Due to their position as the world’s principal fuel sources, oil and natural gas are important sectors in the energy industry and have a significant impact on the global economy. The processes and systems involved in the production and distribution of oil and gas are very complicated, capital-intensive, and reliant on cutting-edge technology to function properly. History has shown that natural gas is closely associated with oil, mostly due to the production process or the upstream part of the industry. Natural gas was seen as a nuisance throughout most of the industry’s history, and it continues to be flared in huge amounts in various regions of the globe, notably the United States, even now. Natural gas has risen to a more significant position in the world’s energy supply as a result of the shale gas production in the United States, as previously noted, as well as the fact that it emits less greenhouse gases when combusted as compared to other fuels such as oil and coal.
There are three main segments in the industry, which are as follows:
- Upstream – refers to the business of oil and gas exploration and production, as opposed to downstream.
- Midstream process – Transportation and storage
- Downstream – activities include refining and marketing.
With an estimated $3.3 trillion in revenue generated yearly, the oil and gas business is one of the world’s biggest industries in terms of monetary value, ranking second only to manufacturing. Oil is critical to the global economic framework, particularly for the world’s top producers, which include the United States, Saudi Arabia, Russia, Canada, and China, as well as other countries.
If you are an investor seeking to get into the oil and gas business, you may be intimidated by the intricate vocabulary and specific measurements that are utilized across the industry. This introduction is intended to assist anybody interested in learning about the foundations of organizations operating in the oil and gas industry by introducing essential ideas and measurement standards used in the industry.
Crude oil and natural gas are made up of hydrocarbons, which are naturally occurring compounds found in the earth’s crust and rock formations. They are formed by the compression of plant and animal remnants in sedimentary rocks such as sandstone, limestone, and schist. These organic raw materials are used in the production of plastics and other manufactured products.
As a result of sedimentary rock formation in ancient seas and other bodies of water, the sedimentary rock itself may be described as follows: The rotting carcasses of plants and animals were incorporated into the developing rock when layers of silt were formed on the ocean bottom. After being subjected to appropriate temperatures and pressure ranges deep under the earth’s crust, the organic material finally converts into oil and gas.
Being lighter in weight than water, oil and gas move more quickly through permeable sedimentary rock toward the earth’s surface than water. The formation of an oil and gas reservoir occurs when hydrocarbons are trapped behind less-permeable cap rock. We get our crude oil and natural gas from these oil and natural gas resources.
Drilling through the cap rock and into the reservoir is used to bring hydrocarbons to the surface. A profitable oil or gas well may be created after the drill bit has reached the reservoir and the hydrocarbons can be brought to the surface by pumping them up to the surface. The well is classed as a dry hole if the drilling effort does not result in the discovery of economically viable amounts of hydrocarbons. A dry hole is normally closed and abandoned.
Methods of Exploration
The presence of visible surface characteristics such as oil seeps, natural gas seeps, and pockmarks (underwater craters formed by escaping gas) serve as the most fundamental evidence of hydrocarbon formation in the environment (be it shallow or deep in the Earth). The majority of exploration, on the other hand, is dependent on very advanced equipment to discover and estimate the extent of these deposits, which is done via the use of exploratory geophysics. Localized gravity surveys, magnetic surveys, passive seismic surveys, and regional seismic reflection surveys are used to discover large-scale characteristics of the sub-surface geology in areas suspected of containing hydrocarbons in the first instance. Features of interest (known as leads) are subjected to more detailed seismic surveys, which are based on the principle of the time it takes for reflected sound waves to travel through matter (rock) of varying densities, and which use the process of depth conversion to create a profile of a substructure’s structure. Finally, when a prospect has been found and analyzed, and if it meets the oil company’s selection criteria, an exploratory well is drilled in an effort to ascertain definitely whether or not there is oil or gas there. The use of electromagnetic technologies may help to lessen the danger of accidents on the ocean floor.
Oil exploration is a costly and high-risk process that requires extensive capital investment. Offshore and remote region exploration are often only performed by major enterprises or national governments with significant financial resources. Deep sea oil wells may cost up to US$100 million or more, whereas shallow shelf oil wells (such as those in the North Sea) can cost as little as US$10 million. The hunt for onshore hydrocarbon reserves is carried out by hundreds of smaller firms throughout the globe, with some wells costing as little as US$100,000.
Aspects of a petroleum exploration potential
A prospect is a prospective trap that geologists feel may contain hydrocarbons and so should be explored. First and foremost, a large amount of geological, structural, and seismic study must be conducted in order to transform the probable hydrocarbon drill site from a lead to an actual prospect. For a prospect to be successful, four geological elements must be present, and if any of these factors are absent, neither oil nor gas will be present.
- Source rock – When organic-rich rock such as oil shale or coal is subjected to high pressure and temperature over an extended period of time, hydrocarbons form.
- Migration – The hydrocarbons are expelled from source rock by three density-related mechanisms: the newly matured hydrocarbons are less dense than their precursors, which causes over-pressure; the hydrocarbons are lighter, and so migrate upwards due to buoyancy, and the fluids expand as further burial causes increased heating. Most hydrocarbons migrate to the surface as oil seeps, but some will get trapped.
- Reservoir – The hydrocarbons are contained in a reservoir rock. This is commonly a porous sandstone or limestone. The oil collects in the pores within the rock although open fractures within non-porous rocks (e.g., fractured granite) may also store hydrocarbons. The reservoir must also be permeable so that the hydrocarbons will flow to surface during production.
- Trap – The hydrocarbons are buoyant and have to be trapped within a structural (e.g., Anticline, fault block) or stratigraphic trap. The hydrocarbon trap has to be covered by an impermeable rock known as a seal or cap-rock in order to prevent hydrocarbons escaping to the surface
Exploration carries a risk
Because hydrocarbon exploration is a high-risk venture, conducting a thorough risk assessment is essential for effective project portfolio management. It is difficult to quantify exploration risk, but it is often characterized as the degree of trust that can be placed in the existence of the critical geological elements, which were addressed above. Based on data and/or models, this level of confidence is often shown on Common Risk Segment Maps (CRSM) (CRS Maps). High confidence in the existence of critical geological causes is often represented by the color green, whereas low confidence is represented by the color red. The maps are also known as Traffic Light Maps, and the whole method is referred to as Play Fairway Analysis in certain instances (PFA). The purpose of such processes is to compel the geologist to conduct an objective evaluation of all relevant geological parameters. Furthermore, it produces straightforward maps that can be understood by non-geologists and managers, which may be used to inform exploration choices.
Terms used in petroleum evaluation
- Bright spot – On a seismic section, coda that have high amplitudes due to a formation containing hydrocarbons.
- Chance of success -An estimate of the chance of all the elements (see above) within a prospect working, described as a probability.
- Dry hole – A boring that does not contain commercial hydrocarbons. See also Dry-hole clause
- Flat spot – Possibly an oil-water, gas-water or gas-oil contact on a seismic section; flat due to gravity.
- Full Waveform Inversion – A supercomputer technique recently uses in conjunction with seismic sensors to explore for petroleum deposits offshore.
- Hydrocarbon in place – Amount of hydrocarbon likely to be contained in the prospect. This is calculated using the volumetric equation – GRV x N/G x Porosity x Sh / FVF
- Gross rock volume (GRV) – Amount of rock in the trap above the hydrocarbon water contact
- Net sand – Part of GRV that has the lithological capacity for being a productive zone, i.e., less shale contaminations.
- Net reserve – Part of net sand that has the minimum reservoir qualities, i.e. minimum porosity and permeability values.
- Net/gross ratio (N/G) – Proportion of the GRV formed by the reservoir rock (range is 0 to 1)
- Porosity – Percentage of the net reservoir rock occupied by pores (typically 5-35%)
- Hydrocarbon saturation (Sh) – Some of the pore space is filled with water – this must be discounted
- Formation volume factor (FVF) – Oil shrinks and gas expands when brought to the surface. The FVF converts volumes at reservoir conditions (high pressure and high temperature) to storage and sale conditions
- Lead – Potential accumulation is currently poorly defined and requires more data acquisition and/or evaluation in order to be classified as a prospect.
- Play – An area in which hydrocarbon accumulations or prospects of a given type occur. For example, the shale gas plays in North America include the Barnett, Eagle Ford, Fayetteville, Haynesville, Marcellus, and Woodford, among many others.
- Prospect – A lead which has been more fully evaluated.
- Recoverable hydrocarbons – Amount of hydrocarbon likely to be recovered during production. This is typically 10-50% in an oil field and 50-80% in a gas field.
Petroleum resources are normally held by the host country’s government. Most onshore (land) oil and gas rights (OGM) in the United States are held by private persons, in which case oil firms must negotiate lease conditions with the individual who owns the OGM. This is not always the same individual that owns the land. Most countries provide licenses to explore, develop, and produce their oil and gas resources, which are normally controlled by the oil ministry. There are several sorts of licenses. Oil firms often form joint ventures to share risk; one of the partners is designated as the operator, who oversees the work.
Taxation and royalties
Companies would be required to pay a royalty on any oil produced, as well as a profit tax (which can have expenditure offset against it). There may also be other incentives and ground rents (licensing fees) due to the government in certain situations, such as a signing bonus payable at the commencement of the license. Licenses are issued via competitive bidding rounds based on the magnitude of the work program (number of wells, seismic, etc.) or the amount of the signature bonus.
Contract for Production Sharing (PSA)
A PSA is more complicated than a tax/royalty system in that the businesses bid on the proportion of output that the host government gets (which may vary depending on the oil price), and the government-owned National Oil Company often participates (NOC). There are also a variety of incentives to be awarded. Development costs are covered by income from output.
When an oil corporation operates as a contractor for the host government, it gets paid to produce hydrocarbons.
Resources and reserves
Hydrocarbons are resources that may or may not be generated in the future. An undrilled prospect or an unappreciated finding may be awarded a resource number. Appraisal will validate the extent of the field and lead to project approval by drilling more delineation wells or gathering new seismic data. At this stage, the appropriate government agency issues the oil corporation with a production license, allowing the field to be developed. This is also the stage at which oil and gas reserves may be officially recorded.
Petroleum and natural gas reserves
Oil and gas reserves are defined as amounts that can be extracted profitably in the future. Reserves are classified into three types: proven, probable, and potential. To be included in any reserve category, all commercial considerations, including government approval, must have been resolved. Technical factors alone distinguish between proven and unproven categories. All reserve estimations are subject to some degree of uncertainty. The most valuable category is proven reserves. Proved reserves have a “reasonable certainty” of being recovered, which suggests that the quantities will be recovered with a high degree of assurance. Some industry experts refer to this as P90 or having a 90% chance of being created. A more complete definition is provided by the SEC:
Proved oil and gas reserves are those quantities of oil and gas that can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether the contract is renewed or not. The hydrocarbon extraction project must have begun, or the operator must be fairly confident that it will begin within a reasonable period.
Probable reserves are described as amounts that are “less likely to be retrieved than proven reserves, but more certain to be recovered than Possible Reserves.” Some industry experts refer to this as P50 or having a 50% chance of being generated. Possible reserves are reserves that, based on geological and technical data, are less likely than probable reserves to be recovered. Some industry experts refer to this as P10 or having a 10% chance of being created.
The word 1P denotes proven reserves; 2P denotes the total of proved and likely reserves; and 3P denotes the sum of proved, probable, and potential reserves. The 2P sum of proven and probable reserves is often regarded as the best estimate of recovery from committed projects. It should be noted that these volumes only apply to presently justified initiatives or projects that are already under development.
An oil company’s principal asset is its oil and gas reserves. Booking is the process of adding them to the balance sheet. Booking in the United States is done in accordance with a set of regulations created by the Society of Petroleum Engineers (SPE). Any corporation listed on the New York Stock Exchange must report its reserves to the US Securities and Exchange Commission. Outside geologists may audit reported reserves, although this is not a legal necessity. Companies in Russia disclose their reserves to the State Commission on Mineral Reserves (GKZ).
Production Process: Upstream, Midstream, and Downstream
Generally speaking, there are three major sectors in the oil and gas industry: upstream; midstream; and downstream.
Production and exploration in the upstream
The upstream component of the oil and gas business consists of exploration operations, which include the creation of geological surveys and the acquisition of land rights, as well as production activities, which include the drilling of wells on land and in water, onshore and offshore.
Density and sulfur content are the two characteristics that distinguish crude oil from other types of oil. API gravity is used to determine density, and it may vary from light (high API gravity/low density) to heavy (low API gravity/high density) depending on the application. A variety of sulfur contents are available, ranging from sweet (low sulfur content) to tart (high sulfur content) (high sulfur content).
The price of light and sweet crude oil is often greater, and hence more sought-after, than the price of heavy and sour crude oil, since it is simpler to refine for use in gasoline production. One barrel of oil is equivalent to 42 gallons, and the amount of oil is measured in barrels (bbl).
In addition to related formations, which means that it is generated and produced in conjunction with oil, natural gas may be found in non-associated reservoirs, which are reservoirs that are not connected with oil. Gas may be classified as either dry (pure methane) or wet (methane mixtures with other substances) (exists with other hydrocarbons like butane). However, since wet gas must be processed in order to extract other hydrocarbons and other condensates before it can be delivered, it may improve the income of producers by allowing them to sell the products that have been removed.
It is one of the most significant achievements in the history of the energy business that shale gas has emerged in the United States. Prior to the emergence of shale gas, the United States was considered to be a rising importer of natural gas. Although shale gas production has boosted the United States’ position as the world’s biggest producer of natural gas and a rapidly expanding exporter, the country is still in its early stages. Horizontal drilling and hydraulic fracturing were the two most important technical breakthroughs that made production from shale and other tight formations commercially feasible.
Natural gas exploration includes all of the procedures and techniques used in discovering possible locations for oil and gas extraction, as well as the methodologies used to locate such sites. Surface clues such as natural oil seeps were used by early oil and gas explorers; but advances in science and technology have made oil and gas exploration more efficient. Onshore and offshore geological surveys are carried out utilizing a variety of techniques, ranging from subsurface testing for onshore exploration to seismic imaging for offshore exploration and development. Energy companies compete for access to mineral rights granted by governments by entering into either a concession agreement, which means that any discovered oil and gas becomes the property of the producers, or a production-sharing agreement, which means that the government retains ownership and participation rights in the production of oil and gas. Discovery and exploration are high-risk and costly activities that are typically funded by corporate resources. Unsuccessful exploration, such as one that consisted of seismic research and drilling a dry well, may cost between $5 million and $20 million per exploration site, and in certain situations, much more money. However, when an exploration location is successful and oil and gas extraction is profitable, exploration expenditures are recouped and are much less expensive than other production costs in contrast to other costs of production.
When a corporation estimates that it can produce commercially recoverable oil and gas in situ, as of a certain point in time, using present technology, it is said to have proven reserves. Based on periodical reassessments, the estimates for proved reserves are revised during the life of a lease. Estimates may be influenced by technological developments. Because of developments in hydraulic fracturing and horizontal drilling, for example, the United States Geological Survey has increased its proved reserves estimate for the Marcellus Shale by 40 times the amount originally forecast by the agency. Prices and existing infrastructure, in addition to technology, have an impact on reserve estimations.
In terms of capital investment, oil and gas production is one of the most capital-intensive sectors, requiring costly equipment and highly experienced laborers to be successful. A company’s planning for drilling begin as soon as it determines where the oil or gas is found. The majority of oil and gas businesses enter into contracts with specialist drilling companies, paying for the work crew and rig dayrates. Depending on the drilling depth, rock hardness, meteorological conditions, and geographic distance from the site, the drilling length might vary. Because real-time information and trends are provided by smart technology, tracking data may improve drilling efficiency and well performance. While every drilling rig has the same basic components, the drilling techniques used vary depending on the kind of oil or gas being extracted and the geology of the area being drilled into.
A field of wells is formed at an onshore drilling facility, with each well occupying half an acre or less in heavy crude oil drilling and 80 acres or more in natural gas drilling, depending on the kind of drilling. The collection of wells is linked by carbon steel tubes, which transport the oil and gas to a production and processing plant, where the oil and gas are processed using a chemical and heating process. As a result of this, onshore production businesses are better able to adjust to market circumstances than offshore production companies.
Using a single platform, either permanent (bottom supported) or movable, offshore drilling may be accomplished (floating secured with anchors). It is more costly to conduct offshore drilling than it is to conduct onshore drilling, and permanent rigs are more expensive to operate than mobile rigs. In close proximity to offshore rigs, the majority of manufacturing facilities are situated on or near coastal coastlines.
Also known as hydraulic fracturing, is a kind of drilling that uses hydraulic pressure to create holes in rock.
Oil and gas extraction from geologic formations is accomplished by fracking, also known as hydraulic fracturing, which is a high-pressure liquid injection process. While the technique has been around since the 1940s, it was only in the late 1990s that George Mitchell’s Mitchell Energy & Development Corporation patented slick water fracturing, which made it more cost-effective than previous methods. Using fracking has resulted in the recovery of gas, then oil, from previously unreachable areas of drilled wells, as well as extractions from coalbed wells, tight sand formations, and shale formations, among other resources. In recent years, fracking has been employed in 90 percent of new oil wells in the United States, mostly due to a decline in the quantity of traditional oil reservoirs.
Upstream Industry Codes
A standard utilized by Federal statistics agencies in categorizing commercial establishments for the purpose of collecting, analyzing, and disseminating statistical data relating to the United States business economy is the North American Industry Classification System. To identify the broadest industrial level, two-digit codes are used, followed by six-digit codes to identify more detailed levels of detail. At the five-digit code level, statistics from Mexico, Canada, and the United States are similar. Other industry codes are available for data monitoring reasons that are unique to a particular area, nation, or organization. Knowledge of how a certain business or firm within an industry is categorized may be beneficial while doing research since material is often grouped according to these codes.
- 21 Mining, Quarrying, and Oil and Gas Extraction
- 2111 Oil and Gas Extraction
- 211120 Crude Petroleum Extraction
- 211130 Natural Gas Extraction
- 333131 Mining Machinery and Equipment Manufacturing
- 333132 Oil and Gas Field Machinery and Equipment Manufacturing
Midstream: Transportation and Storage
Among the services provided by the midstream industry are the transportation, storage, and trade of crude oil, natural gas, and refined goods. In its unrefined condition, crude oil is carried primarily by two modes: tankers, which traverse interregional maritime routes, and pipelines, through which the vast majority of the oil passes for at least part of the voyage. The products are transported to another carrier or straight to a refinery once the oil has been recovered and separated from the natural gas via pipes. Following that, petroleum products are transported from the refinery to the market by tanker, truck, train car, or one or more pipeline systems. Tankers provide petroleum by transporting crude oil and processed products from other nations to the United States in order to make up for the shortfall between domestic supply and demand for petroleum. Tankers are also used to deliver oil along the Gulf of Mexico coast. The Jones Act, also known as the Merchant Marine Act of 1920, has a significant impact on the transportation industry because it requires that vessels that transport cargo from one U.S. port to another U.S. port be built in the United States and be owned and operated by a majority of citizens or permanent residents of the United States in order to be compliant with the Jones Act.
Codes for the Midstream Industry
A standard used by Federal statistics agencies in categorizing commercial establishments for the purpose of collecting, analyzing, and disseminating statistical data relating to the United States corporate economy is the North American Industry Classification System (NAICS). To identify the broadest industrial level, two-digit codes are used, followed by six-digit codes to identify more detailed levels of detail. At the five-digit code level, statistics from Mexico, Canada, and the United States are similar to one another. Other industry codes are available for data monitoring reasons that are unique to an area, a nation, or an organization. Knowing how a certain business or a firm within an industry is categorized may be beneficial while doing research since material is often structured according to these classifications.
- 2212 Natural Gas Distribution
- 221210 Natural Gas Distribution
- 237120 Oil and Gas Pipeline and Related Structures Construction
- 484220 Specialized Freight (except Used Goods) Trucking, Local
- 484230 Specialized Freight (except Used Goods) Trucking, Long-Distance
- 486 Pipeline Transportation
- 4861 Pipeline Transportation of Crude Oil
- 486110 Pipeline Transportation of Crude Oil
- 4862 Pipeline Transportation of Natural Gas
- 486210 Pipeline Transportation of Natural Gas
- 4869 Other Pipeline Transportation
- 486910 Pipeline Transportation of Refined Petroleum Products
- 486990 All Other Pipeline Transportation
- 493190 Other Warehousing and Storage (bulk petroleum storage)
Crude oil is transported from the wellhead to the refinery through barges, tankers, pipelines, vehicles, and trains. Pipelines and liquefied natural gas (LNG) vessels transmit natural gas.
Tankers transporting oil
A tank vessel is one that is built or modified to transport oil or hazardous substances in bulk as cargo or cargo residue, according to the United States Coast Guard. Tankers are classified into four types: oil tankers, parcel tankers (chemical boats), combination carriers (built to transport either oil or solid commodities in bulk), and barges. International bulk chemical regulations oversee the safe transport of chemical cargoes and provide varying degrees of protection against uncontrolled material release. Tank boats are categorised according on the commerce in which they regularly operate throughout time. Crude oil carriers, product carriers (which may transport both clean (e.g., gasoline, jet fuel) and unclean (e.g., black oils), and parcel carriers are the three most prevalent types (chemicals). Tankers often stick to one trade, but market circumstances might force a shift, even if the procedure of changing a vessel’s trade is time-consuming.
Crude carriers, which are classified as either VLCCs (Very Large Crude Carriers) or ULCCs (Ultra Large Crude Carriers), are intended to carry large amounts of crude oil through several lengthy and highly trafficked maritime routes. Furthermore, “lightering,” or unloading or moving oil from huge tankers to smaller ones, is utilized to let smaller vessels to access tiny ports that larger boats cannot. The stress on the hull is one of the primary considerations in the safe transport of bulk liquid cargos by tank vessel. Bending in the form of sagging (concentration of weight in the midsection of the vessel causing the deck to experience compression forces while the keel is under tension), hogging (concentration of weight at both ends of the vessel causing the deck to experience tensile forces while the keel is under compression), and shear force, which occurs when two forces act in opposite directions parallel to each other, such as at a bulkhead between an empty hull and an empty hull. The shear force phenomenon is caused by the weight or gravitational and buoyant action experienced on each side of the bulkhead. Tankers transporting oil from one U.S. port to another must follow the Jones Act, which requires a vessel to be constructed in the United States, have a majority of its crew from the United States, and be owned by a majority of its crew from the United States. Although exceptions have been granted for emergencies, these criteria significantly decrease the number of boats available for domestic oil delivery.
Tankers transporting LNG
Transporting compressed natural gas aboard tankers is problematic due to high pressures and explosions. Natural gas may now be converted to liquid at very low temperatures and delivered as liquefied natural gas as a result of technological advances in the mid-20th century (LNG). LNG tankers are built with two hulls to provide for more ballast water since LNG is lighter than gasoline, as well as additional safety precautions. There are presently no licensed vessels to deliver LNG domestically by tanker due to Jones Act constraints.
Gathering systems (wellhead to processing facilities), transmission lines (supply regions to markets), and distribution pipes are all examples of pipelines (most commonly to transport natural gas to medium or small consumer units). Pipelines are very important in the transportation process since the majority of the oil travels via them for at least part of the way. Pipelines transmit crude oil to another carrier or straight to a refinery once it has been separated from natural gas. Petroleum products are subsequently transported to market via tanker, truck, train tank car, or pipeline from the refinery. As natural gas output in the United States increases, so does the need for additional pipeline building. There are over 300,000 miles of natural gas transmission pipes in the United States.
Strategic planning entails determining the shortest and most cost-effective routes for pipeline construction, as well as the number of pumping stations and natural gas compression stations along the route, as well as terminal storage facilities, so that oil from almost any field can be shipped to any refinery on demand. Offshore pipelines are more vulnerable to leaks and environmental effect than onshore pipelines, however technical advances in pipeline materials and monitoring systems have improved pipeline safety and efficiency. Pipeline safety standards exist and are issued by organizations such as the International Organization for Standardization (ISO) and the American Petroleum Institute (API). The Federal Energy Regulatory Commission (FERC) supervises interstate natural gas and oil transportation and permits LNG facilities and natural gas pipelines. Prior to the establishment of FERC in 1977, the Interstate Commerce Commission was in charge of regulating oil and gas transportation.
Barges are mostly seen on rivers and canals. They need less infrastructure than pipelines, but are more expensive, convey much less volume, and take longer to load.
Trucks for the railroad and tankers
Railroads were historically the principal mode of petroleum transportation. Today, railways compete with pipelines: although railroads are often more costly than pipes, the existing train infrastructure provides a more flexible, alternate option when pipelines are full. Many petroleum products are transported by tank truck or train tank car from refineries to markets. Tank trucks transport gasoline to gas stations and heating oil to homes.
Increased demand for oil has resulted in deeper drilling, with bigger drilling rigs placed farther offshore, justifying the construction of larger and more powerful tugs and larger barges.
Oil and natural gas storage serve to balance out supply and demand fluctuations. Companies store more when prices are lower than they would want and less when prices are higher than they would like. Underground places, such as drained reservoirs, are the most cost-effective storage option. This approach is mostly utilized for natural gas; completed oil products, according to laws, cannot be kept in subterranean natural spaces. Crude and refined oil, completed oil products, and natural gas are stored in above-ground tanks. Tanks are housed underground at retail places such as gas stations for safety reasons. When land storage is full, tanker ships are employed for temporary storage, making them the costliest alternative. There is a minimum working level of crude oil that cannot be withdrawn without difficulty from pipelines, refinery tanks, and the overall system. The coronavirus pandemic significantly lowered demand for oil in 2020, which was combined with an oversupply caused by Saudi Arabia boosting oil output and OPEC and non-OPEC nations failing to reach an agreement on cutting oil production. This signified that the storage tanks were almost full. As a result, oil storage businesses upped their storage prices dramatically. In one case, tankers were charging roughly $25,000 per day in February 2020, but by April, costs had increased to $300,000 per day.
Governments in the United States force manufacturers and refineries to carry more storage than they would normally for security reasons. In certain nations, such as the United States, the government, rather than a private enterprise, keeps the oil reserves. The world’s greatest stock of emergency crude oil is held in the United States Strategic Petroleum Reserve (SPR). These stocks are kept in vast subterranean salt caverns along the Gulf of Mexico’s shoreline. Under the powers of the Energy Policy and Conservation Act (EPCA), the President has the ability to remove crude oil. The need for a national reserve date back to 1944, when Secretary of the Interior Harold Ickes advocated stockpiling emergency crude oil, but the idea was not implemented until President Gerald Ford signed the EPCA in 1975, following the 1973-74 oil embargo, which heightened the need for a strategic oil reserve.
Downstream: Refining and marketing process.
Refining and marketing are included in the downstream sector. The objective of refining is simple: to take crude oil, which is almost worthless in its original condition, and change it into petroleum products that can be used for a number of applications such as heating homes, fueling automobiles, and manufacturing petrochemical polymers.
Refining involves a variety of procedures that vary based on the final product that is desired. Hydrotreating is used to remove undesired components from hydrocarbons, such as Sulphur and nitrogen; cracking is used to break down molecules into smaller pieces, which results in the production of gasoline and other lighter hydrocarbons. A variety of different goods, such as synthetic rubber and polymers, are made from the vapors released by cracking. The octane number of gasolines is important because it prevents engine knocking when it is manufactured. Tetraethyl lead was added to gasoline in the United States in the 1920s despite the fact that it was known to be harmful. This was done in order to enhance the octane rating. The usage of alkylation and reformation to produce high-octane gasoline has increased significantly since the United States government outlawed lead in vehicle fuel in 1996 as part of the U.S. Clean Air Act. It is common for refineries to be positioned close to population areas in order to simplify the marketing and distribution of finished goods.
In the petroleum sector, marketing is the wholesale and retail distribution of refined petroleum products to businesses, industries, governments, and the general public. Oil and petroleum products often flow to the markets that give the most value to their suppliers, which is typically first to the market that is closest to the supply due to reduced transportation costs and greater net income for the supplier. When it comes to actuality, however, various variables such as refinery layouts, product demand mix, and product quality criteria may cause the trade flow to diverge from the above-mentioned pattern.
Most gasoline sales are handled through gasoline service stations, and oil firms sell their petroleum products to factories, power plants, and transportation-related businesses rather than directly to the general public. Natural gas sales are virtually equally split between industrial users, electricity suppliers, and consumers for residential and commercial heating and cooling.
Because gasoline is a commodity that is essentially the same everywhere, competition for consumers necessitated the development of innovative marketing strategies. Services such as maps, vehicle washing, and tableware were provided at no charge at retail fuel stations. Beginning in the 1950s, oil company brands began offering credit cards as a way to maintain client loyalty. To attract drivers, radio, billboard, and television advertisements used catchy phrases, additives, and words such as “premium” and “high performance” to market the products. Mobil employed advertorials, sometimes known as paid op-eds, in the New York Times to promote pro-oil sector opinion. Today, social media provides businesses with a platform to promote a variety of energy programs while also countering bad news.
Industry Codes for the Downstream Sector
A standard used by Federal statistics agencies in categorizing commercial establishments for the purpose of collecting, analyzing, and disseminating statistical data relating to the United States corporate economy is the North American Industry Classification System (NAICS). To identify the widest industrial level, two-digit codes are used, followed by six-digit codes for more detailed classifications. At the five-digit code level, statistics from Mexico, Canada, and the United States are similar to one another. Other industry codes are available for data monitoring reasons that are unique to an area, a nation, or an organization. Knowing how a certain business or a firm within an industry is categorized may be beneficial while doing research since material is often structured according to these classifications.
- 3241 Petroleum and Coal Products Manufacturing
- 324110 Petroleum Refineries
- 324121 Asphalt Paving Mixture and Block Manufacturing
- 324122 Asphalt Shingle and Coating Materials Manufacturing
- 324191 Petroleum Lubricating Oil and Grease Manufacturing
- 324199 All Other Petroleum and Coal Products Manufacturing
- 424710 Petroleum Bulk Stations and Terminals
- 424720 Petroleum and Petroleum Products Merchant Wholesalers (except Bulk Stations and Terminals)
- 425120 Wholesale Trade Agents and Brokers (Petroleum brokers)
- 454310 Fuel Dealers
The Cost of Oil and Gas
As the world’s reliance on oil increased, the price of oil became an issue of political and economic significance on a worldwide scale. Until the 1960s, major oil firms were in charge of setting crude oil prices, after which responsibility was transferred to oil exporting nations. After a series of oil price surges resulted in a series of oil crises in the early 1960s, price forecasting became more crucial. Crude oil futures were first traded on the New York Mercantile Exchange (NYMEX) in 1983, where they were traded alongside other commodities. Natural gas futures were first traded on the New York Mercantile Exchange (NYMEX) in 1990. The Chicago Mercantile Exchange now owns and operates the New York Mercantile Exchange (NYMEX) (CME). April 2020 was the first time in the history of the oil market when the price of oil fell below zero dollars per barrel, reaching a low of -$37 per barrel. At the time, demand for oil fell as a result of the coronavirus pandemic, while supply increased as a result of the inability of countries such as Saudi Arabia, Russia, and the Organization of the Petroleum Exporting Countries (OPEC) to agree on a reduction in oil production, which increased the demand for oil storage.
Price benchmarks are used in the oil and gas business to provide purchasers with a mechanism to determine the worth of a commodity based on factors such as quality and geographic location. The following are the most often used benchmarks in this industry:
- Brent Blend is the most widely used oil benchmark in the world, and it is utilized all across the world. Located in London and traded on the InterContinental Exchange (ICE), it is composed of light, sweet crude oil sourced from offshore drilling in the North Sea and is produced by BP.
- West Texas Intermediate (WTI) is a word that refers to light and sweet oil that is produced in the United States, notably crude oil that is produced from land-locked wells in Oklahoma and is sold as such.
- Middle Eastern oil with a higher sulfur content is transported from the Persian Gulf to the Asian market via Dubai/Oman.
- A standard for North American natural gas and worldwide liquefied natural gas (LNG), Henry Hub is based on the Henry Hub natural gas pipeline in Louisiana and serves as a global baseline for both. Crude oil is used as a pricing proxy in markets where there are no natural gas pipelines, although this is changing.
Prices for crude oil traded in the United States’ futures market are determined by the price of a contract for oil transported to Cushing, Oklahoma, a vital storage hub where numerous oil pipelines converge.
Tariffs, embargoes, and subsidies are some of the ways in which countries and international organizations such as the United Nations may affect the price of oil and natural gas, both locally and internationally, via the application of trade policies.
- Tariffs are extra levies levied on items that are imported.
- Embargoes and sanctions prohibit commerce with a certain item or with a specific nation.
- Subsidies are financial assistance provided by the government to an industry in order to keep commodity prices low.
Regulations and laws
At several levels of government, the oil and gas business is heavily regulated. This article summarizes relevant laws and international agreements. The subpage on U.S. regulatory agencies discusses the many federal entities in charge of enforcing rules. Contact the Law Library’s Ask a Librarian service with any more legal issues.
Statutes of the United States
Congress has approved several pieces of legislation affecting the oil and gas industry. The following are a few of the laws that now govern the oil and gas sector. Visit the Law Library’s Guide to Researching Federal Statutes to look for others.
- Interstate Commerce Statute of 1887, ch. 104, 24 Stat. 379- This act governs interstate commerce.
- Energy Policy Act of 2005 (EPACT), Pub. L. No. 109-58, 119 Stat 594 – It describes the incentives and advantages for oil and gas producers that contribute to the United States’ energy independence. The legislation also creates the renewable fuel standard (RFS) program, which mandates that gasoline be mixed with renewable fuel.
- Energy Policy and Conservation Legislation of 1975 (EPCA), Pub.L. No. 94–163, 89 Stat. 871 – In response to the early 1970s oil crisis, Congress utilized this act to create the Strategic Petroleum Reserve (SPR).
- Mineral Leasing Statute of 1920, ch. 85, 41 Stat. 437 – This act empowers the United States government to manage mineral rights on public lands.
- Clean Air Act Modifications of 1990, Pub. L. No. 101-549, 104 Stat. 2399 – The Clean Air Act Extension of 1970 (Pub. L. No. 91-604) and later amendments establish fuel regulations, including the prohibition of leaded gasoline.
- Energy Independence and Security Act of 2007, Pub. L. No. 110-140, 121 Stat. 1492 – Expanded the renewable fuel standard (RFS) program while also raising fuel efficiency criteria.
- Natural Gas Act of 1938, ch. 556, 52 Stat. 821- The Natural Gas Act of 1938 empowers the Federal Energy Regulatory Commission to regulate interstate pipeline development and transportation of natural gas.
The United Nations Framework Convention on Climate Change (UNFCCC or UN Climate Change) was established in 1992 to promote worldwide agreements about energy usage. Furthermore, regional groupings may have their own legislation governing the oil and gas business.
- UN Framework Convention on Climate Change – The official website of the UNFCCC contains papers, decisions, issue overviews, and agreements.
- Paris Agreement (2016) – The Paris Agreement’s central goal is to strengthen the global response to the threat of climate change by keeping the global temperature rise this century well below 2 degrees Celsius above pre-industrial levels, and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius.
- Kyoto Protocol (1997/2005) – The Kyoto Protocol is an international agreement connected to the United Nations Framework Convention on Climate Change that binds its Parties by establishing internationally enforceable emission reduction objectives.
- Directive 94/22/EC of the European Parliament and of the Council of 30 May 1994 – Directive 94/22/EC governs the requirements for granting and utilizing authorizations for hydrocarbon prospection, exploration, and production.
- IEA member nations’ energy policy – Accessible online through the OECD iLibrary database membership. Reports on all IEA member nations’ energy policy.
Disputes in the Industry
Some major controversies of this industry include:
- Cyber-attacks on infrastructure
- Drilling and pipelines on Indigenous nations’ lands
- Drilling and pipelines near national parks
- Environmental impact, such as water, natural habitats, and air quality
- Financial power of integrated oil companies
- Impact on climate change
- Consolidated power of oil companies
- Oil spills and leaks
- Overuse and over-reliance on fossil fuels
A wide range of projects and campaigns have been launched to address these challenges by local, state, and national government agencies, as well as nonprofit groups, some of which have included oil and gas firms themselves as partners. Many different organizations and people have organized public demonstrations in response to particular events, such as the Dakota Access Pipeline demonstration to preserve the waters and ground between the Standing Rock and Fort Berthold Indian Reservations. This guide includes sample materials and chosen organizations that report on these themes as samples and/or overviews, as well as information on how to get started. About a different page inside this book, you’ll find information on oil spills and natural gas leaks.
Overview of the Oil and Gas Industry in 2022
Throughout 2021, the oil and gas sector has returned rapidly, with oil prices hitting their highest levels in six years. While the industry’s recovery has been stronger than projected, market dynamics in the future year remain unpredictable. Our 2022 perspective delves into five factors that will affect the future of oil and gas industry.
A transformational period
As we approach 2022, many oil and gas (O&G) businesses are attempting to reinvent themselves by concentrating on financial health, adopting capital discipline, committing to climate change, and reforming business models. The optimism of such changes is mirrored in our study, where almost two-thirds of O&G executives say their firms’ strategy adjustments are extremely favorable.
The industry’s transformation path has just just started, and merely managing or riding oil price cycles is no longer an option. O&G strategists should:
- Streamline and optimize their resource portfolios over the next 12 to 18 months.
- Accept and create appropriate objectives for the energy transformation.
- In a tight labor market, attract, train, and retain employees.
- Accept extra environmental, social, and governance (ESG) criteria.
Organizations that are purpose-driven, tech-enabled, and human-powered, with appropriate interim objectives and progressive communication and transparency strategies, can make it happen. Our 2022 oil and gas sector overview investigate five factors, ranging from M&A activity to gasoline retailing, that will likely impact the industry’s path over the next 12 months.
Five oil and gas sector trends to keep an eye on:
1. Rising oil prices bolster energy transition plans, putting common knowledge to the test
After falling below $80/bbl in April 2020, oil prices have rebounded to roughly $80/bbl. However, popular thinking is that when oil prices are high, oil and gas businesses exhibit less financial discipline and concentrate more on core business than than new sustainability potential. As a result, it has often been thought that rising oil costs would hinder the energy shift. However, 76 percent of polled oil and gas executives believe that oil prices over $60 per barrel would most likely accelerate or supplement their energy shift in the short future.
A high oil price encourages investment in more risky and costly green energy options, such as carbon capture, utilization, and storage (CCUS). Given that no one stakeholder can provide the required investment and bear all economic risks associated with establishing a CCUS business, all players in the whole O&G value chain become critical, since they are engaged in more than half of all proposed CCUS projects.
2. Environmental, social, and governance (ESG) considerations play a growing role in mergers and acquisitions (M&A)
Oil prices have been climbing since the beginning of 2021, aided by rebounding demand and OPEC’s limited supply. However, upstream M&A activity, which is normally correlated with oil prices, remains much lower than pre-pandemic levels. While the continuous capital discipline of O&G businesses is the fundamental cause for the dip in upstream M&A activity, an increasing element is buyers’ lack of insight into the carbon profile of sellers or their assets.
Companies pursuing net-zero targets are trying to buy low-carbon-intensity barrels or sell high-intensity barrels, signaling that acreage consolidation or portfolio restructuring may be on the future. However, a big resource size and an appealing selling price may not be enough to entice a bidder intent on fulfilling its net-zero objectives. As a result, M&A transactions must not only be financially beneficial, but also contribute to ESG objectives.
3. A new energy age necessitates a revolution in business structures
Even before the epidemic, the oilfield service (OFS) industry had cut costs and streamlined operations to remain afloat. The industry, which has historically been reliant on upstream cycles, is now set to undergo a permanent structural change as the scales of O&G income and investment shift due to the fast energy transition. With profits under pressure from another pricing cycle and decreased expenditure, several OFS firms are developing a new energy strategy.
With a broader decarbonization requirement across sectors, businesses have a chance to lead the way for customers by completely reengineering old OFS business models and solutions outside of traditional “oilfield” services and into other industries. Digitalization, on the other hand, will only assist to a limited amount. The industry must become increasingly leaner and greener. Integrating solutions for decarbonizing upstream projects, creating subscription-based income models, or branching into the low-carbon domain might be major facilitators of the future OFS strategy.
4. As a new anchor to entice consumers, convenience and experience have surpassed fuel
Aside from the disruption caused by transportation electrification, traditional fuels (diesel and gasoline) face competition from low-emission fuels such as hydrogen and renewable fuels. Furthermore, the demographic transition from baby boomers to millennials is shifting consumer fuelling preferences away from brand and price and toward convenience and user experience.
The interaction of the energy transition and shifting demographics is posing a challenge for many gasoline retailers, who must modernize their operations in order to attract and keep a new generation of consumers while simultaneously responding to a changing fuel mix. Companies who seek to go beyond fuel offerings are likely to be the ones that prosper throughout the energy shift. How can businesses contribute to this goal? By making convenience a central element of the customer experience and extending to include a complete spectrum of goods and services.
5. Greener jobs and varied incentives may aid in staff retention and return
The 2020 oil price drop resulted in the fastest layoffs in the history of the US oil and gas sector. Prices have roughly doubled since then, but only about half of the lost jobs have returned. The industry’s image as a stable employer is suffering as a result of cyclical recruiting and laying off personnel, and a tenured, aging workforce is diminishing the available talent pool.
In a congested labor market, even O&G enterprises with advanced plans and sound financial sheets would find it difficult to distinguish themselves to the workforce. Although a commitment to decarbonization may be the best recruiting pitch, more than 75 percent of our survey respondents believe that flexible and agile workforce structures that empower remote, hybrid, and cross-border teams will help companies compete and retain talent in today’s tight labor market.
Oil & Gas Innovation Trends in 2022
In order to grow sustainably and strive through the hard time and this transformation era, Oil and Gas industry must rely on and utilize the new technologies to provide opportunity. These trends are considered useful and in demands for the industry with some on-going utilization from several companies.
Internet of Things (IoT)
O&G uses IoT to boost production, optimize equipment, monitor distant regions and guarantee worker safety. Sensors within wells, BOPs, and choke valves capture real-time data. By identifying defective equipment early, O&G startups enable field engineers foresee and respond rapidly. Oil & gas companies may use IoT technologies to save maintenance costs and obtain extensive insight into their equipment.
- Smart Real-Time Monitoring System – Sensital is an Australian company that helps industries utilize IoT networks. iBOTics’ IoT platform automates control, monitors remotely, and produces maintenance. The result is increased well and pipeline equipment reliability and efficiency. It also reduces OPEX and increases ROI (ROI).
- An IoT Platform from Zyfra – Zyfra produces cloud-based IIoT solutions for the oil and gas industry. Geonaft is an IIoT solution for upstream oil and gas. There is also assistance for predictive maintenance and precision drilling. It helps O&G startups increase production and worker safety.
Upstream, middle, and downstream operations increasingly use AI and data science to tackle challenging challenges. Predictive, prescriptive, and cognitive analytics are supported by AI-enabled systems. Thus, AI aids petroleum engineers and oil & gas managers in discovering and implementing novel exploration and production concepts on the field.
- Neudax supports upstream O&G decision-making – Neudax is an upstream oil and gas AI startup based in the US. The startup lets field engineers create resources with confidence and efficiency. FracDax, the startup’s AI platform, combines deep learning and reinforcement learning (RL). FracDax analyzes hundreds of well data, evaluates completion choices, and recommends refracturing solutions.
- Nesh creates an AI Chatbot – US startup Nesh creates an AI-powered chatbot for the oil & gas industry. The Nesh virtual assistant gathers data from many sources and uses natural language processing to answer industry-related inquiries (NLP). Nesh helps field operators tackle difficulties connected to oilfield operations and technology. The chatbot also discovers fresh information from data, allowing on-site operators to make quick and educated judgments.
Analytics & Big Data
The oil and gas business generates vast amounts of unstructured data. Big data platforms aid data analysts in analyzing production and performance data. Engineers may utilize this to maximize production and reservoir safety. Moreover, prior operations data help train and evaluate AI-driven algorithms and models. Using big data analytics, the oil and gas sector can minimize operating costs and carbon emissions.
- Welligence provides SaaS Data (DaaS) – It provides big data and AI solutions for the oil and gas sector. On the startup’s AI platform, engineers may access data dashboards, visualisation tools, production estimates, and valuation models. In addition to the subscription-based platform, Welligence offers data integration from any source. The software enables engineers and energy managers to better manage assets and companies.
- Drilling Optimization by Phoenix RDS – Phoenix RDS uses big data and analytics to optimize waterflood, production, and drilling. Phoenix RDS provides reservoir modeling techniques as well as optimization procedures for EOR (EOR). These improve reservoir sweep efficiency and minimize injection volume needs. This allows oil firms to save money and boost asset value.
Robotics & AV
Oil and gas operators frequently work in hazardous conditions, putting their lives in jeopardy. To reduce this danger, the oil sector is using robots and automation to improve worker safety and speed. Robots are important in oil rigs and refineries for inspection, surveying, and automation. Robotics and automation improve efficiency and reduce human error by speeding up operations and reducing labor requirements.
- Sensia has Flow Automation – US startup Sensia delivers intelligent automation solutions for oil & gas organizations to minimize detection, diagnostic, and resolution time. An oil & gas digitalization and automation platform from the firm. Solutions from Sensia improve operational efficiency and asset productivity in oil and gas production, storage, and processing. They help petrotechnical specialists and process engineers optimize output and decrease downtime.
- EXRobotics provides Robot-as-a-Service. – EXRobotics is a Dutch firm that manufactures industrial robots. First Responder for explosive gas situations, Emissions Detector for fugitive emissions, Co-Operator for remote facilities, and Investigator for data collecting. We provide cloud based RaaS platforms for the oil & gas sector. The platform improves operating efficiency, safety, and reduces expenses.
Highly realistic subsurface reservoir and O&G equipment models are created using 3D modeling and visualization. 3D modeling replicates production and injection stages of a reservoir’s lifespan using historical production data. This helps estimate reservoir safety hazards. Engineers optimize production and operations based on data. 3D modeling and visualization also saves costs and hazards while enhancing asset performance.
- O&G Cloud allows Dam Simulator – O&G Cloud, situated in Singapore, provides upstream oil & gas businesses with XXSim, a cloud-based platform. A thermal, black oil, and compositional reservoir modeling platform. XXSim provides both the platform and tools to convert simulation files from other simulators. Reservoir engineers use the XXSim cloud computing platform to anticipate reservoir performance and offer inputs to enhance output.
- Maillance offers Optimisation – Oilfield.ai by Maillance automates reservoir modeling and visualization while making real-time choices. GEOSCIENCE, PHYSICS, AND AI ANALYTICS Ai for oilfield optimization, field development and reservoir management. They utilize it to develop replicable algorithms that anticipate reserve estimations and maximize production.
Cloud computing can store and analyze data remotely, freeing up pricey local memory and processing power. The oil and gas business creates massive volumes of data every day. Enabling digital transformation with cloud-based software solutions increases oil and gas efficiency and security. Cloud-native solutions such ‘as-a-service’ platforms provide powerful analytics, graphic dashboards, and remote access to real-time information.
- InerG has PAM – Petroleum Asset – InerG, established in the US, provides technologies for petroleum asset management and well data analytics. The startup’s products integrate economic, production, and operational data. It finds operational modifications that increase efficiency and save costs. The company also provides inergDiligence, a cloud-based platform for valuing oil and gas reserves. A&D assessment, integration, and oil & gas asset management are improved using diligence software.
- Engage helps Field Management in the Digital Age – As a cloud-native digital field management platform, Engage is situated in the US. A data analytics platform delivers real-time monitoring and predictive scheduling. On-site manufacturing data, IoT devices, and accounting software are integrated into the ENGAGE platform. A predictive algorithm also automates tasks based on predefined parameters. It also saves time, increases production, and lowers costs for oil and gas companies.
Augmented Reality (AR)/ Virtual Reality (VR)
Immersive technologies include AR/VR, MR, and ER (XR). These systems improve productivity and prevent mistakes by presenting real-time information regarding equipment, tools, and parts. For remote monitoring, downhole imaging, and virtual training, E&P firms deploy reality technologies. Also, O&G companies use wearables and smartphone notifications to allow human-machine interactions.
- With Previse Studio – Previse Studio provides VR solutions for manufacturing and OEMs in the process sectors. The company uses VR and AR to simulate a real environment for users during greenfield, brownfield, and renovation projects. The solution helps with plant building, maintenance, workforce training, and safety. The startup’s VR studio allows for plant walk-throughs, monitoring construction and operations, and enabling predictive maintenance.
- Wearables for Industry: RealWear – RealWear is a US-based firm that makes hands-free industrial headphones. With remote coaching, document navigation and IIoT visualization, the startup’s headsets also provide digital workflow solutions. Realwear’s unique HMT helps oil and gas engineers see and cooperate during well-testing operations. HMT may also be used to communicate amongst process engineers when scanning pump types. The firm also sells AR/VR headphones, bump caps, and hard helmet clips.
MEP Systems (MES)
To manage the production process, MES unites manufacturing facilities, operational technology (SCADA), and computer systems. Engineers seek ways to monitor and regulate complicated oil & gas equipment production processes. Intelligent manufacturing solutions with integrated control are available from MES. It allows quicker, safer, and more dependable oilfield technology.
- Cognate-Gnosis provides Ops Optim – Cognate-Gnosis provides MES systems for oil & gas, mining, and utility companies. Equipment makers may use real-time production data to optimize operations, eliminate waste, and improve overall equipment efficiency (OEE). The company also provides IIoT solutions for predictive analytics, staff training, and network security.
- Link3D streamlines AM workflows – Link3D, established in the US, provides a cloud-based MES software platform for AM operations. It allows for faster prototyping, tooling, and production of end-use and spare components. Link3D’s solutions help manufacturing engineers increase production, centralize orders, and reduce costs. Aside from that, the platform allows for large-scale spare component manufacture.
Predictive maintenance and operations collect data from field sensors and combine it with machine learning algorithms. Engineers can easily analyze equipment status and schedule repairs. Predictive operations, along with software platforms, allow O&G operators to see parts and forecast faults. Predictive maintenance is used in upstream, midstream, and downstream processes. These solutions increase safety, lengthen equipment life, and save operational and maintenance expenses.
- TwinThread provides Predictive Operations Platform – TwinThread is a US-based firm that uses digital twins and digital threads to help manufacturers learn quicker from their existing production data. TwinThread’s predictive operations technology is designed for industry. It estimates OEE, material, and energy costs, and predicts throughput and asset life.
- Context Monitoring with Prognostic – a UK startup Prognostic creates end-to-end PaaS solutions for IIoT-based predictive maintenance. Vibration, noise, and temperature data are all analyzed via its self-titled condition monitoring platform. It uses AI to extend asset life and generate failure patterns. The platform helps oil and gas businesses, among others, decrease equipment downtime and associated expenses.
Blockchain is rapidly being used in oil and gas operations. Safeguarding oil & gas operations using smart contracts is critical. Distributed ledgers handle smart contracts and verify contractors. Blockchain also automates bills, settlements, and joint venture accounting. Hydrocarbon fleet tracking, trading, and intragroup invoicing.
- Ondiflo offers Oilfield Automation – Ondiflo uses blockchain and IoT to automate oilfield transactions. The business uses sensor data to automate fluid transportation procurement. Ondiflo’s approach improves transparency by monitoring loads to discharge. It also improves operating efficiency while lowering CO2 emissions.
- Blockgemini forecasts oil demand – American firm Blockgemini provides transparent and secure business solutions for complicated oil and gas operations. The business uses Blockchain, AI, and IoT to help the oil and gas sector become digital. This covers forecasting, warehousing, and transportation. As a result, cloud-based platforms allow oil and gas firms to digitally exchange, coordinate and enhance business planning. Overall operational efficiency is improved by offering transparency into diverse oil & gas operations.