The oil drilling automation market is evaluated at US$486.688 million for the year 2019 growing at a CAGR of 10.01% reaching the market size of US$862.494 million by the year 2025. Oil drilling automation refers to the automation of sub-processes of operational as well as downhole activities that are necessary for the drilling of oil. In other words, it refers to the integration of surface and downhole measurements with the help of modernized machinery, systems as well as predictive models to improve operational efficiency in a cost-efficient and effective manner. There are growing requirements of safety as well as efficiency during the drilling process, thus, these tools and equipment further offer enhanced safety and efficiency with the help of predictive tools and models. Automation of drilling are being increasingly adopted due to the fact that it also helps to optimize the surface activities. For this, a combined system is required with a comprehensive understanding of the subsurface and its interactions with the drilling systems that operate under surface drilling.
The market for oil drilling automation is being primarily driven by the fact there has been a significant increase in the exploration activities owing to the increased demand, which is anticipated to be one of the prime factors that are expected to supplement the demand for automation solutions in oil fields. Furthermore, the increasing focus on the development of new oil fields with reduced risks and enhanced safety and efficiency is a major factor that is paying a significant role in shaping up the market growth throughout the course of the next five years. Additionally, the up-gradation of the existing infrastructure in the oil fields coupled with the growing penetration of automation processes across several industry verticals is further bolstering the oil drilling automation market growth throughout the forecast period.
However, the market may be restrained by the fact that the initial upfront costs of these solutions is further leading to a reluctance in the adoption of these solutions. Also, the risk of security coupled with the volatile nature of the oil industry are some of the additional factors that are projected to inhibit the market growth. Furthermore, the outbreak of COVID-19 is considered to be a major factor that is expected to hamper the market growth during the short run due to the fact that in many parts of the world the capital expenditure spending on oil and gas has been negatively impacted due to economic crisis. Also, the halt in industrial manufacturing further led to a decline in energy demand as well, which further led to a decline in the production.
High Upfront costs
The initial requirements and the time consumed for the installation of both hardware and software solutions are comparatively high. Thus, making the firms reluctant towards the adoption of these solutions since they have been operating without these solutions as well for many years. Also, the maintenance, as well as running costs, are also added up to keep them working constantly. Moreover, costs regarding the software used also adds up to the cost burden of the end-user which uses them, thus restraining the market growth. Thought, these solutions often offer operational efficiency, these also add up the operating costs as workers with special skill sets are also required to read and analyze the predictive models and data which is generated. Many times maintenance costs might exceed the revenue generated, hampering the growth of the market. Furthermore, any breakdown or downtime in the system or machinery may further led to an increase in the overall cost burden of the company. Furthermore, any machinery breakdown or downtime further leads to an increase in the burden of cost over the company. The systems used for these solutions are quite complex which further requires sophisticated instrumentation to ensure that adequate service is delivered. Thus, a highly complex process coupled with heavy initial capital requirements for the automation of the oil drilling process has led to a limited number of players in the industry who are venturing into the market, leading to restricted product options and limited market growth during the given period.
Outbreak of COVID-19
The recent outbreak of the novel coronavirus disease is projected to hamper the market growth to some extent during the short run. The major factors responsible for the slump in the market growth include the reduction in the capital expenditure due to the global crisis caused by the coronavirus disease.
The graph above represents the investment spending in oil and gas upstream that showed a constant increase after the year 2016 and a sharp decline in 2020 is observed. Also, a significant decrease in the oil demand and prices was observed as transportation as well as several industrial sectors were not operating. This, further led to an increase in the supply due to which the operations across the oil sectors were temporarily suspended in many parts of the world. Also, the economic crisis in many countries of the world further led to a decline in the production output as economies aren’t able to support ongoing operations due to the build-up of oil stocks further saturated the storage capabilities in some parts of the world.
Onshore to hold a considerable share
By application, the segmentation of the oil drilling automation market has been done into onshore and offshore. The onshore segment is projected to hold a considerable share in the market owing to the fact that onshore oil production dominates the offshore drilling and accounts for a larger share of oil production at the global level. Also, the increased spending on onshore oil explorations is a key factor supplementing the onshore oil drilling automation market growth in the coming five years. For example, the Oil and Natural Gas Corporation of India announced an investment worth ?3,500 crores onshore oil exploration project in Assam in December 2019. However, the offshore segment is expected to witness a promising growth in the near future.
Software to show healthy growth
By offering, the market has been classified into hardware and software. The hardware segment is expected to hold a decent market share throughout the forecast period primarily due to the considerable high costs. Also, the growing investments in automation technology further support the growth of this segment during the course of the next five years. The software segment is projected to witness a significant market growth during the forecast period due to the growth in the spending of automation solutions due to their cost-effectiveness and safety. The software consists of systems that convert the collected information into meaningful data. Also, growing investments by major market players in the adoption of advanced automation solutions further show the potential for the market to grow in the coming years and thereby propelling the business growth opportunities for the market players over the next five years. For example, in June 2019, British Petroleum, one of the worlds leading oil and gas company based out of London, announced the implementation of a NOVOS™ platform, downhole drilling dynamics tools, drilling apps, and wired drill pipe in BP Alaska as a part of the automation package offered by National Oilwell Varco. The company aims to achieve the potential of this technology and move a step closer to drilling automation.
North America to hold a considerable share
Geographically, the market has been distributed into North America, South America, Europe, Middle East and Africa, and Asia Pacific. The North American region is expected to hold a considerable share in the market due to the fact that the region boasts about being the early adopter of technology coupled with the presence of a world-class infrastructure across the oil and gas industry. The Asia Pacific region is expected to witness a promising growth during the forecast period. The presence of the world’s fastest-growing economies such as India and China among others coupled with the increasing expenditure in the oil exploration sectors in these countries further support the oil drilling market growth in the APAC region throughout the forecast period.
Prominent/major key market players in the oil drilling automation market include ABB, Emerson Electric Co., Huisman Equipment B.V., and Sekal AS among others. The players in the oil drilling automation market are implementing various growth strategies to gain a competitive advantage over its competitors in this market. Major market players in the market have been covered along with their relative competitive position and strategies and the report also mentions recent deals and investments of different market players over the last few years. The company profiles section details the business overview, financial performance (public companies) for the past few years, key products and services being offered along with the recent deals and investments of these important players in the oil drilling automation market.