Just two years ago, the Offshore Technology Conference in Houston was packed with 108,000 attendees. At the time, oil prices had surpassed $100 a barrel.
The contrast with this year’s event was stark. Just 68,000 attended, and there was a marked reduction in tchotchke giveaways. The reason: Crude oil is now trading for around $44 a barrel.
Amid the worst energy slump in 30 years, much of the offshore drilling industry is retracting. In April, for instance, ConocoPhillips announced that it abandoned plans to drill a pair of exploration wells in the Gulf of Mexico. Energy research for Wood Mackenzie estimates that the industry as a whole is cutting exploration budgets by 30 percent.
Since the downturn is expected to last a while, there’s incentive for the industry to adopt aspects of the industrial internet, which could introduce more efficiency and automate some jobs. In particular, wearables are getting some traction, as are sensor technologies to help run pipelines. Security remains a lingering concern, though.
Wearables
One method of increasing efficiency for drilling operations is to offer real-time communication for workers in the field. In the past, logging on to laptops was clunky and ineffectual. Tools like smart safety glasses and arm-mounted tablets can help offshore workers receive instructions from experts back on land. Heads-up displays, augmented reality and virtual reality units are also being adopted.
For instance, Kopin’s Golden-i headsets function as a tablet which the user can operate via speech recognition. That headset can be used for a variety of work situations, of course. For offshore drilling, it might help coach a novice worker through a challenging situation.
Some are looking at other ways to apply the technology. BP employees in the United States are using Fitbit trackers to help them stay in good physical condition. In the future, that type of tracking might be able to tell if a remote employee’s health were compromised. While such technologies show promise, experts agreed that wearables often needed to be ruggedized to adapt to drilling environments.
Pipeline sensors
Another aspect of the oil and gas business that could use some added efficiency is the pipeline industry. Companies in the industry spend some $40 billion a year maintaining and expanding their networks. Monitoring data can help reduce the risk of an accident by alerting companies sooner to small faults before they become bigger.
The amount of data processed in such pipes is huge. Every 30,000 miles produces 17 terabytes of data. Not surprisingly, sensors designed to track pipeline activity often fail. GE is currently working on software applications to better detect cracks.
Security concerns
As with other industrial internet applications, using connected technologies to apply data to physical operations has its risks. For the gas and oil industry, those risks are enhanced even further. That’s why ABI Research predicted that by 2018 the industry will spend $1.87 billion on security.
Such caution is necessary. One day’s worth of downtime could cost a company in the oil and gas industry around $1 million a day, and companies are expected to lose between one and three days a year to downtime. Beyond that, a December 2015 cyber attack against Ukraine’s power grid that left thousands without power shows the possibly catastrophic effects of such an attack.
Industry outlook
Amid the industry downturn, businesses are caught in a catch-22: They need to spend more to make their operations more efficient, yet spending more will hurt their operations in the short term.
As such, oil and gas is something of a special case. Other industries might tiptoe into embracing the industrial internet at their own pace. For oil and gas firms, there is pressure to get more efficient, fast. With both the effects of the downturn and the promise of new technology evident this year at OTC, the choice is clear.
Todd Wasserman has been writing professionally for over 20 years and was most recently Mashable’s Business Editor. From 1999-2010, he covered the advertising and marketing industry for Brandweek, and became editor-in-chief in 2007. He wrote for Computer Retail Week and various dailys, and freelanced for The New York Times, Business 2.0, The Hollywood Reporter and Inc., among others. He has appeared on CNN, NPR, Fox Business and BBC America.