Drillers warn of bandwidth bottleneck in Permian Basin
Increasingly reliant on digital tools, oil firms work to build communications infrastructure
At first, there were not enough pipelines to move oil and natural gas to market. Then, it was a lack of water for drilling and hydraulic fracturing operations. And then it was an insufficient number of disposal sites to handle all the wastewater from the oil fields.
Now, bandwidth — the capacity to transmit data over the internet — is poised to become the next big bottleneck in the Permian Basin, the nation’s largest and busiest oil field.
As the oil and gas industry becomes increasingly dependent on digital tools and automation, hundreds of companies are operating in remote areas where cellphone service and internet connectivity can be as sparse as the desert landscape surrounding them.
Cellphone carriers such as AT&T, Sprint, T-Mobile and Verizon provide service along major highways and plan to extend their their reach into the Permian’s expanse across West Texas and southeastern New Mexico, but energy companies say it’s not enough. Seeking to unlock the oil fields’ full potential and lower production costs through automation, oil and gas producers desperately want greater bandwidth, more broadband options and ultra-fast 5G wireless service that telecommunications companies are beginning to roll out — an endeavor that could cost billions of dollars.
“I can tell that we’re pushing major wireless carriers to see what options exist to essentially light up the Permian, but it’s a tough business case for them,” said Nick Pezirtzoglou, network
assets manager for the California oil major Chevron. “It would take a consortium of oil and gas companies all working together to ensure that there would be enough demand to merit the construction that would be required.”
‘More data than oil’
In the days before the widespread adoption of cellphones, field engineers and technicians would drive from remote wells to the nearest pay phone with a “greasebook” — an oil-stained notebook or clipboard filled with information about activity at a drilling site. The person with the figures would call the office and report the numbers scribbled on the smudged forms.
That has changed. If a site does not already have cellphone or internet service, staff members drive to the closest spot with a strong enough cellphone signal to electronically transmit figures from a laptop, tablet or smartphone. But cellphone dead spots are numerous throughout the 86,000-square-mile Permian Basin, where a recent report issued by state officials shows that the majority of rural residents in the region also live without highspeed internet service.
Tom Bonny, a digital oil field expert with the Houston office of the global consulting firm Deloitte, said oil and gas companies are becoming increasingly dependent on digital tools such as artificial intelligence and Internet of Things technology — which connects so-called smart devices and sensors through the internet. That allows the devices to be operated and monitored remotely as they gather data on activities and conditions above and below ground.
Drilling rigs alone are each estimated to produce more than 1 terabyte of data per day, roughly the equivalent of streaming around 400 hours of high-definition video.
“Operators in places like the Permian are starting to say that they’re producing more data than oil,” Bonny said. “That’s something to think about.”
As a result, major cellphone carriers are adding more towers in West Texas and southeastern New Mexico, including some that will be used to create a 5G network. The fifth generation cellphone network would allow for larger and more complex data such as video to be sent in the blink of an eye.
Some telecommunications companies are already thinking about more towers and services to improve coverage for their oil and gas industry customers. TMobile of Bellevue, Wash., began in July to provide high-speed network coverage in a 60,000 square mile area of the Gulf of Mexico, where oil rigs serve as their primary customers.
T-Mobile, which plans to roll out at nationwide 5G network next year, is eyeing similar opportunities in the Permian Basin.
“As oil and gas companies become more reliant on wireless service across their vast operations,” a company spokesman said, “T-Mobile is working with them to enhance their service.”
Private networks
In the meantime, Chevron and other large producers — including Exxon Mobil and the Houston companies Conoco Phillips, Apache Corp. and Occidental Petroleum — have built their own communications towers. Accustomed to drilling in remote areas of the world, the companies have come up with several ways to connect their wells with control centers. The Permian Basin is no different.
Chevron, for example, built private, high-speed wireless networks to support its operations in the Gulf of Thailand and Nigeria. In the Gulf of Mexico, the company joined a consortium with BP and other oil majors to build a “fiber ring” where they laid a fiberoptic-cable network underwater to connect offshore rigs with control centers onshore.
In the Permian Basin, Chevron has built temporary microwave towers equipped with transmitters and receivers that rely on microwave frequencies to send and receive data.
Although these towers allow Chevron to get the job done today, executives say the company will need more bandwidth to accomplish its future goals. During a speech in August at Summer NAPE, an annual conference held in Houston for exploration and production companies, Kim McHugh, vice president of drilling and completions, outlined Chevron’s plans to develop smart rigs in the Permian and beyond.
McHugh said future drilling sites will use sensors that transmit massive amounts of data to artificial intelligence tools, provide real-time analysis of activities and send alerts when maintenance is needed. Facial recognition will improve security while employees will use more Wi-Fi enabled devices and gear, such as virtual reality goggles.
But all that requires much greater bandwidth, which is scarce in remote places such as the Permian Basin.
“This is a problem that we need to figure out as an industry,” McHugh said.
Looking ahead
Not all companies have resources to build their own communications networks. Some smaller oil field services companies are filling the gaps for smaller operators.
TotalCom, a San Antonio company founded last year, specializes in trailers with portable cellphone towers and other communications equipment, is providing temporary cellphone and Wi-Fi service to a construction site in the Eagle Ford Shale and testing the equipment for a pipeline company in the Permian Basin. The temporary towers provide internet to a control room in a trailer and can provide Wi-Fi service up to a 10-acre footprint, said Weston Martinez, the former AT&T engineer who founded the oil field telecommunications company.
“I promise you that internet is the new water,” Martinez said. “We have to have bandwidth and flow in our internet. We have to make sure that you’re building a network that’s reliable.”
The Permian Basin produces an estimated 4.1 million barrels of oil per day, but no one knows how much data it produces. The industry and its advocates agree that digital technology is vital to lowering productions costs.
“Infrastructure is more than roads and pipelines,” said John Tinterra, president of the industry lobbying group Texas Alliance of Energy Producers.
A report in October from the Texas Comptroller of Public Accounts shows that state leaders are aware of a growing digital divide between urban and rural communities. An estimated 91 percent of residents in the incorporated areas of Harris County have high-speed internet service while the majority of rural residents in 35 out of the 61 counties that make up the Permian Basin do not have any access at all.
Realizing that lighting up the Permian Basin with more broadband options will cost billions of dollars, Chevron favors working through a consortium of oil companies, telecom firms and federal, state and local governments.
“We need to get more visibility on this issue,” said Pezirtzoglou, Chevron’s network manager. “When you look at the Permian, it has become a national asset. With all the production that’s happening there, not having the communications infrastructure to fully enable it would be a shame. More need to get behind this now.”