Industrial IoT: From Concept to Business Reality. Improving O&G Operations with IoT. Progressing through the 5 Stages of IoT

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1 Industrial IoT: From Concept to Business Reality 01 Improving O&G Operations with IoT 02 Establishing Goals for IoT 03 Progressing through the 5 Stages of IoT 04 An Illustrated Example

2 01 Improving O&G Operations with IoT The Industrial Internet of Things (IIoT) is dramatically shifting how businesses operate. IoT often capitalizes on using software, sensors and devices to predict equipment failures along the supply chain, track performance in real time, and help refine designs and processes to prevent those failures in the future. But IoT s true promise lies beyond just helping oil and gas (O&G) companies directly manage their existing assets, supply chains, or customer relationships. In fact, IoT technology creates an entirely new asset: information about these crucial elements of their businesses. Page 1 Oil and Gas Bsquare May 2017

3 8.8% Not interested or unsure 7.2% Clear vision with implementation well underway 19.4% Strong commitment with implementation and pilots beginning 20.4% Committed and in the planning stages Current Attitude on Industrial IoT As O&G organizations continue to feel pressure on commodity prices, CIOs are turning to digital innovation strategies and IoT as a means to reduce costs and increase productivity. More importantly, they are embracing a bottom-up approach by investing in smaller projects that deliver significant value to a focused area of the business with a faster return on investment. For large-scale extraction industries like petroleum and gas operations, IoT has been proven to provide tangible financial benefits including greater uptime while delivering superior products to their customers at the same time. 16.0% Interested but haven t started and need to learn more 28.2% Interested and researching the technology and business value possibilities Source: Internet of Things Institute, BPI Network Page 2 Oil and Gas Bsquare May 2017

4 02 Establishing Goals for IoT Modern equipment can generate vast amounts of data that can be harnessed for business benefit. But before implementing a connected initiative, companies need to focus on two primary components: The business objectives they wish to achieve and the team required to make them happen. Leveraging equipment data to create business value, whether it s cost savings or performance improvements, takes a concerted effort between trusted partners, IT, and those who work with the equipment on a daily basis: engineers, technicians, reliability professionals, and others. Increased data capture and analysis can likely save millions of dollars by eliminating as many as half of a company s unplanned well outages and boosting crude output by as much as 10 percent over a two-year period. Page 3 Oil and Gas Bsquare May 2017

5 A single pump failing in an offshore rig can halt operations and cost the company $100,000 to $300,000 a day in lost production. To illustrate, in the O&G industry, compression systems have a wide range of essential applications in both upstream and midstream operations. These systems often include a diesel or natural gas powered engine, cooler, and the compressor itself. In upstream operations, natural gas compression is critical to gas lift extraction methods, with midstream distribution requiring compression to maintain pressure and flow over long distances. Unplanned compression equipment failures and downtime hit the bottom line hard. Servicing these systems, whether for preventative maintenance or unplanned repair, is costly but critical. Above all, O&G organizations seek to achieve the consistent equipment performance and reliability that is the very lifeblood of their operations. So how can IoT help achieve these goals? Page 4 Oil and Gas Bsquare May 2017

6 03 Progressing through the 5 Stages of IoT In an industry as diverse as O&G, there is no one-size-fits-all IoT solution; however, through the establishment of comprehensive, data-driven predictive insights, O&G companies can employ sophisticated rules and machine learning to constantly adapt and tune expensive assets in realtime using trend analysis. Page 5 Oil and Gas Bsquare May 2017

7 To get to this point, though, organizations need to focus on specific business outcomes such as improving financial performance while also maintaining critical uptime using IoT as the basis for an overall strategy. There are many paths that can be taken in pursuit of these goals, but to reap the greatest return IoT should be looked at as a maturity progression as the organization s needs and adoption of IoT change. Each phase of IoT maturity yields ROI, but it s not until the later stages that significant value is added. The early stages of IoT reflect a change in behavior the company must embrace, while the later stages emphasize a shift in technological perception. When a full-scale IoT solution is in place, the result can be starkly different than a company s current operating model. Progress across IoT stages among F2000 businesses 100% % Stage achieved by global Fortune 2000 companies that have active IoT deployments underway or completed Cummulative (sources: Gartner, 451 Research, percent of total Bsquare estimates) expected ROI realized at each stage along the IoT maturity index (sources: Gartner, 451 Research, Bsquare estimates) 1 100% % Total available ROI achieved at each IoT maturity stage Page 6 Oil and Gas Bsquare May 2017

8 Stage 1: Device Connectivity & Data Forwarding The components that make up a modern compression system described in the example above come equipped with onboard sensors and standardized ports that allow data to be transmitted over wired or wireless networks for a real-time view of the device. On-board logic determines what data is collected, from simple error codes to a full stream of real-time equipment information. In a non-connected scenario, if a compressor unit is powered off due to a well shutdown or acute trouble code, an onsite team (assuming there is one) is required to call the dispatch center, which identifies an available technician to drive to the location. At this point, the technician has limited or no information on what caused the shutdown or what parts may be required to address the problem. Sensor data is transmitted and stored for analysis and action. Simply collecting data requires an investment but doesn t produce business benefits. A system that performs some type of monitoring or alert messaging is required to begin to extract value from the device data. Page 7 Oil and Gas Bsquare May 2017

9 Stage 2: Real-Time Monitoring The data coming off the compressor components can be used to populate real-time dashboards to monitor activity on site, or if connected to the cloud, anywhere on earth. Dashboards allow teams to view all relevant asset telemetry and contextual data and compare it against utilization metrics. They can alert operators via , SMS, or other external notification extensions when any assets meet predetermined conditions. Data is monitored and visualized to initiate use cases for desired business outcomes. Achieves awareness of equipment status and refines business processes. With the monitoring team automatically informed of a compressor shutdown, they can quickly assess the contextual data to determine the reason for the shutdown. If it stems from a trouble code, they arm the technician with that information, so he or she can stop by the service center prior to commuting to the site to pick up an array of replacement parts associated with the trouble codes. With real-time monitoring, companies can achieve some level of condition-based insight; however, using this approach often results in an unacceptably high rate of false positives or false negatives. Basic dashboard solutions simply cannot detect complex conditions and events as they attempt to apply simple logic to complex equipment. Human monitoring has the benefit of user experience, but is limited in the degree of complexity and scalability. Page 8 Oil and Gas Bsquare May 2017

10 Stage 3: Data Analytics Data analytics can deliver insight, predictions and optimization, and reduce unnecessary false positives across the entire fleet of equipment. Several elements are required for a successful data analytics system: data discovery, machine learning, cluster analysis, and digital modeling. Taken together, these elements provide truly valuable insight that allows appropriate actions to be taken in many cases automatically. With pressure to reduce operating expenses, operations managers are driving technician utilization rates higher and higher. When anomalies occur, dispatch teams are required to pull technicians from pre-planned preventative maintenance work, often at the last minute. Data analytics can predict when compression units may experience failure by using the unit s repair history and current operating conditions and comparing it to the historical data of the entire fleet. Additionally, advanced analytics can identify the probable root cause, allowing technicians to troubleshoot faster and reduce the number of spare parts kept on hand. Lastly, predictive analytics can estimate the remaining useful life of a component and allow operations managers to maximize time between preventative maintenance intervals. Delivers insight, predictions and optimization using many different types and formats of data. Reduces unnecessary false positives by an average of 25%. Page 9 Oil and Gas Bsquare May 2017

11 Stage 4: Automation Once rules and automation are applied, complex actions can be orchestrated across multiple areas such as integration into inventory, support, or service ticketing systems. Additionally, there may be data collection rules that can be changed. For instance, if the device is healthy, less data is collected and transmitted, but when the rules monitoring the system s health start to determine that conditions are approaching a potential anomalous condition, data fidelity can be increased by collecting more data. Orchestrates automated, complex actions from equipment to inventory, support, service ticketing, and other systems to enable condition-based maintenance and better device utilitation. Once the anomaly is detected in the compressor, the system can go through a series of automated steps in order to get the equipment fixed. If needed, the operating parameters of the equipment can be adjusted or shut off completely without human intervention. It can also trigger work orders in the company s ERP system, place orders for the needed parts, dispatch the closest and most qualified technician, and estimate the expected time to repair. Page 10 Oil and Gas Bsquare May 2017

12 Stage 5: Enhancing On-Board Intelligence Distributed intelligence refers to the concept of processing data on or very close to the connected equipment in addition to functions performed in gateways or the cloud. Rather than moving the data to the logic, on-board intelligence brings the logic to the data. Much of today s connected industrial equipment already has computing capabilities that can be tapped to perform data analytics and automation directly on the equipment, in real time. Oil fields and natural gas pipelines, and their respective compression units operate in some extremely remote locations that often lack basic cellular reception. In these scenarios, operators rely on satellite-based communications that can be cost-prohibitive for moving large amounts of data. By bringing the logic capabilities to each unique machine, operators can avoid the challenges stemming from data transfer, but still harness powerful analytics capabilities to deliver all the benefits of a fully connected solution. By having 100% of the data available, results are faster, more accurate, and eliminate the need, and associated costs, to transmit and store unnecessary data. Provides maximum ROI and business benefit from predictive failure, data-driven diagnostics, and device optimization Page 11 Oil and Gas Bsquare May 2017

13 04 An Illustrated Example An oilfield services company has a contract to deliver compression to an upstream operator. The service company s IoT solution continually monitors the engine, compressor, and coolers operating conditions by sending data to the cloud every 60 seconds. In this scenario, the IoT platform identifies the engine is operating at temperatures above the pre-identified threshold and automatically initiates a diagnostic and service repair plan. Companies do not achieve this level of automation by simply flipping a switch. They identify opportunities where IoT can help improve business outcomes and put a plan in place to achieve their goals. Page 12 Oil and Gas Bsquare May 2017

14 Once the anomaly is detected, data transmission volume increases to 10-second intervals to inform the asset s digital twin (digital model of physical, real-world equipment) in preparation for utilizing predictive analytics. 1 10s 2 The system determines if an auto shutoff is required or the application can remotely configure the device to run at lower RPMs to safely extend useful life while simultaneously prioritizing repair need. Estimates the remaining useful life based on the unit s repair history and current operating conditions compared to historical information from the entire fleet. 3 Page 13 Oil and Gas Bsquare May 2017

15 4 Evaluates real-time conditions and other contextual data against the pattern bank built from all field assets to determine a probable root cause. In this scenario, the engine s water pump is the most probable cause of the higher temperatures based on similar scenarios in the past. A work order is created in the service company s ERP system. a. This identifies the closest technician (by using data from an onboard telematics unit in the service vehicle) b. Checks the truck s inventory for the required c. water pump or submits a parts order to the d. distribution center automatically e. c. Continually communicates the technician s status, location, and estimated time to repair to f. key stakeholders and operations managers 5 6 Once onsite, the IoT solution guides the technician through the optimal repair steps for replacing the water pump. a. If a senior technician deviates from the guided steps, it is recorded and used to guide future b. repair scenarios matching the characteristics of this mechanical failure. Page 14 Oil and Gas Bsquare May 2017

16 Summary With IoT and the digitalization of oil and gas operations, it is now possible to substantially improve production efficiency while reducing operating costs. The approach outlined above can be applied to all types of business-critical heavy equipment throughout O&G organizations. Ultimately, though, implementing IoT is a collaborative effort across many groups within the organization and best accomplished as a set of steps rather than an all or nothing approach. It is important to look at IoT not just as a journey but a maturity progression as your organization s needs and adoption of IoT change. Whether your organization needs to complete all five stages depends on the desired business outcomes. Having a clear strategy, plan for execution, and an understanding of what constitutes success will help determine where your company needs to begin implementing IoT and how far it needs to go. Page 15 Oil and Gas Bsquare May 2017

17 About Bsquare: For more than two decades, Bsquare has helped its customers extract business value from a broad array of assets by making them intelligent, connecting them, and using data collected from them to improve business outcomes. Bsquare software solutions have been deployed by a wide variety of enterprises to create business focused Internet of Things (IoT) systems that can more effectively monitor assets, analyze data, predict events, automate processes and, in general, optimize business outcomes. Bsquare couples innovative software with advanced professional services that can help organizations of all types make IoT a business reality. To find out more about Bsquare and how your organization can best embrace IoT for maximum impact, please sales@bsquare.com or call For more information, please visit /company/bsquare 2017 Bsquare Corporation. Bsquare and DataV are a registered trademarks of Bsquare Corporation in the U.S. and other countries. Other names and brands herein may be trademarks of others. Phone: