Oil rig is a large structure of equipment that is used for the purpose of drilling deep holes in the earth’s subsurface in order to extract crude oil. Dependence on the manual process can lead to performance inconsistency and variance in oil rig operations.
Thus, digital oil rig is an innovative step aimed to get data driven operational support and curb drilling inefficiencies
The oil & gas industry is implementing IoT (Internet of Things) solutions across the value chain to enhance resource management and operational efficiency, enable faster decision making, and control & reduce operational costs
Industrial IoT is enabling implementation of advanced energy production and distribution technology, management, and services, while leveraging existing investments in infrastructure and operations
Volatility in crude oil prices is a major driver of the global digital oil rigs market. Demand & supply scenario and geopolitical instability has driven oil prices in the past. Decline in oil prices is a result of low demand and high supply of crude oil. For instance, increase in crude oil output from the U.S. along with geopolitical issues among OPEC (Organization of the Petroleum Exporting Countries) countries, Iran, Russia, and the U.S. led to a decline in crude oil prices from US$ 110 per barrel to US$ 26 per barrel in early 2014.
Low prices of crude oil result in high losses for the crude oil industry, as their exploration and production requires high CAPEX and OPEX investment, which is recovered if minimum oil prices are US$ 50 per barrel or above. However, these prices have driven the industry to optimize its resources. This has resulted in the adoption of IoT (Internet of Things) in the industry in all its operations to provide real-time data for analysis and data modelling for faster decision-making and optimum utilization of resources. Thus, volatility in oil prices is expected to fuel the adoption and implementation of digital oil rigs during the forecast period.
Process and environment safety is also a key driver of the global digital oil rigs market during the forecast period. Processes in oil & gas drilling are critical; a small human error can lead to loss of property and life, along with damage to the environment. For instance, the British Petroleum oil spill in the Gulf of Mexico caused damage to the equipment and the marine ecosystem. Oil companies have to pay huge compensation and penalties for any such accidents, which not only effect their profitability, but also deteriorate their creditability. However, adoption of digital oil rigs can help avert these situations by eliminating the human factor in the process, resulting in safer and low-cost operations. Furthermore, IoT (Internet of Things) improves a company’s creditability.
Many countries in the world are shifting their focus from fossil fuel to renewable energy sources to lower the detrimental effects of global warming. Thus, less consumption of fossil fuels is expected to hamper the global digital oil rigs market.
COVID-19 Impact Analysis on Global Digital Oil Rigs Market
Governments of several countries across the globe have imposed stringent lockdowns to limit the spread of the coronavirus. Movement of individuals and economic activities, related to goods and services, have come to a halt because of lockdowns. Supply could not adjust to the drop in consumption. This resulted in considerable buildup of crude oil in storage. Low prices and unprecedented drop in demand has created difficulties for the downstream sector in regions with unfavorable production economies. This unprecedented situation hampered the investment in oil & gas industry, thereby adversely affecting the global digital oil rigs market.
Digital Oil Rigs Market: Segmentation
The global digital oil rigs market can be segmented based on solution, type of oil rig, and application
In terms of solution, the global digital oil rigs market can be segregated into hardware, software, and services
In terms of type of oil rig, the global digital oil rigs market can be classified into jack-up rigs, semi-submersible platforms, drillships, and others
In terms of application, the global digital oil rigs market can be bifurcated into onshore and offshore. The onshore segment is anticipated to expand at a faster pace, as onshore drilling entails lower operating cost as compared to offshore drilling.
In terms of region, the global digital oil rigs market can be split into Middle East & Africa, Latin America, Asia Pacific, Europe, and North America
According to Rystad Energy, well service spending is expected to rise to US$ 54 Bn in 2021 from US$ 50 Bn in 2020 in North America. Thus, North America is expected to lead the global digital oil rigs market during the forecast period. Growth of the digital oil rigs market in North America can also be ascribed to the increase in investment in IoT (Internet of Things) in the region, especially in the U.S.
According to the Oil and Gas Journal, well intervention in Middle East & Africa is anticipated to rise at a faster pace, with around 10,000 active offshore wells on oil fields with average well age of 16-21 years compared to average well age of 10-15 years in other regions. Thus, growth of the oil & gas industry and rise in investment in digital oilfields are anticipated to drive the digital oil rigs market in the region during the forecast period.
0 Comments