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The oil and gas sector has been facing several challenges over the last few years. Decreasing oil prices have reduced the cash flows and have forced companies to examine their exploration and production strategy. Oil and gas companies are also undergoing a major challenge on how to use digital solutions to address the fluctuation in pricing and demand. Although the oil and gas companies have been steadily adopting newer technologies, they have recognized the need to transform their business models, processes, and IT operations, to compete in the digital era.

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Certain companies look up to IoT as an area of technology, which includes the possibility for companies to overcome these challenges. Access to real-time information across remote locations is one of the major demands of oil and gas companies, which is now being achieved with the help of Internet of Things (IoT) sensor data, which brings extraordinary insight into process performance.

Internet of Things (IoT), which integrates sensing, communication, and analytics dimensions, has shown improvement as the core technologies have enhanced. The possibility of IoT technologies in the oil and gas industry lies in helping the oil and gas companies create new asset information about the elements of their businesses. The three major advantages that the deployment of IoT in the oil and gas industry will bring to the industry are improved reliability, enhanced business operations, and added value in the business.

Each of the industry stream (Upstream, Midstream, and Downstream) can be benefitted from the use of IoT in the above-mentioned categories. Upstream companies that deal in the exploration and production of oil and gas can gain operational insights by analyzing a huge set of data. Midstream companies that deal in transportation such as pipelines and storage, will be benefited by building a data-enabled infrastructure, which will further enhance the business considerably. Downstream companies dealing with the petroleum products, refiners and retailers will witness new opportunities of revenue generation, expanding their presence across the supply chain and targeting digital consumers with the help of IoT.

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The new era of lower oil prices is taking a stronghold in the oil and gas industry, which is pushing the indebted oil and gas companies towards the credit-rating agencies, watchlists, and derailing their capital expenditure and distribution plans. This action in the industry requires a change in the industry’s perspective from using operational technologies to locate and exploit complex resources, using IoT to make hydrocarbon extraction and every stage across the value chain more efficient, and generating revenue than adjusting the financials.

Companies within the oil and gas industry vertical can significantly improve their business models by developing integrated IoT strategies. Additionally, several companies can save millions in their revenue by increasing the usage of IoT for data capturing and analysis, which further helps in reducing the company’s pipeline/well and equipment failure and enhances the output. Even the Global GDP has witnessed the influence of IoT solutions in the oil and gas industry to an extent. As per the data by Oxford Economics, the industry-wide adoption of IoT technology could increase global GDP by as much as 0.8 percent, or $816 billion during the next decade.

For the deployment of IoT solutions to create economic value, companies need to link IoT technology deployment with specific business priorities, which can be described using three categories of increasing scope. First, companies should focus on minimizing the risks to health, safety, and the environment by reducing disturbances. Secondly, the companies need to work on increasing their productivity and optimization of the supply chain, which will help in improving their cost and capital efficiency of operations. Lastly, the companies should also lookout for new sources of revenue and competitive advantage that can assist in transforming their existing business by creating new value.

Apart from investing in IoT solutions, companies need to closely monitor IoT deployments, which assists in keeping the application on track, in the initial years. It is expected that IoT will have significant optimistic impacts on the entire supply chain of the oil and gas industry. With the right support and investment, this industry is ready to mark most of the next industrial revolution, and that could be lead to a turning point for the oil and gas sector.