Cloud computing has worked its way into even the most down-to-earth of industries – oil and gas exploration and production – and driven the need for wireless access in remote drilling landscapes.
ERF Wireless has found a niche serving the oil and gas industry by providing wireless coverage in rural parts of the country, with service and coverage tailored to unpredictable oil rig movements and intermittent needs at far-flung sites with little-to-no infrastructure. Using specially designed “cell-on-wheels” towers that the company calls mobile broadband towers, ERF hauls its MBTs out to follow drilling rigs, which often move to different sites every two weeks, said Dr. H. Dean Cubley, president and CEO of ERF Wireless. The towers are powered by generators at the drill sites and provide wireless access for remote monitoring of drilling progress.
Cubley said that ERF Wireless’ extensive rural network for the oil and gas industry “is the biggest in North America, by far, even when you consider Sprint, AT&T or Verizon. We have more coverage in the oil and gas production areas than any of those.
“It’s a little hard for some to fathom, but [the national carriers] are covering mainly along the interstates and cities,” Cubley added. “Our network is out in the areas where the oil and gas exploration is really going on.”
The company, which was founded in 2004, and began serving oil and gas customers in 2008, provides network coverage across 450,000 square miles in Texas, New Mexico, Louisiana, Oklahoma, Kansas, Arkansas, Colorado, Montana, North Dakota and Wyoming. ERF Wireless began with the goal to acquire a selection of rural wireless ISPs, and has acquired 16 of them over the past five years.
Rather than focus its efforts on the residential ISP market – which even in rural areas can be competitive, Cubley said – ERF bought a WISP with intellectual property in serving regional banks. Then the financial crisis hit in 2008 and that market went flat, the company began looking at serving the verticals of healthcare, education, and the oil and gas industry in rural markets. About 67% of its business currently comes from the oil and gas vertical.
The demand that ERF Wireless meets is largely driven by cloud computing advances in the oil and gas industry, Cubley said. Traditionally, an oil company would send a geologist out to a site to monitor data coming in from the drilling rig; now, sophisticated computer programs can transmit the data to a geologist in a central office who can monitor several sites at once. But that requires wireless access at the drilling site and a low-latency connection, Cubley said.
“For exploration analysis and to help them make drilling more efficient, they need these extensive programs to run over a communications platform,” Cubley said. “And they have become so large, and the programs require so much bandwidth, that it becomes very expensive to run over VSAT, if it even works.”
Satellite has been the traditional mainstay, but Cubley said that ERF’s connections offer lower latency and cost than satellite – although the company does also rely on satellite as a back in geographically difficult coverage areas.
Cubley said that despite the challenges of serving the oil and gas vertical, the margins are attractive. For the same amount of data that a WISP could charge a residential customer perhaps $40 per month, ERF can offer basic connectivity for about $100 per day and as much as $300 to $400 depending on the level of additional services that the company provides. That level of service is another advantage over national carriers, Cubley said; ERF offers add-on such as an on-site wireless intercom system and guarantees that a technician will be on-site to address any issues within four hours, even at the most isolated locations.
The company’s growth reflects its success in the vertical. While still a small company with fewer than 100 employees, ERF expects to earn about $8 million in revenue this year – a figure that is rapidly growing. It’s revenues for the third quarter were up 51% year-over-year; for the oil and gas subsidiary alone, the increase was 92%.
