When Digital Ambitions Meet Analog Realities: The True Cost of Modernizing Oil & Gas Infrastructure

When Digital Ambitions Meet Analog Realities: The True Cost of Modernizing Oil & Gas Infrastructure

AI, automation, and digital twins are poised to transform oil and gas operations, but many facilities still run on outdated infrastructure. During the session “Smart Operations in Oil and Gas: Leveraging IIoT for Efficiency” at IIoT World Energy Day 2025, speakers outlined why the digital revolution stalls at the wellhead for many operators.

Legacy Systems: The Unseen Roadblock

Jonathan Morgan, COO and VP at Jay-Bee Oil & Gas, highlighted that much of the sector’s infrastructure predates digital technology. Equipment is often 20–30 years old, built on long amortization schedules, and difficult to upgrade. “What we might think is commonplace now didn’t exist then,” Morgan said, explaining why sensor data is often missing or unreliable.

Mismatched Data and Field Reality

Even basic upgrades are hindered by poor documentation. In one example shared by panelists, operators discovered during a sensor rollout that pipeline diagrams didn’t match real-world layouts. The result: costly on-site inspections and project delays. Dominique Meyer, CEO of Looq AI, added that outdated blueprints are often inaccurate, leading to safety and operational risks when deploying new technologies.

The Integration Challenge

Retrofitting older equipment isn’t just expensive—it’s technically complex. Todd Slind of TRC noted that many legacy systems lack digital outputs entirely, requiring manual tagging, custom connectors, and data normalization. He stressed the need for a full data lifecycle approach, from collection to visualization, to make IIoT implementations viable.

ROI vs. Reality in the Field

For smaller or low-output wells, even minor monthly costs can tip them into unprofitability. Morgan explained that for marginal wells, “$5 a month for something might not seem that outrageous, but it might actually be what tips them into non-economics.” This means companies must carefully prioritize where retrofits are worth the investment.

Smart operations require more than smart tools. They demand a foundational layer of accurate, accessible, and standardized infrastructure data—something that many brownfield sites still lack. Until that gap is closed, true automation at scale will remain out of reach for much of the sector.

This article was written based on insights from the “Smart Operations in Oil and Gas: Leveraging IIoT for Efficiency” session, presented during IIoT World Energy Day 2025.

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