How the IoT Is Collapsing Different Oil and Fuel Theft Methods

The Internet of Things is helping the oil industry monitor the movement of crude oil and its products, even from remote locations.
Published: October 6, 2019

Oil theft is one of the biggest hiccups that affect the oil industry drastically in terms of financial losses. Since oil and its refined products are fungible substances, it is very easy for thieves to steal them without being detected. Around $133 billion worth of oil is stolen annually and sold illegally on the black market. This crude oil is then processed in artisanal refineries to produce low-quality petroleum products.

Due to artisanal refining techniques and oil smuggling, the price of petrol and diesel is continuously soaring. Oil spills caused by improper oil extraction and transportation methods contaminate the environment to a large extent. These implications may become severe based on the method that thieves use to steal oil. Pipeline vandalism and illegal oil bunkering are among the methods that thieves use to steal fuel. Oil companies need to take preventive steps to ensure that petroleum-based products remain secure.

The Internet of Things (IoT) is one technology that is helping the entire oil industry to monitor the movement of crude and its products, even from remote locations. The IoT is a network of objects connected with each other over a wide area. The objects are integrated with technologies that allow them to share information and transmit data to distant locations.

Its implementation is helping oil refineries and companies to tackle financial losses and meet the demands of end consumers. With collective usage of traditional oil dyeing or molecular marking methods and the Internet of Things, oil-stealing practices can be tackled. Let’s examine several methods that thieves use to steal oil, and the ways in which they can be countered:

Pipeline Vandalism and Tapping
Pipeline tapping is one of the major challenges that oil refineries face. This method is mainly prevalent in African countries. In Nigeria alone, oil pipeline vandalism has increased by 77 percent within a single month. “Oil mice” (thieves) drill a hole in a pipeline and install illicit taps to divert oil and other refined products.

Since pipelines are buried in complicated and remote geographical locations, it becomes very difficult for refineries to keep an eye on them. Also, pipelines can run for several kilometres, making inspection and maintenance tasks more complex and rigid. Oil mice take advantage of these complexities and flee undetected with the stolen oil. Sometimes, these practices result in sudden explosions and fire, which cause human casualties, pipeline damage and environmental contamination.

Current oil theft prevention systems for pipelines operate on the principle of pressure difference. Pressure sensors are placed at a pipeline’s entrance and exit. In the event that someone drills a hole in the pipeline, the pressure at the exit port decreases and an alert is raised. The problem with this system is its inability to tell the exact position of tapping. In addition, such a system is incapable of detecting minor leaks.

IoT-powered fuel theft prevention system help oil companies to keep real-time surveillance on their pipelines. Sensors, cameras and remote terminal units automatically sense and capture images, videos and other in situ signals as soon as oil mice try to tap a pipeline. These signals are then transmitted to the authorities via a network, giving them enough time to take preventive steps.

Illegal Bunkering
The oil-carrying capacity of oil vessels can range from 500,000 to 4,000,000 barrels of oils. These vessels are designed to carry crude from one location to another. They act as a cheap and simple mode of oil transportation and their influence on the oil industry cannot be underestimated.

However, many oil tankers are being used for practices related to illegal oil bunkering. Thieves who steal crude from pipelines often sell it to oil tankers at a low price. The tankers then carry the stolen oil to refineries and sell it as a legitimate product for a good profit. Sometimes, tankers transfer the oil to a more reputable ship so that the oil can be easily imported to more profitable areas.

Even though methods like dyes and molecular marking are being used to prevent fraud and to easily identify oil, they in no way help in preventing fuel robbery. Moreover, some dyes are being replicated by criminals for simple oil smuggling.

With the use of the IoT and a GPS-based monitoring system, the positions and movements of tankers can be monitored from a far-off location. And with a highly scalable fleet-management system, such tracking can be extended to a large number of ships. A fleet manager receives an alert if a vessel changes its course or takes long breaks during its journey.

Tanker Transportation
Oil tank trucks and tankers are used to transfer petroleum products from refineries to petrol pumps. Truck drivers often partner with thieves and empty the tankers’ contents into their containers. To make up for the lost fuel, the drivers then add kerosene with petrol or diesel in the tank and sell the combined fuel to petrol pumps. Due to such adulteration, the engines of automobiles using this fuel becomes damaged, resulting in over-emission of harmful gases.

IoT implementation helps oil companies to develop a robust monitoring platform that lets them track the movement of fuel across vast distances while ensuring its quality. With the use of various sensors, different attributes—such as the volume and quality of oil or fuel—can be monitored by the oil companies.

The sensors attached in the tanker continuously measure the volume of fuel, forwarding this information to a centralized platform, along with other parameters. An alert is also transmitted to the platform hub via a network if the level of fuel decreases within the tanker. This helps oil companies to confirm that the fuel reaches its destination without any complications.

Oil thievery has become a practice that results in the illicit movement of billions of dollars’ worth of fuel. It affects the process of crude exploration, transportation and refining. Oil and fuel theft security is thus one of the most prominent aspects that the industry needs to work upon. Various social, economic and environmental challenges associated with oil can be tackled with use of the Internet of Things. Implementations of the IoT in this sector have brought in capabilities related to real-time monitoring and analytics. The IoT’s applicability in the fuel theft prevention field has enabled oil refineries and companies to ensure the protection of crude and petroleum products.

Sanjeev Verma is the founder of Biz4Intellia, one of the leading IoT development companies in the United States. He is extremely passionate about the Internet of Things and explores the possibilities unleashed by the IoT on a constant basis. At Biz4Intellia, Sanjeev’s concrete focus is on building a rapid growing, market-driven organization that delivers influential IoT business solutions.