What Do IIoT and Abraham Lincoln Have in Common?

Now that I have your attention with a headline such as the one above asking what does IIoT and Lincoln have in common, and that likely has you scratching your head, let me try and answer the question.  Although we don’t have consistent records of active rig counts prior to 1949, some industry sources believe the total US drilling rig count hasn’t been this low since the inception of the modern US oil industry – about the same time that Abraham Lincoln was sworn in as the 16th US president.  Leaps in modern drilling rig efficiency and productivity (as well as capital intensity) is something that has been written about repeatedly over the past several years.

Last week, the total US drilling rig count fell to a record low since Baker Hughes began tracking the data in 1949. Even if one adjusts today’s record low rig count of 480 upwards by a liberal 30% for drilling efficiency gains, it would still be lower than just about any other time in recorded US drilling history.

In 1859, Edwin Drake famously used a rig to drill the first successful well in Pennsylvania. His success marked the beginning of the oil drilling industry, and the number of active drilling rigs grew quickly, turning the Appalachian Basin into a leading oil producer (supplying half the world’s oil).

By the time Abraham Lincoln was inaugurated as US president in 1861, the US rig count (albeit comprised of wooden derricks, not the highly engineered steel of today) was very likely either at or above today’s levels and climbing.  Rig Counts 03142016In Canada, the rig count fell 31 rigs to 98 for the week.

Okay, now how does all this have to do with IIoT? Simple, we at ARC believe that IIoT-enabled solutions can help upstream oil & gas companies lower the cost to drill a well by leveraging smart sensors (i.e. fiber optics, azimuthal gamma ray, etc.) and advanced analytics along with robust communications systems such that companies can still make money (albeit not as much when oil was $100/bbl).  ARC also believes that companies can optimize artificial lift to increase production and EUR by leveraging IIoT-enabled solutions that ensure greater asset availability, maximize production, and improve profitability in these margin compressed times, likely not seen perhaps since the time of Abraham Lincoln.

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