Huge amounts of capital are generated by the oil and gas industry every year, and in many countries and territories, the entire state budget – or at least a significant portion of it – is driven by profits made from extracting, processing, and transporting oil and gas products. Digitalization in the oil and gas space is not new, but there are many challenges that up-, down-, and midstream players must address to make the most of the oil and gas IoT market which is projected to be worth $40 billion by 2023.

Many different technologies are currently in use at different oil and gas enterprises, which include industrial automation systems, sensors and networks for asset monitoring, software monitoring, preventive control, and more. 

Here we talk about the role and benefits of IoT in the oil and gas space as well as a few promising use cases that forward-thinking organizations should have in mind when drawing up their long-term oil and gas business strategy.

The Case for Oil and Gas IoT

Smart IoT devices have transformed the ways in which countless industries do business, including healthcare, utilities, construction, and transportation. IoT in the oil and gas space is no exception, and many businesses are looking to the efficiencies and cost-savings that IoT can deliver to improve margins, profitability, and sustainability.

According to a recent survey, the leading use case for IoT in the oil and gas space is tracking and supply chain optimization – but it may also be used for exploration and production. For all use cases, the focus is typically on workload optimization via the use of sensors and devices that increase the data points needed to drive better results.

The Benefits of IoT in Oil and Gas

There are hundreds of ways in which smart sensors and devices can be used in different oil and gas deployments. Broadly speaking, most deployments aim to deliver benefits in the following areas.

Improved Automation and Control

This includes research, resource extraction, manufacturing, production, transportation, and demand/supply tracking. Automation can lower human resource expenses and provide fast, automatic responses to critical developments.

The oil and gas industry will likely face losses over the next several years as retiring Baby Boomers leave vacancies that are difficult to fill. IoT can deliver the improved operational efficiencies needed to provide visibility and empower management to optimize processes, reduce response time from days to minutes, and focus on other high-value or high-margin aspects of the business in the wake of retiring workers who will take decades of experience with them.

Big Data Decision-Making

Data-driven decision-making can drive the same organic growth in the oil and gas space as it has for the retail space. With smart digitalization, industry stakeholders can extract better insights, make smarter decisions, and make better predictions using IoT data. 

For example, one Bain & Company study found that improved visibility into various drilling processes would improve production by between 6% and 8%. 

With the right networks and devices in place, oil and gas companies can convert massive amounts of data into beneficial and actionable information.

Improved Safety

Smart sensors and automated event response systems can lower the risks associated with incidents like machine breakdowns or dangerous chemical leakages through proactively identifying potential issues or hazardous conditions. Remote troubleshooting powered by smart devices can deliver more constant and efficient regulation of business-line processes as well.

Pipeline Monitoring

IoT devices can be used to provide real-time monitoring, which in turn can help increase production and lower system downtime and the need to check pipelines. A single machine failure (whether a pump in an upstream company or a vehicle breakdown in a downstream company) can cost hundreds of thousands of dollars per hour – not to mention catastrophic environmental losses that can result from a large-scale leak.

Risk Mitigation

Complex, demanding, and machine-intensive drilling operations can be remotely monitored from a central command station using IoT devices deployed in the field. This can reduce not just the risks to workers of injury or death, but also the human errors that can arise when manual responses are made to changing field conditions.

Higher Revenues

One study from Oxford Economics found that the world’s GDP could grow by over $800 billion over the next 10 years through the industry-wide adoption of smart IoT devices in the oil and gas space. Innovative IoT technologies can enhance profitability – which is particularly important as lower oil prices and increased competition become the new normal.

Environmental Footprint

IoT devices – with their real-time monitoring and data aggregation capabilities – can reduce the environmental impact of oil and gas companies through preventing oil spills and other accidents. They can also help lower carbon emissions thanks to better monitoring of processes and resource usage.

The benefits above spill over into every aspect of oil and gas operations, from drilling management and pipeline monitoring to refinery monitoring, offshore monitoring, shipping/transportation monitoring, health, safety, compliance to standards, and carbon footprint control.

Now that we understand the benefits of IoT in oil and gas, the next steps are understanding and overcoming the challenges that arise when launching the right IoT system.


It is helpful to look at oil and gas IoT challenges from the following perspectives:

  • Downstream companies primarily focus on marketing and distribution; they can benefit from IoT deployments that improve environmental friendliness and price/asset monitoring.
  • Midstream companies primarily focus on supply chain and logistics; they can benefit from IoT deployments that improve route scheduling, temperature control, maintenance, and compliance.
  • Upstream companies focus on research and production; they can benefit from IoT deployments that improve the efficiency of raw material extraction and/or provide remote control capabilities. Work in high pressure, high pressure, and corrosive substance environments is also a concern.

Oil and gas players must understand the unique challenges they face and the business goals they must attain before approving an IoT deployment. The section below talks about the steps to take before deciding on your particular business, industry, or use case.

Steps for Deploying IoT in Your Oil & Gas Business 

Business transformations involving IoT can be costly, but the long-term benefits justify the expenses of deploying a smart, sensor-driven network to manage and improve your processes. 

Here are the steps we recommend before deploying an IoT project for your business.

1. Understand Your Goals

What are the business goals you hope to achieve, and how can IoT help you achieve them? Start with a pilot project that will help you define your problem, gather data, analyze your options, implement a solution, and assess the success of the project before moving on to a bigger deployment.

2. Procure Ready-Made Solutions

Conducting empirical research and producing custom devices and sensors for your business can be prohibitively expensive. However, many businesses specialize in developing exactly the kinds of hardware and software needed for a wide variety of oil and gas use cases. You may be able to find an off-the-shelf device that meets your needs, so conduct a little research into what those are and what the market has to offer before making any final decisions.

3. Ensure Compatibility and Interoperability

Will the Internet-enabled devices you selected for your IoT project work with other devices, networks, and machines that are part of your oil and gas operation? It is important to ensure that new systems, devices, and software work with both your new and older systems.

4. Understand How to Use Data

IoT devices are needed to power data-driven smart insights for your business, but they can only help if you have the analytics capabilities needed to extract those insights from the data you collect. An additional challenge may be to have decision-maker backing for IoT-empowered insights, so stakeholder and organizational buy-in are also important.

5. Iteratively Improve Your Process

It can take time to get the results you hope to see from your IoT project, so stick with it and iteratively improve your approach until you develop a sound understanding of the unique challenges you face, the kinds of data you need to make improvements, and how and where your IoT devices are helping. Only then can you address areas of concern and slowly work toward a truly robust and performant IoT solution. 

Contact Kajeet Today

We understand how challenging it can be to understand the countless tools and technologies custom-built for players in the oil and gas space. Kajeet Solutions Engineers can walk you through what you need to know about how and where IoT can best be utilized to how to launch, run, maintain, monitor, and improve an IoT system designed specifically for your needs. Contact us here to learn more.