Digitalization is now: Private 5G cellular networks futureproof oil and gas digital transformation
Today, the digital transformation we are witnessing is evolving most strikingly in the oil and gas sector. Industry 4.0 is here, and the stakes are clear - connectivity platforms are key in streamlining operations, while also unlocking revenue through new use cases. A 2020 report from McKinsey states that digitizing operations could create USD $250 billion in value for oil and gas upstream operations by 2030.
Nevertheless, the rush to bring operations into the digital age has had the unintended result of creating a hodgepodge of connectivity solutions-including Wi-Fi, Bluetooth and other closed systems that do not interact and can be difficult for information technology (IT) functions to manage. The result is slowed or stalled transformation efforts and limited impact on the bottom line.
The solution? Private cellular networks - a secure, unified connectivity platform across all operations as well as an end-to-end IT solution that operational technology (OT) teams can use to build those value-driving use cases - and future proof for growth.
A recent report from Oil and Gas IQ identified operational excellence through automation and digitalization as becoming more important than ever and one of the top trends shaping the sector. The report states oil and gas companies will need to implement “thoughtful optimization and automation of key processes, digital transformation and continual improvement of operations” as key to delivering affordable, reliable sources of energy.
A unified connectivity solution through private wireless can be part of that foundation. Private 5G wireless comprises the platform to streamline and digitize operations now, while laying the groundwork for future use cases like digital twin, AR/VR, remote operation, drone maintenance, and beyond.
Ericsson has already started: with customers like Centrica plc, a multi-national energy company based in the UK, and Vodafone to build a private LTE network, fully upgradeable to 5G - the first 5G ready network for the oil and gas industry. This system replaced manual, pen-and-paper processes and allowed the company’s staff to run operations, maintenance, and safety functions digitally, from handheld mobile devices.
It’s imperative that oil and gas companies act now to establish their communications infrastructure needed for the future. Prior to the pandemic, energy companies were working to bring efficiency, sustainability and profitability to their business models, and since that time, the sector has only experienced increased uncertainty with price collapses and escalating instability. Today, oil and gas CIOs understand the best methodology to fighting these systemic challenges is accelerating digitalization to ultimately ensure cost savings. Otherwise they risk being left behind as the digital transformation of the industry rolls on.
Challenges to digital adoption - and how private networks can help
Oil and gas companies are facing several challenges on the road to digitalization. Refineries and other facilities are like small cities, built with mazes of steel beams and piping. They’re a mix of outdoor and indoor environments, while also being spaces where security and safety are paramount. It is here where legacy solutions like Wi-Fi or expensive fixed infrastructure such as wired connections are proving to be hurdles to real transformation. Compared to a private 5G network, Wi-Fi has limited range (especially indoors) and coverage can be spotty. Wi-Fi also requires expensive installation of cabling and access points, whereas a private 5G network can serve the same area with fewer cellular access points and with improved performance. New wired connections are prohibitively expensive to route for brownfield assets that need to maximize uptime.
Mobile connectivity can solve some of these issues, but many of these facilities are in remote areas, where public cellular service is simply not available.
That’s where private cellular networks come in. With the advent of services, companies now have an option for a private 5G solution that is part of their own IT network. It is a secure, high-performance connectivity infrastructure that is dedicated and reliable, with no single point of failure.
Ericsson knows 5G - approximately 50 percent of 5G traffic (excluding China) runs on Ericsson networks. Our commercial 5G leadership and technology evolution has been recognized by Gartner 5G Magic Quadrant 2023. And our private network solutions are driving Industry 4.0 transformations across industries.
5G is critical to the urgent need to digitalize oil and gas operations, as the superior capacity and speed, reliability, low latency, and built-in security will be needed to unlock the most exciting use cases in the near future.
In cases where a private network is installed with 4G, once adopted, the evolution path from 4G to 5G is seamless through software updates, enabling an oil and gas customer to transition to the latest generation without costly downtime or expensive upgrades.
An end-to-end solution to enable real transformation
Private networks are a unified solution for the oil case industry because some of the most exciting, and potentially valuable, use cases depend on full integration and visibility across the entire operation.
The acceleration of the Industrial Internet of Things (IIoT) with its proliferation of connected devices is driving much of this. According to an IHS Markit study, modern offshore drilling platforms have approximately 80,000 sensors, which can generate as much 15 Petabytes (PB) of data during the life of the asset. Analyzing and making use of this data in real time will be the key to unlocking not just minor, incremental efficiency gains but the true value of digital transformation.
One of the strongest examples is asset condition monitoring. An Ericsson and Arthur D. Little study found that 70% of companies do not have an accurate sense of when their assets are due for maintenance, relying on schedule rather than the actual condition of the equipment. This can result in both over-replacement of parts and unexpected downtime when parts fail. Using a 5G network to monitor and predict asset maintenance can:
- Provide a 25% reduction in the number of maintenance sessions needed per asset, per year
- Reduce the number of workers needed to monitor equipment by 80%
- Enable a 35% reduction in unplanned downtime, compared to a maintenance schedule only program
Other opportunities for value that a private 5G cellular network could create include:
- Advanced analytics such as increasing drilling operation productivity by improving drilling speed;
- Digitally-enabled logistics that provide better material tracking and improved demand management;
- Energy efficient operations through increased throughput of production enabled by real-time data collection; and
- Enhanced field operations including connected workers in the field using tablets to file reports, or AR googles to remotely diagnose problems.
An industry at a critical moment
Digital transformation has already come to the oil and gas industry. However, companies need to think about the connectivity platform that empowers this journey. A 5G private network can provide a unified, end-to-end solution, complimenting existing IT infrastructure while providing a future-proof platform for the revenue-generating use cases of the future. The time to act is now.
Sep 19, 2023
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