logo_header
  • Topics
  • Research & Analysis
  • Features & Opinion
  • Webinars & Podcasts
  • Videos
  • Event videos

Why telcos should build an edge computing business for the oil and gas industry

There is mounting need in the oil and gas industry to rapidly transform and optimize processes to reduce costs and improve efficiencies. Without the ability to access and share data effectively, digital transformation in the sector may be inhibited.

Dalia Adib
15 Jan 2020
Why telcos should build an edge computing business for the oil and gas industry

Why telcos should build an edge computing business for the oil and gas industry

At Digital Transformation Middle East next week, Dalia Adib, Principal Consultant & Practice Lead – Edge Computing, STL Partners, will be presenting a talk entitled Accelerating your journey to the Edge to support 5G services, highlighting how telcos can build an edge computing business for the oil and gas industry. Read some of her insights in the article below before the big event.

The oil and gas sector has always been important for the Gulf Cooperation Council (GCC); it is forecast to be $304 Billion in GDP in 2030. But, as an industry facing ever-increasing pressures during a period of digital transformation, there is real potential for telecoms operators to play a key role to enable this digitalization via new technologies such as edge computing and 5G.

The oil and gas sector is in need of digital transformation


The oil and gas industry is highly volatile and competitive. As the world faces pressure to substitute traditional energy sources with renewables, the challenges companies in the sector face will only increase. There is mounting need to rapidly transform and optimize processes to reduce costs and improve efficiencies. However, this is only becoming more difficult given an ageing workforce whose skills are becoming quickly outdated.

Technologies such as data analytics, the internet of things (IoT) and automation are being introduced, but the sector still lags others, such as manufacturing, in the speed at which it is transforming. Nonetheless, these technologies require and result in a huge amount of data being produced.
Over a terabyte of data is generated from a single oil rig each day, but less than 1% of this data is used. Part of the challenge is that, at these remote locations, data can take up to 12 days for a day’s worth of data to be transmitted to a data centre.

Without the ability to access and share data effectively, digital transformation in the sector may be inhibited. Future solutions that use artificial intelligence (AI) or mixed reality (MR) will only further emphasize this issue, given that high bandwidth, low latency transfer of data is paramount for both to succeed.

5G will help overcome challenges to accelerate growth


The challenge of implementing digital transformation in oil and gas companies and enabling new use cases could, in some cases, be solved by advancements in ICT – namely 5G and edge computing. The capabilities of 5G means it is will potentially be a key technology across many industries:

  • Low latency: roundtrip latency of under 10 milliseconds

  • Bandwidth: data rates 100 MB/s on average; 20 GB/s at peak

  • Capacity: up to one million devices per square kilometre

  • Reliability: 99.999% network reliability

  • Mobility: seamless transfer between radio nodes up to 500 km/h

  • Battery life: up to 10 years battery life for low power devices


In the oil and gas sector, these capabilities will be beneficial for robotics, enabling the use of augmented and virtual reality (AR and VR), IoT, remote processing and automation. On its own, 5G will not be sufficient, but coupled with data analytics/AI, edge computing and other forms of connectivity technologies, digital transformation will be accelerated.
A recent study by STL Partners forecasting the impact of 5G on the energy and extractives industries (oil, gas and mining predominantly) found that 5G and the use cases it enables could provide a 5% boost to its GDP globally in 2030.

There is huge potential for the energy and extractives industries to benefit from 5G

But 5G needs edge


5G is not the only new technology that will be pivotal for digital transformation; edge computing is a key enabler too. Edge brings the capabilities of cloud close to the end-user or end-device and can be anywhere on a spectrum from the device and the hyperscale cloud.

Arguably, 5G needs edge more than edge needs 5G. First, it is inherent in 5G standards as it is the only way to meet the latency targets that have been set (1ms network latency). Improvements in the radio interface alone will not achieve these. Second, demand for edge computing exists independently from 5G. Although 5G allows rapid transfer of data, there is still a need for the massive amounts of data being generated to be collected and analysed at an edge, to reduce latency, costs and risks from network failure.

For example, edge computing can be used in condition monitoring and predictive maintenance in the oil and gas sector. With edge, data can then be analysed immediately, the cause of the issue identified, and the appropriate actions taken to rectify the situation, ideally long before significant damage occurs. This results in a significant reduction in downtime.
For a liquified natural gas (LNG) facility, a single day of downtime can cost $25 million and this occurs an average of five times per year.

There is real opportunity for telco operators in the region


Mobile operators globally are facing a decline in their core business. We see that 4G did not generate sustainable ARPU growth and, in some markets, ARPUs have fallen dramatically. With 5G, operators will need to do something different to be able to combat this threat – either slash costs or find new sources of revenue growth.

Annual growth in mobile operator revenues is tending to 1% in Asia Pacific, North America and Western Europe
Telcos have an opportunity to use 5G and edge computing to build significant B2B businesses, offering enterprise customers tailored networks that meet their needs (with or without slicing), as well as the enabling platforms and end-solutions that generate the real value. In the GCC, the oil and gas sector is an obvious starting point, given its significance in these economies, constituting the largest market, which is forecast to be $304 Billion of GCC GDP in 2030.

In GCC countries, energy and extractives and construction industries are particularly important
For operators, the challenge with 5G is that even in advanced markets such as Saudi Arabia and the UAE, full 5G coverage will take time. Plus, focusing the opportunity on 5G alone limits the operator, as it is only one of many connectivity technologies that will be used by the oil and gas sector.

Edge computing is a key part of this opportunity, not only because it provides different capabilities, but it can serve as a strategic stepping stone. Telcos that want to address the B2B opportunity sooner rather than later can start enabling edge computing solutions, build relationships with these long-term customers and eventually augment solutions with 5G.
For this to succeed, mobile operators need to start engaging their customers today and change the way they innovate. Ecosystems and partnerships are key in this ever-evolving space where a single company cannot provide the end-to-end solution, and there is much education that needs to happen on both the operator and the customer side.