulic fracturing (fracking) and utilizing horizontal wells. However, the global supply of oil has far surpassed demand. As a result, oil prices have dropped dramatically, and oil companies are facing steep revenue losses.
To combat this, oil companies are utilizing Internet of Things technology to reduce their production costs by becoming more operationally efficient.
In a new report from BI Intelligence, we examine how oil companies are connecting their oil wells, rigs, and exploration devices to the internet in order to gain insights about how their assets are performing.
Here are some key takeaways from the report:
- Over the next three to five years, 62% of oil and gas executives worldwide say they will invest more than they currently do in digital, according to a recent Microsoft and Accenture survey.
- Oil and gas companies will use IoT devices and their associated analytics to survey land for new potential drilling sites and extract the oil from the ground. Among oil and gas executives, 89% believe they can leverage analytics to improve business practices, according to Microsoft and Accenture.
- We estimate the number of devices used on oil extraction sites — primarily wells — will increase at a 70% compound annual growth rate (CAGR). The devices will primarily be internet-connected sensors used to provide environmental metrics about extraction sites.
- By fully optimizing the IoT solutions available, an oil and gas company with $50 billion in annual revenue could increase its profits by nearly $1 billion, according to a Cisco study.
In full, the report:
- Explains the driving forces for the increase in oil production
- Examines how IoT analytics are being utilized by oil and gas companies in oil fields
- Identifies the types of networks needed to connect the devices
- Discusses the importance of mobile devices to control IoT devices
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