Cloud Computing: The Next Big Investment for the Oil and Gas Industry

Storage hardware must evolve at a rapid pace to keep up with the incredible accumulation of data in today's world. Cloud computing is the perfect platform for AI, big data, and IoT, while also facilitating unprecedented mobility in the oilfield.

Illustration: © IoT For All

Globally, we produce more than 2.5 quintillion bytes of data per day, and this rate has been rising exponentially since the introduction of the Internet of Things (IoT). In fact, over 90 percent of the data in the world today was created in the last two years. Our storage hardware is being forced to evolve at a rapid pace to keep up with this incredible accumulation of data. The oil and gas industry, like every other sector, can no longer maintain on-premise data storage. In 2019, oil and gas companies will be flocking to the cloud.

Sensors in the Oilfield

Sensors have proven their worth in the oilfield. By monitoring the many aspects of well health, we are able to identify the biggest problems as they happen and dispatch workers to solve them. Tracking equipment and field workers increase efficiency by linking people, tools, and tasks more intelligently. The amount of data produced by all these sensors is growing every day to give greater visibility; this accumulation offers insight through big data analysis. However, many producers who have deployed SCADA systems in their oilfields are not utilizing the data because they can’t keep up with storage demands.

As our oilfields get connected, the flow of data increases, and as big data analytics continues to improve the value of accumulating data, our data storage needs to scale up rapidly. Cloud storage offers highly scalable storage to meet the needs of even the most connected oilfields. This means that as companies grow, their data storage will grow with them, and when they add more assets, they won’t be burdened or delayed by the acquisition of more on-premise storage devices.

Cloud Computing Versus On-Premise Hosting

You can look at the decision of whether to use cloud-based versus on-premise hosting in the same way you would for leasing versus owning a car. Buying a car is like choosing on-site data storage; it demands a large one-time upfront payment and requires you to pay for maintenance as the car ages. Leasing a car is more like opting for cloud storage; you pay a monthly fee and your equipment is maintained and upgraded by the service provider. Data accumulation is like adding more passengers. When the car/server you own is full, you need to buy a new one. If leasing, the service provider will be able to upgrade to a bigger car without another capital outlay.

Most oil and gas companies would rather spend their capital on drilling and pumping equipment than on servers. On-premise data storage would also mean the recruitment of new IT teams, in addition to the cost and disruption from necessary maintenance and regular hardware upgrades. Cloud computing offers data storage as a service, tailored to those companies that want to take advantage of data but do not have the expertise, the capital, or the need for on-premise servers.

The cloud also supports oilfield intelligence by ensuring they have access to the latest data anytime, anywhere. This supports mobility and AI initiatives in the oilfield and delivers insights for quicker and more informed decision making on the go. As technology becomes more efficient at storing and retrieving data, those utilizing leading cloud computing services will be the first to feel the benefits of innovation as providers stay ahead of the curve. Those with on-premise storage will have to continuously invest in new hardware, software, staff, and training after each breakthrough to keep up.

A recent Accenture report shows that for a majority of oil and gas companies, cutting costs is becoming a secondary concern as they focus on the power of the cloud to speed decision making and to shorten time frames. “We’re seeing the industry beginning to shift its digital focus from sheer cost reduction opportunities to boosting asset and work productivity,” the report highlighted. Be it for cost-cutting or boosting productivity, the cloud is the right solution for oil and gas producers.

Why the Cloud Is the Best Choice

Some still resist the cloud due to security concerns or ownership of data issues that have long since been proven wrong. Unless a company spends huge sums of money to secure every endpoint, WiFi connection, and physical access point, creating a pentagon-style secure environment, the cloud is more secure. Massive data centers owned by some of the world’s biggest corporations hire the leading security specialists and spend millions on physical and cyber defenses to keep customer data safe. It’s important for companies to ensure that contracts clearly place ownership and access to data in their hands, which is now commonplace in cloud computing.

Cloud computing makes sense for small- to medium-sized oil and gas producers looking to develop a broader strategy toward effective digital innovation. Cloud computing is the perfect platform for AI, big data, and IoT, while also facilitating unprecedented mobility in the oilfield. “The opportunities that come with cloud are profound and will be an important enabler for the oil and gas industry as it transforms itself for the future,” concludes the Accenture report.

Are you still debating if the cloud makes sense for your oilfield?

Shiva Rajagopalan is the President and CEO of Seven Lakes Technologies, a niche analytics and technology solutions firm, driven to improve business drivers and enhance execution of customer business strategies for the Upstream Oil and Gas Sector. Rajagopalan founded Seven Lakes Technologies in 2009 and has overseen the development of numerous innovative products. Previously, as a Data Architect at Chevron Corporation, Rajagopalan created solutions used to solve a broad range of oilfield challenges, resulting in multi-million dollar cost savings. Rajagopalan holds a bachelor’s degree in Mechanical Engineering from the Indian Institute of Technology, Bombay. He received four Chevron Contractor Recognition Awards for professional and technical excellence.