The energy industry already makes extensive use of technology but could do much more to cut costs and improve efficiency in the current, low-commodity price environment, according to a new study published by ABB.

Entitled “Next Level Oil, Gas and Chemicals: Harnessing the power of digitalization to thrive in the ‘new normal’ of low oil prices,” the white paper focuses on midstream applications and outlines four “imperatives” during what it calls “the fourth industrial revolution,” spurred by Internet of Things (IoT) technology:

  • Enterprise-wide digitalization and connectivity;
  • Simplification and standardization;
  • Deeper partnerships with suppliers; and
  • CEO leadership.

The Zurich-based power and robotics firm said it has proved integrating automation, safety and other procedures through IoT technology can cut CAPEX and OPEX budgets by 20% to 30%. It quotes a McKinsey & Co. study that found petrochemical firms increase return on investment by 10% through optimizing existing technology.

“Many midstream operators already deploy a substantial amount of digital components with advanced measurement devices such as electric flow metering and data-intensive pipeline inspection gauges (pigs),” the study said. “However, there is still room to optimize operations further through the better distillation of the data they currently collect to generate new insights and by gaining additional information through the deployment of drones to conduct pipeline flyovers where regulations permit. Better fleet optimization will also improve through greater use of increasingly sophisticated tracking technology.

“Additionally, the market environment has changed significantly with the growth in unconventional energy which needs to be transported, particularly in the form of liquid petroleum gas (LPG) and natural gas, from well sites to refineries, processors or storage facilities,” it added. “Midstream players will need to expand capabilities, or adapt aging infrastructure to track and optimize greater flows of an increasingly complex array of product from and to a variety of new locations.”

ABB recommended increased application of cloud-based computing to manage sprawling pipeline networks, processing equipment data and weather forecasts. It also pointed to greater midstream concerns about cybersecurity.

“Better deployment of technology will help companies use their pipeline data to optimize routes to market and react quicker to changing volumes and fluctuating prices. For example, careful surveillance of electricity market indicators may signal increased future demand for gas. Being able to leverage insights from big data models will help savvy operators steal a march on competitors slower to read the market signals due to an outdated method of forecasting,” the study said.

“On the supply side, it may be that by analyzing flow history and better tracking existing conditions, midstream companies may become better at predicting where and at what pressure and volume the product to be transported will arrive. Improved forecasting algorithms will mean they can better optimize their configuration plans and increase revenues from their assets,” the paper added, noting technology improvements also can improve leak detection and theft protection. ABB said product thefts are a particularly problem in the Third World and estimated product losses to midstream operators at $37 billion per year.

The white paper cites case studies of how technological improvements have helped midstream operators. One outlines Australia’s Queensland Gas Co.

“Integration of automation, electrification and telecommunications makes it possible for a skeleton crew to oversee a complex operation consisting of a 540-kilometer (335-mile) pipeline and over 6,000 wells spread over 3,500 square kilometers (1,350 square miles) in Australia,” it said. The coal-seam gas operation, which feeds Australia’s LNG exports, has an estimated 250 trillion cubic feet of proved reserves.

Paul Hart can be reached at pdhart@hartenergy.com.