Mention leading technology companies in the world, and it is doubtful that oilfield service organisations jump to the top of your list. These companies are known for performing the gritty work of producing, maintaining and repairing oil-extracting equipment. They also provide drilling, energy discovery, well maintenance and other vital services to oil and gas companies.
But a growing number of oilfield service organisations are not only beginning to think of themselves as technology companies, they are also billing themselves as such as they increasingly embrace artificial intelligence and machine learning, predictive maintenance, and other emerging digital solutions. In a recent study, ABI Research, a global technology market intelligence firm, predicted that natural gas and oil companies would spend $15.6 billion on digital transformation technologies by 2030.
These technologies are not so new to the major oilfield service firms, which have typically had the financial resources to be early adopters. But thanks to recent events, midmarket oilfield service companies have the opportunity to add digital tools as they seek greater efficiency.
The decline in oil prices in early 2020 that followed the COVID-19 lockdowns forced oilfield service firms to slim down operations, and technology helped the organisations do more with less. But the latest oil price boom has provided midmarket service companies with the ability to budget and commit more capital toward implementing or expanding digital transformation for their operations in the office and at the wellsite.
Most oilfield service organisations recognise that technology-based systems are crucial to the success of field operations. In addition to creating more efficiency and allowing the organisations to monitor operations and equipment performance remotely, the growing use of technology is providing greater precision and confidence to a sector that has traditionally relied on tried-and-true mechanical solutions to deliver the desired outcome.
Specific applications and the benefits of using them in the oilpatch include the following:
- Artificial intelligence and machine learning (AI/ML) — Oilfield service companies are using AI and ML to increase efficiency, improve decision-making and reduce costs. AI and ML can help oil and gas companies evaluate the value of specific oil reservoirs, customise drilling processes and completion plans to correspond with surrounding geology, and assess the risks associated with wells. The technologies are also being used to extract value more efficiently from existing data sets, predict outcomes based on historical data, automate time-consuming processes, detect patterns in well production data and identify new revenue opportunities in existing assets.
- Digital oilfield services — Cloud-connected digitised oilfields allow oilfield service providers to remotely monitor and control critical activities at production facilities in real time. Implementation of a digital monitoring system enables well operators to address everyday situations related to well construction, well data governance and drilling data management integrations, among other conditions, to optimise safety, maintenance and efficiency while minimising equipment downtime. User-friendly dashboards provide process visualisation and control, resulting in more responsive and better-informed decisions related to directional drilling, well logging, formation testing and other operations.
- Onsite real-time data streaming — Safety and performance are of paramount importance at the well site, and both depend on accurate data. Drilling rigs equipped with real-time data streaming sensors constantly deliver well pressure, flow rate, temperature and other critical readings to detect abnormalities or divergences that could spell danger for workers or equipment.
- Predictive maintenance — Oilfield service organisations use industrial technology enabled by the Internet of Things and leverage predictive analytics to monitor the condition of oil and gas pumps, tank pressure, pipelines, and other equipment. Sophisticated predictive maintenance technologies use sensors to aggregate vast amounts of real-time operational data related to equipment thermography, lubrication, circuitry and other conditions. Often the solution combines this information with data from enterprise resource planning and manufacturing execution systems to spot patterns. This helps anticipate maintenance requirements, which can cut costs and reduce unexpected equipment failures.
Oilfield service companies are also using autonomous robots in offshore operations to read gauges, detect leaks, take video and audio recordings, and identify anomalies. Subsea robots are being developed that can perform a range of inspection, repair and maintenance activities with minimal human intervention. Additionally, drone technology is becoming a useful tool as companies are opting to use it to address inspection needs across the value chain and reduce operational costs. The increasing adoption of robotics and drones in these settings is fueling a paradigm shift that will require fewer workers as monitoring becomes more remote.
Moreover, advancements in drilling technology represent another change in the oilfield services sector. These innovations are leading to the discovery of new resources, providing access to harsh or remote locations, and enabling the development of challenged reservoirs that previously did not make economic sense to pursue. In addition to horizontal and multilateral drilling, these advances include a cutting-edge system that directs drilling by using automated guidance, navigation and controls adapted from algorithms used to correct flight paths in space travel.
Ultimately, companies in the broadly diverse oilfield service sector will gravitate toward the technologies and approaches that best fit their area of expertise, whether that involves providing an entire vertical of oilfield solutions to oil and gas companies or solely focusing on the manufacture of field equipment.
Regardless of their scope and size, oilfield service companies are embarking on a period of steady growth after years of contraction. Over the next five years, annual revenue in the sector is expected to increase to $96.2 billion from $85.4 billion, which equates to a yearly growth rate of 2.4%, according to a recent report issued by research organisation IBISWorld. That represents a significant reversal from the 2016 to 2021 period, during which revenues declined 1% a year.
With a return to revenue growth hanging in the balance, oilfield service companies need to ensure that they limit damage, repair and maintenance events that could force their oil and gas clients to temporarily suspend operations. organisations that proactively adopt or expand a robust digital programme will position themselves to keep not only their customers happy but also fully capitalise on the growth opportunities projected for the sector.