Tag team travails

January 5, 2010

Its boosters say radio frequency identification (RFID) technology, which is gaining wider acceptance in retail and other industries, offers cost-effective and convenient applications for oil & gas companies, particularly in tracking assets. So why has the industry been slow to adopt RFID? Russell McCulley talks to experts about the emerging technology's promise, and efforts to expand its use offshore.

It's hardly what might be considered an emerging technology; radio frequency identification, or RFID, has been around in some fashion for decades, and some companies have used the technology to track assets or reusable containers. But the cost of the technology – which involves individual 'tags' that contain a transponder and are capable of storing information about a product and its movements through the supply chain, along with a device to wirelessly retrieve the data – has hindered its growth. For an inexpensive product, such as a bottle of shampoo, RFID is a great way to keep track of inventory, but the price of the tag might represent a big chunk of the total retail price. Paradoxically, the industry needs to grow in order for tag prices to drop low enough that they could be considered disposable.

The Auto-ID Center at the Massachusetts Institute of Technology, which has been working with private industry to develop a low-cost RFID tag, has maintained that tags could cost as little as five cents each when some 30 billion are consumed annually, giving tag manufacturers the scale needed to bring the price down. The catch, of course, is that usage will never approach that level as long as the tags remain costly: today, 'passive' RFID tags, which do not contain an energy source but are activated by a reading device, cost between $0.20 and $0.40.

In 2003, Wal-Mart gave the effort a boost when the retail giant announced that suppliers would be required to use RFID tags on cases and pallets of goods, starting in 2005. The controversial move angered some suppliers – and alarmed some customers, who thought the technology could be an invasion of privacy – and Wal-Mart has yet to fully implement the plan. But the requirement has helped accelerate interest in the technology. Around the same time, other factors came together to make RFID a hot topic: advances in ultra-high frequency (UHF) RFID systems increased the read range needed for supply chain applications; the development of open standards that allow different companies in a supply chain to read the tags; and the growth of the internet, which companies can use to identify and track products in the supply chain.

A few years ago, researchers from Texas A&M University teamed up with service providers and subject experts to explore and promote RFID applications for the oil & gas industry. Dubbed the Oil & Gas RFID Solutions Group, the consortium hopes to encourage adoption of the technology while dispelling some of the misconceptions surrounding it. Texas A&M professor Ben Zoghi , who is also director of the consortium, says some of the skepticism in the industry can be traced to the Wal-Mart initiative and subsequent backlash. The company didn't collaborate effectively with vendors, he says; at the same time, RFID proponents were making claims that then were false or misleading – that the technology could work in water or through metal, for example – while skeptics fanned privacy fears. 'So it kind of backfired,' Zoghi says. 'There was a lack of technological advances, there was a lack of effective communication, there was a lack of education. Suddenly, the customers were scared to death that, “hey, if I buy a Gillette with an RFID tag, the US government can follow me all the way to my house.” Which was ridiculous.'

The technology has evolved of late, he says, so that it's possible to read tags on metal cans that contain liquid, and at greater distances. And active tags, which contain their own power sources, can broadcast a stronger response signal with a greater read range. 'The oil & gas industry has a lot of need for the technology,' he says. But cost remains an issue for some companies; specialized tags that are suitable for offshore environments are relatively expensive, but like passive tags used in retail applications, are likely to drop in price considerably as standards are settled upon and competition increases among manufacturers, Zoghi says.

'One of the challenges we have right now is the lack of a standard, especially with active RFID,' he says. 'And when there's a lack of a standard, everyone is implementing their own solution, so we don't have a universal solution. That means a tag, rather than being a dollar, is ten to twenty dollars today.' As with the MIT group's joint effort with Wal-Mart and other companies to develop a standard for passive RFID tags, industrywide standards for oil & gas applications would make the tags more a commodity rather than specialized hardware, and thus bring down the price. 'As much as Wal-Mart gets punished for pushing this too early,' he says, the effort did lead to the development of a standard for passive tags. 'And that's helped the industry a lot.' Passive RFID technology is being used offshore to track the movement of goods at critical points in the supply chain. But complex, expensive projects require a higher level of automatic identification, Zoghi says. 'Offshore, you need active RFID for a real-time location system. Contractors, expensive equipment – you really want to know where they are at any given moment.'

Passive and semi-passive tags, which contain a power source but require a reader for activation, have found their way into oilfield applications, however. The technology is being used to track the flow of materials through the supply chain, and a few majors are conducting trials with drill pipe outfitted with RFID tags built to withstand high temperature/ high pressure environments. The tags could help ensure proper drill string composition, pinpoint location of stored pipe and provide a history of its use, says Sam Falsafi , oil & gas principal at Shipcom Wireless. 'There are two worlds you are serving' with RFID, he says. 'One is the entire supply chain – enhancing supply chain transaction by gluing together the pieces of information that make sense using this technology. And the second category is actually enhancing inspection, repair and maintenance operations, which is the core business of some O&G service companies.'

The technology could help automate many inventory operations that are now largely done by hand, Falsafi says. 'To make sure you have the right materials that are supposed to go to the right job in the right container is actually a very valuable monitoring system that could help companies. But the fact is that people log in the information after (the shipment) takes place, and this is where you are vulnerable to mistakes,' with data not reaching 'the right desk' or being entered erroneously, he says. RFID can also provide a digital 'time stamp,' Falsafi says, which can cut down charges for rental tools. 'With rental tools, you want to know exactly when the clock starts,' as well as when work ends and the equipment is awaiting pickup, he says. Tags can also help suppliers quickly distinguish their equipment from that of others, reducing the chance of mix-ups.

One of the more promising areas for RFID is in subsea applications, where research is helping the technology overcome some challenges presented by water and pressure. Divers can use a hand-held reader to identify sections of pipelines or other offshore infrastructure in need or inspection or maintenance; proponents say RFID offers an advantage over bar code tagging because the tags can be read in places where algae buildup or other obstructions inhibit visibility. Pilot programs in the Gulf of Mexico and offshore Brazil are exploring the viability of ROV-mounted RFID readers for identifying wellheads in deepwater fields, Falsafi says, and the RFID consortium is working with majors to agree on a standard for identifying wellheads and other equipment.

'The standard that we're talking about in oil & gas is not a physical standard or a frequency standard,' he says. 'We're trying to work on a software standard. What we're saying is that if we're going allocate an ID for a type of tag – let's say wellheads – if we can find a way to identify wellheads in the world with the same identification number, at least the first ten or 12 digits, and then leave the other digits for manufacturers to put their own numbering, we now have a common ground where we can say, no matter what wellhead manufacturer provides this, you can now track and trace because of that unique, specific number.' The RFID Solutions Group is encouraging five large operators 'to look at this and create a program where they can start pushing it toward their suppliers or vendors and have them engaged, sort of like the Wal-Mart model,' he says. 'The mission of the consortium is to create visibility and value across the industry for this type of technology.'

For now, asset tracking is getting the most attention from the oil & gas industry, says Mark Roberti , founder and publisher of RFID Journal. 'Asset tracking is kind of a no-brainer,' he says. 'If people are spending lots of time looking for parts, it can delay production and cost labor. If you can find things very quickly and accurately, you can keep pumps pumping and you don't spend a lot of labor looking for things.' Yet many in the industry remain skeptical about the technology's cost and reliability. 'There's been a lot of misinformation, a lot of disinformation,' Roberti says. 'A lot of people are threatened by new technology, so they put out a lot of bad information. One myth, for example, is that RFID doesn't work around metal, which would be a big problem in the oil industry. But RFID can work very well around metal. It requires some specialized tags, but they're coming down in price, and can deliver upwards of 100 meters of read range for a passive tag, which two or three years ago was unheard of. So some of it is old information, and some of its deliberate misinformation.'

RFID technology is maturing quickly, he says. 'It is relatively immature compared to other technology, certainly to bar codes, but the quality of the systems, the cost of ownership and the ability to install them quickly is all improving very rapidly. I think the biggest problem the industry faces is not having integrated solutions that are ready to deploy from day one. It still requires, in most cases, working with a systems integrator, choosing a tag provider, choosing a reader provider, choosing a software provider and then integrating the whole thing. There are very few folks out there who can say, look, we have all that, we can track all your stuff going out to the rig with this automated solution and we can deploy it in a week.'

That's one of the goals of the Oil & Gas RFID Solutions Group, says Zoghi. 'The industry has asked us to show them a complete solution that is completely integrated.' But he says the consortium is not in the business of picking winners and losers in the race to standardize RFID for oilfield, but rather to educate and encourage the technology's use. Which RFID providers emerge as industry leaders 'is not really up to us at the end of the day,' he says. 'It's up to the customer to choose a solution.' OE

A Savi solution . . .
Savi, a Lockheed Martin company, formed a strategic alliance with Shipcom Wireless and KBR Wireless to deliver a software solution that links with RFID technology to track and manage supplies transported between onshore and offshore oil & gas facilities. Savi said in a release that the package can cut costs, prevent theft and reduce data errors, and improve regulatory compliance 'by automating visibility, asset and shipment management in upstream operations.' The alliance is an effort to address one of the obstacles to widespread adoption of RFID technology in the oil industry: the need for an integrated solution that brings together hardware and software. The combined solution is underpinned by Savi's SmartChain Enterprise Platform and Asset Management application, and leverages real-time data from Savi's RFID tags and KBR's passive RFID tags. The tracked supplies include consumable goods, risers, choke valves, wire rope, stud tensioners, slings and wellheads, as well as containment and transport units. Savi and Shipcom developed integrated software to process and manage the RFID data.

. . . a suite deal . . .
Global Satellite USA launched what the company claims is the first digital voice and data solution customized for a commercial boat or offshore application. The system integrates with a satellite phone, a BGAN or Fleetbroadband system, SatCollect, Internet, wireless and GSM networks, Global Satellite said in a release. The Satellite IP PBX system uses a category 5 cable to provide voice, data and power, reducing the amount of cable and weight onboard, and allows unlimited extensions, conference calls, phone and high-speed Internet with multiple users. 'The applications are endless, but with our Satellite IP PBX you really could run your business from the boat,' said Global Satellite CEO Martin Fierstone.

. . . and new digs
Communications and navigation systems provider Furuno announced the launch of the Furuno Broadband Service Center (FBS), which will be charged with the development, expansion and maintenance of the company's satellite communications activities. FBS will be located at Furuno's Danish subsidiary in Copenhagen and will be the coordination center for subsidiaries and clients in Europe, the Middle East, Africa and North America.

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