The Oil Drilling Automation – A Futuristic Solution for the Fast-Growing World
The oil drilling automation market is valued at US$350.683 million for the year 2020, growing at a CAGR of 10.14% reaching a market size of US$689.301 million by the year 2027. Oil drilling is a process by which a tube is bored through the surface of the Earth to pump out the oil reservoir. The process of oil drilling automation is centered on the entire process system which starts from well designing and planning to downhole activities. Oil is a major part of human life. A majority of human activities involve the use of oil in different forms, one such widely known use is fuel. To meet the rising oil demand, automation has become a necessity in the oil drilling industry. This has given rise to oil drilling automation techniques.
In simple words, oil drilling automation refers to a sub-process that involves operational as well as downhole activities that are needed for drilling oil from the Earth. The rising need for oil and the technological developments in the field of oil drilling has given a boost to the oil drilling automation market. The oil drilling process requires precision and efficiency, but most importantly it must ensure the safety of workers involved in the operation. Automation in the field of oil drilling can offer enhanced safety and efficiency along with an assurance of optimized surface activities. Hence, the combined system is required to understand the subsurface and its interactions with the drilling systems that operate under the surface.
Analysts anticipate that the market will rise due to rising excavation activities owing to rising oil demand.
The primary factor driving the oil drilling automation market is the rising need for oil which has resulted in increased exploration and excavation activities around the world. Rising demand is expected to drive automation and technological advancements in the oil drilling automation market. According to the EIA’s (Energy Information Administration) Short-term Energy Outlook released in September 2022, the global consumption of petroleum and liquid fuels is estimated to increase by 2.1 million b/d in 2023 to 101.5 million b/d. The high consumption has ultimately created higher oil demand which is playing a significant role in the development of new oil fields with enhanced safety and automation.
Furthermore, the abundant source of untapped oil resources in different parts of the world is also attracting these oil drilling automation giants to extract oil as well as profits. According to the estimates of the United States Geological Survey (USGC) report published in December 2021, the US Bakken and Three Forks Formation of the Williston Basin province, North Dakota, and Montana have 4.3 billion barrels of oil and 4.9 trillion cubic feet of gas. Also, in March 2022, the Energy Monitor reported that in the Russian Arctic more than ten million barrels of oil equivalent per day are expected to be extracted in 2022. These new oil discoveries and huge oil extractions by the oil drilling giants are boosting the oil drilling automation activities in the market.
The high upfront costs act as a challenge in the oil drilling automation market
The oil drilling automation process is complex and time-consuming. It requires a large number of investments to install both hardware and software solutions. The initial costs are very high as it involves building the whole infrastructure, installing hardware and software, etc. Furthermore, the maintenance and running costs add up to the total costs, which further increases the cost burden on the end users. Moreover, the software involved in oil drilling automation operations needs to be updated for smooth and proper functioning. The updating process brings up the costs of upgrading the software and training workers on how to use the upgraded version of the software, and it further affects the regular operations of the organization. For instance, due to the training, the regular work hours are diluted into training hours and work hours, the regular operations are slowed down and the learning curve effect on the new system further impacts the operational efficiency of the worker.
Additionally, these systems are complex, hence it requires qualified and well-trained workers and operators. It also requires sophisticated instrumentation to ensure adequate service which further increased the overall costs to the company. Thus, the overall high costs and complex processes involved in the automation lead to limited growth for the oil drilling automation market.
During the forecast period, the analyst anticipates that the software segment is expecting significant growth.
The oil drilling automation market is segmented into hardware and software based on the offerings. According to the analysts, the hardware segment is expected to account for a sizeable share. While, on the other hand, the software segment is expected to show vigorous growth owing to the growing investments and technological advancements in the market during the forecast period. For instance, eDrilling, a software company based in Norway secured funding from the Research Council of Norway for a good software study in October 2020. Furthermore, the company introduced a software solution for real-time drilling parameter optimization named as wellGuide, in June 2022. The software solution provided by drilling is designed for rigs where an automated drilling upgrade requires a heavy investment or rigs that need drilling advisory systems to optimize their operations. The wellGuide software solution helps in achieving automation, better performance, and avoidance of non-productive time in drilling and energy operations. Such technological advancement coupled with the development of software is expected to propel the oil drilling automation market.
The outbreak of the novel coronavirus had a significant impact on the oil drilling automation market. The overall market and industries were temporarily shut down due to pandemic restrictions. As a result, industrial capitalistic behavior was restricted. The focus of industries shifted to operational activities and capital expenditure was restricted during the pandemic. The primary factor involved in the downfall of the oil drilling automation market was the reduction in oil and gas demand. Owing to the industry-wide shutdowns coupled with operational discrepancies the overall oil and gas demand significantly decreased during the period. Furthermore, the pandemic led to a slowdown in production and mobility worldwide, producing a significant drop in global oil demand. As per the IEA Oil Market Report July 2020, the global oil supply fell by 2.4 mb/d and the global oil demand fell by 16.4mb/d owing to the lockdowns imposed due to COVID-19.
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