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Overview of Oil and Gas Market Challenges and Core Operations

The oil and gas industry faces various challenges, including declining oil prices, market volatility, and increasing regulatory requirements. Key factors affecting the market include supply and demand dynamics, geopolitical tensions, and the impact of emerging technologies like IoT. The U.S. oil and gas sector consists of over 1.1 million wells, extensive pipeline networks, and numerous companies employing hundreds of thousands of people. Understanding market operations, managing risks, and improving efficiencies through integrated platforms are essential for navigating this complex landscape.

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Overview of Oil and Gas Market Challenges and Core Operations

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  1. Oil & Gas Market and Core Operations Overview Ram Mistry M (214) 608-9304 Ramniklal.Mistry@VerizonWireless.com

  2. Business Challenges for Oil & Gas • Decline in the price of oil - overall market volatility • Competitive market cutback strategies • Economic impacts • Increasing regulatory requirements • State-sponsored hacking and associated security risks • Increasing data needs

  3. Supply and Demand Demand Supply • US Production • US Inventories • US Shale BE Cost of $40 • US 1.1M Wells • No OPEC Production Cuts • Iraq/Iran • Russia • Venezuela • New discoveries and long lead projects • US: Solar and Wind • US GDP: 2.3% ave • China GDP • India GDP • Japan Negative GDP • Eurozone uncertainty • Electric Cars • Increasing vehicle mpg • Auto share and ride share programs • IoT and Workforce optimization

  4. Global Market by the Numbers: Supply & Demand

  5. Global Break-Even Costs

  6. US Oil & Gas Industry by the Numbers • 1.1M Oil and Gas Well Heads; 1,880 Drill Rigs • Petroleum and Natural Gas Extraction: • 11,500 companies(184,000+ Employees) • 352 companies with > 50 Employees (108,000 Employees) • 200,000 miles of crude oil and refined petroleum product pipelines • Pipeline Transport Companies: • 5,090 companies(72,000+ Employees) • 139 companies with > 50 Employees (32,500 Employees) • 38 Jones Act vessels (U.S. flag ships that move products between U.S. ports) • 3,300 coastal, Great Lakes and river tank barges • 200,000 rail tank cars • 144 refineries • 1,400 petroleum product retail, 100,000 tanker trucks, and 123,289 Convenience stores selling Gasoline • 475,000 storage tanks

  7. US Oil & Gas Industry Core Operations Transport Land Management Production/Storage Refine Drilling/Completion Transport Terminal Retail Seismic

  8. US Oil & Gas: Drilling and Well Completion • Drilling/Completion: • Cost to Oil & Gas company: $5M+ per Drill Rig per Well Head(s) • Drill Rigs • 6-8 weeks per well (mobile asset) • Typical deployment in rural areas • 25-30 people onsite from different vendors • 500MB/month/Rig • New development of Multiple Lateral Drills per pad site (2 to 24 drills per pad) • 10% to 20% estimated miss rate: miss pocket completely or hit the pocket partially • 50+ sensors per Rig collecting data: Power/Generators, Tank Levels, Gas emissions, Toxic compounds from drill site, etc. • Data stored locally on Hard Drive and then sent to Petroleum Engineers (90% of Rigs are not connected to the network)

  9. Mobile Communications Solution Mobile Communications Solution Dynamic Mesh • Cellular Only • Cellular Primary + Satellite Secondary

  10. US Oil & Gas: Transport • Green: Oil pipelines • Red: Natural Gas pipelines • Blue: Refined Petroleum pipelines • Characteristics of Crude Oil pipelines: • Up to 48 Inches in diameter • Flow rate of up to 510K barrels per day for Trans Alaska Pipeline System • Oil movement of 1 to 6 meters per second • Pinhole size leak at 1.5% of max flow rate for 14 days – 189K barrels of oil leaked (source PHMSA) Source: Theodora 160K+ miles of pipeline with an average of 1-2 sensors per mile

  11. Chevron Pipeline

  12. Requirements Improve efficiency with an end-to-end, integrated platform and solutions. Leverage expertise from consultants/professional services. Increase effectiveness by interpreting data correctlyin near real-time. Enhance operational efficiencies with mobile management and workforce optimization Protect all lines of business by managing risk across the board. Maintain compliance with strict security policies. Focus on core business.

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