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Take 5: 5G in oil and gas

Part of the Take 5 on 5G article series

Jack Fritz and Nate Clark, leaders from Deloitte’s 5G and Edge Computing practice and Energy, Resources & Industrials industry, share their perspectives on five key questions around 5G in oil and gas and discuss how it will transform the industry.

1. How will 5G affect the oil and gas industry?

Nate Clark: In the past, the oil and gas industry didn’t have the data throughput needed to conduct real-time monitoring in the field. With 5G, organizations will be able to monitor any activity going on inside a facility in real time. All that data can be integrated to create safer and improved performance at a lower cost. This will also come into play for retail oil and gas, where real-time data can be used to provide better experiences to customers. There is also a sustainability angle, because 5G will enable oil and gas equipment to operate with fewer emissions. The less waste produced, the better for the environment.

Jack Fritz: In a commodity-heavy industry like oil and gas, 5G and edge computing can drive efficiencies that lead to significant advantage. Operations often occur in hard-to-reach geographies. In many of these areas, there may be no connectivity whatsoever, but in others, the connectivity is often more limited than you would experience in an urban area. In these locations, 5G and edge computing provide a path to improving overall operations. For example, machine-to-machine communications can occur without having to go back to the core network. In remote areas, with an edge compute setup on or near location, data can be acted on locally without having to wait for it to travel over less dependable or slower networks, which reduces latency while improving reliability.

2. What are use cases for 5G and edge computing in oil and gas?

Nate Clark: The first use case is around higher efficiencies and reduced costs. Oil and gas operations produce a vast amount of data that is waiting to be utilized. When information is coming off equipment on a millisecond basis, leveraging that data productively is imperative. This is where 5G and edge computing can be used to integrate and optimize the community of machines in a plant to achieve greater efficiency—not just optimizing one unit, but the entire system. The next use case is enabling richer communication with field workers. 5G and edge computing in oil and gas will allow organizations to connect information more easily and move larger amounts of data more quickly. In the field, this could look like an augmented reality hard hat providing a technician with real-time advice on how to fix a piece of machinery, getting the job done safer and faster.

Jack Fritz: For the oil and gas industry, the implications of 5G are massive because large amounts of capital is invested, downtime is expensive, and the risks are incredibly high. Considering what’s at play here, 5G is well-positioned for these environments. Let’s talk through an example that uses 5G and edge computing. The small cities where refineries are located face unique challenges compared with a downtown office building or retail store. With the ability to connect machines and layer a “network of networks” on top, 5G can be used to control and act on new connected devices, existing 4G connected devices, and Wi-Fi and integrate them all. It’s designed to get to a point that, regardless of where operations are occurring, organizations can better control, understand, and act on information. 

3. Who should be thinking about 5G in oil and gas organizations?

Nate Clark: The operations department of oil and gas organizations should be thinking about 5G and edge computing. More specifically, within exploration and production companies, the operations and drilling teams could have a major advantage. In terms of adopting this technology for downstream and chemical subsectors, anyone responsible for ongoing operations and predictive maintenance should be involved. Another relevant subsector is all-field services, which can use 5G to provide services on top of the drilling machines they create. And finally, sales and product management are relevant to the conversation, as they often handle the retail locations.

Jack Fritz: Whether it's an oil well, at an offshore rig, or on a pipeline, there are opportunities to embed technology into it. But building on what Nate said about sales, fuel stations and convenience stores should be thinking about how to leverage 5G to deliver a better experience to customers. In a retail environment, which is very different from their other operations, oil and gas companies need to determine how to leverage efficiencies to give differentiated customer experiences and drive down the cost of operating the pump compared with another company across the street. There is also an opportunity for manufacturers that produce specialty equipment to move upstream and start embedding advanced remote measurement capabilities in the machines.

4. What challenges might oil and gas organizations face along their 5G journey?

Nate Clark: While 5G may be well-marketed to consumers for increased connectivity speeds on mobile devices, there hasn’t been as much discussion around industrial applications yet. The first barrier will be cost expectations and perceptions with the technology. The second challenge will be 5G rollout and availability. 5G is not available everywhere, and it’s even less available outside of urban areas, where many oil and gas companies operate. And finally, there is retail data out there that needs to be connected to pumps, and if you don’t have a big tower within range, that is a limitation.

Jack Fritz: 5G is still emerging and is rolling out differently across the world. There are a number of different spectrum frequencies with different licensing and usage schemes that will eventually be addressed by all chipsets, but the industry is not there yet. This creates challenges for global oil and gas operators who would need to think about different chipsets for their drills and other equipment in various parts of the world. Security is another challenge, with the range of potential threats from pipelines and refineries all the way down to payments at gas stations. In a 5G world, the number of devices will be increasing from 10 to 100 times per person, which opens the door to more vulnerabilities. And lastly, fragmentation in the industry poses another challenge. If you think about local gas stations, they are often independently owned and have their own technology solutions that will need to seamlessly blend together.

5. How should oil and gas organizations get started on their 5G and edge computing journey?

Nate Clark: The first thing oil and gas companies can do is look at their operations and identify where the highest costs and risks are. From there, they should consider where having greater visibility and control would make the biggest difference. Typically, that aligns with where 5G and edge computing in oil and gas can make the greatest impact by enabling the movement of information.

Jack Fritz: Many companies have multiple networks serving the same locations. A focus on consolidation of networks can drive out some initial cost and create a platform for developing initial proof points. From a nonfinancial perspective, this presents organizations with an opportunity to address operational constraints, such as scenarios where there is data that cannot be handled due to size or latency, or machines were not previously connected that now could be. Looking at these areas can also serve as a great starting point to begin inserting more analytics, data, and machines into the business.

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