How Ethernet can help cut oil prices

GarrettCom Europe business development manager David Moss argues that advanced Ethernet networking technology has a major role to play in bringing oil prices back down to previously affordable levels:

Twelve months ago, with oil prices nudging $90 a barrel, the idea of a $100 barrel seemed unthinkable. There were mass protests at petrol prices that were trending towards 80p per litre. Now oil prices are hovering around $140 a barrel, and pundits are warning us to expect prices of at least $150 a barrel before the end of the year. Correspondingly, petrol prices, now almost £1.20 a litre, could peak at £2.00 or more in 2008, whilst the threat of heating bills exceeding 10% of the income of huge numbers of people has become a frightening reality.

In the long term, we have the energy output of wind farms, solar electricity, hydroelectricity and wave energy to look forward to, not to mention the nuclear option that has found favour in the UK of late. In the short to medium term, however, the government’s own findings suggest that fossil fuels will continue to be our predominant source of energy for decades to come. The UK Energy White Paper published by the DTI last year concluded that even by 2020 and despite an emphasis on renewable energy sources, fossil fuels will still be supplying the great majority of UK energy needs.

This makes the current high price of oil a real worry. The UK government has said it will be working hard with its overseas partners to determine why oil prices are so high. But really there is no mystery here. The issue is clearly one of supply and demand. The ramping up of China’s industrial economy is just one of the many factors that is dramatically pushing up demand, and production has not increased to match.

But do we have the reserves of oil to increase production and to sustain that increased output over the longer term? Perhaps the latest findings on North Sea oil hold the answer. The North Sea has been a major source of oil since its first significant production in the mid 1970s. In 1998, North Sea oil production represented nearly 9% of world oil production.

The North Sea has been a key factor in increasing non-OPEC oil production for over 20 years, but output went into decline from both the UK and Norwegian oil fields in the late 1990s, leading many pundits to conclude that supplies would soon dry up. Although that pessimistic perception has remained, analysts are now saying that quite the reverse could be true, and that there may well be enough reserve to equal all the oil recovered over the last three decades.

Some experts believe that up to 30 billion barrels are still in the ground. And following evidence that 300 fields off the coast of Britain are still to be explored and tapped properly, reserves could be even greater.

If we have the supplies, and we have a corresponding demand, then the key to lower prices lies in minimising the costs of discovery and production. Making extraction and distribution of the remaining North Sea reserves cost effective will depend on advanced technologies that are hardened against the uniquely challenging offshore conditions. Even the most minor of technical difficulties can lead to extended shutdowns that significantly impact on production rates in offshore oil fields.

Fortunately, North Sea oil producers have historically been adopters of the best available technology, and have ably demonstrated how technological improvements in the management of data is crucial in delivering cost-effective oil production.

Building on industrial Ethernet

Over the last few years, Ethernet has become the technology basis for virtually all new and updated supervisory control and data acquisition (SCADA) systems across all sectors of industry, and looking at the oil industry in particular it is easy to see why. To process the massive amounts of data that simplify exploration and production, oil (and indeed gas) companies require an enormous amount of network bandwidth with security for industrial operations.

But the data capacity of the networks is far from the only challenge to oil producers working offshore when it comes to the capability of the technology. Networks must also be hardened for field operations, and offer redundancy for highest availability. Such heavy-duty networks hold the key to enabling producers to explore for hydrocarbon fields, develop new fields and manage production and transportation.

The demand for secure, redundant, hardened high-bandwidth industrial networking capabilities at oil and gas exploration sites, energy field development, production, and transportation facilities is on the rise. But these environments make stringent demands of products in terms of safety and corrosion resistance.

Meeting the needs of these operations, operators can today turn to industrial Ethernet network products with Class 1 Division 2 certification, allowing use in hazardous environments. Designated the OGP range – for oil, gas and petrochem – they carry the Class 1 Division 2, Groups A, B, C, D certification, and as such are UL approved for use in hazardous environments containing volatile flammable liquids, gases or vapours.

At the same time, there is the option of a silicone-based conformal coatings that meet the requirements of the IEEE PCIC specifications, offering protection against even highly corrosive gases such as hydrogen sulphide and benzene. As a result, users in industries such as oil and gas, and petrochemicals can now take advantage of advanced Ethernet solutions, bringing the benefits of managed networking deeper into hazardous environments.

The latest offerings include a wide selection of switches, converters and routers suitable for these tough environmental industrial Ethernet applications. Products include 10Mb, 100Mb and even 1Gb speed options, with mixtures of both fibre and copper ports, and all common input power types, offering the ability to easily handle stressful workload mixtures of high-burst data traffic and priority streaming traffic.

In the UK sector of the North Sea, it took 25 years to bring the first 100 oil fields to be brought online. Yet, with advances in technology, it took just six years to bring the next 100 fields online. Now, with the latest control technologies aided by developments in hardened industrial Ethernet, new fields can be brought online at or near maximum production capacity from day one.

The debate concerning the direction of future oil production is growing, and it is a global debate. As existing oil fields decline, either the remaining reserves in those fields need to be tapped more cost-effectively, or new oil fields need to be found and tapped. In both cases, advanced technologies, including Ethernet, hold the key.