The global market for the Internet of Things (IoT) in oil and gas is expected to reach to US$30.57 billion by 2026, growing at a compound annual growth rate (CAGR) of 24.65 per cent during the forecast period from 2017 to 2026, according to a new market intelligence report by BIS Research.
The forecast is based not on a recovery of oil prices but rather on the need to cut costs through efficiencies through the lower for longer price environment, something the digital oilfield can help companies accomplish.
Low prices of crude oil, growth in the demand for electric vehicles, increased production of shale oil in the U.S., decreased demand rate of crude oil in China and the prospect of an increased supply from Iran are driving the oil and gas industry to focus on increasing operational efficiencies, improving asset performance and management, and maximize capital productivity, according to the Bloomington, Minnesota-based B2B market intelligence and advisory firm.
Usage of IoT technologies and solutions can enable the oil and gas industry to overcome these challenges in an effective manner. The collected and analyzed data can benefit the industry with various operational processes such as production optimization, asset maintenance, business operations and supply chain, among others. There is an impending need to monitor these business operations and optimize them to increase the efficiency of the process and reduce operational costs, BIS Research said.
There is substantial fuel loss throughout the supply chain, i.e., upstream, midstream and downstream, which results in financial losses, BIS Research noted, while a shortage of skilled labour in the near future and an increasing number of cyber attacks are expected to drive the market for IoT in the industry.
Privacy and security concerns related to data, coupled with the lack of technical expertise and awareness are some of the constant challenges for the effective implementation of IoT projects. The growing interconnection of IoT devices actively provides various channels for the hackers to peep into the other systems through various decentralized entry points.
Moreover, different layers of software, application programming interface, and machine-to-machine communication create more complexity as well as risk in terms of security. Owing to this, oil and gas companies are reluctant to invest in IoT projects. This has created a viable opportunity for service providers, consultants and niche analytics players to make profits from oil and gas industry, the firm said.
Next generation devices such as wireless networks, edge computing devices and digital core platforms, among others, are expected to revolutionize the oil and gas industry in the coming future, it concludes.
“Reduced crude oil price per barrel has compelled the oil and gas industries to improve operational efficiency which is expected to drive the need for IoT solutions at a high growth rate of 24.65 per cent. Recent partnerships between many companies and new product launches are expected to expand and diversify product portfolio for oil and gas industry,” Ankit Agarwal, an analyst at BIS Research, said in a statement.
“For instance, Hitachi in 2016 launched an open and adaptable software architecture, Lumada, which created IoT solutions for a range of industrial applications including oil and gas. With increasing levels of interest of oil and gas companies towards analytics, platforms and analytics together will be the major focus area for investment in the nearby future," Agarwal said.
