A BUSINESS CASE FOR RFID IN THE OIL & GAS INDUSTRY

MARKET OVERVIEW

An underlying priority of the Oil & Gas Industries investment in technology is to support growth and innovation in a very dynamic

and volatile market space. Global petroleum prices have explicitly provided a foundation for a sturdy market growth and implicitly

driven demand for technologies that can streamline the increasing complexity of product procurement, distributed site locations,

increase production volumes, and other factors intrinsic to the increase in exploration, drilling, and production because of this

market growth.

IT PRIORITIES - OIL & GAS

Growth and Innovation

International Opportunities

Environmental Regulations

Optimization

Human Capital Management

New Information Technologies

Governance and Disclosure

Mergers and Acquisitions

Oilfield Reserves / Fuel Supply

Liquefied Natural Gas (LNG)

Competitive Landscape

Public Perception

0 10 20 30 40 50 60 70

IT SPENDING - OIL & GAS

(US$ Millions)
Source: Gartner

8774

7555
5697
6946
4906
6336 2631
4510
2265
899
4115
2083
774

1900 2009
711
2007
USA
649
Europe 2006

APAC
2005
Americas
TECHNOLOGY OVERVIEW

RFID technology within the market space is still at its infancy, however the cost-points, memory size, and read range potential

of this technology, can enable visible and important benefits to a variety of different application areas. These include:

OIL & GAS PRODUCT MANUFACTURER

Quality Control (more granular / automated)

Dynamic KPI Data (items/hr; downtime; yields)

Inventory & Asset Control (increased visibility, quicker processing)

Proactive Maintenance / Product Lifecycle Management (usage control, real-time status feedback)

OIL & GAS RIGS

Drill String Validation (improved integrity, decreased downtime, improved maintenance model)

Down hole Actuation (low cost actuation, multi-state capability)

Proactive Maintenance & Control / PLM (usage, status)

Construction Management (decreased rig assembly time, improved integrity)

REFINERIES

Hazardous Material Disposal Management (correct disposal, traceability, onboard safety/disposal information)

PAINPOINT TO REQUIREMENTS MAPPING

MARKET SPACE PAIN POINT(S) REQUIREMENTS

• High-Overhead for Traceability • Paperless & Intergrated Traceability

• High Defect Rates • Automated & Real-time Defect Detection

Pain Point
Product • Poor Interdepartmental Communication To Feature • Integrated Application Systems; Wireless Dispatching
Mapping
Manufacturing • Inefficient Production Scheduling • Real-time Product Visibility

• Inadequate Quality Controls • Automated Control Systems

• Insufficient Product Visibility • Enterprise Wide Automatic Identification Infrastructure

PAINPOINT TO REQUIREMENTS MAPPING

MARKET SPACE PAIN POINT(S) REQUIREMENTS

• Drill String Failure • Onsite & Automated Drill String Verification

Exploration Pain Point
To Feature
• Inefficient Maintenance Procedures Mapping • Maintenance Control System
& Drilling
• Accidents / Safety • Sensor Networks; Geo-Fencing

• Untimely Location of Equipment • Automated Inventory Control & Management

MARKET SPACE PAIN POINT(S) REQUIREMENTS

• Unforeseen Equipment Failure

• Problematic Evacuation Protocols • Sensor Networks

Pain Point
To Feature
Production • Inefficient Maintenance Procedures Mapping • Geo-Fencing

• Wireless Disconnectivity • Product Lifecycle Management

• Cumbersome Data Recording • Onboard Tag Data Storage; SmartClient Applications

• (Volume Pressure, HazMat Docs)

VALUE PROPOSITION

The Oil & Gas RFID (OGR) Solution Group brings together select industry subject matter experts, academic researchers and

technology service providers to identify, define, develop, and deploy cutting edge solutions for Exploration, Production, Drilling,

and Product Manufacturing in the Oil & Gas market. By educating and refining the customers understanding of what the technol-

ogy can do for them, and developing systems with the help of a consolidated effort of Oil & Gas professionals, the solutions

group is creating scalable application systems and data standards, and helping generate understanding and adoption of Radio

Frequency Identification within the Oil & Gas Industry.

This group and its underlying activities are aimed and generating launching pads for commercialization within the market space.

Its marketing and research & development activities are fundamental components of its success.

RFID technology is an indispensable component of the product offering of the OGR Solution Group. Application areas, such as

drill string assembly offer an untapped market space for procurement and production control systems powered by RFID.
DRILL STRING

5+ million metric tons of oil field tubing consumed yearly in the United States

Equivalent to 11 billion pounds of oil field tubing

Equivalent to 30+ million tubing products per year

Controlling drill string assembly to prevent failure is critical to the industry.

Loss of production can cause millions of dollars of loss per day

OIL RIG

2000+ Oil Rigs actively drill/exploring for oil or gas in the United States

Thousands of Gauges, Wrenches, and oil field equipment used on each rig

Millions of different types pieces of equipment that require product lifecycle and/or location management.

These are just two of the application areas of RFID technology that offer a completely un-tapped market space. Furthermore,

even consumable oil field tubing products are valued at a few hundred dollars per unit and the return on investment that is gained

from improving product visibility, control drill string integrity, and streamlining procurement by investment in RFID technology far

outweighs even the highest cost-points associated to RFID tags.

Such that:

Tags within this market space, if properly presented to the end-user community can easily be sold for
$1.00+/unit, something that is not feasible with consumer goods or apparel.

Return on investment can clearly and easily be justified

FOR MORE INFORMATION ABOUT US VISIT:

http://www.rfidsolutiongroup.com