Digital Oilfield Services Need of the Hour as Oil Prices Set to Fall Further
Member countries of OPEC concluded their May 2017 meeting by agreeing to cut oil production for another 9 months; despite that the oil prices tumbled and some industry experts have predicted a further decline in oil prices over the long term in lieu of capacity build-up. Tony Seba, author and lecturer in Entrepreneurship, Disruption and Clean Energy at Stanford University recently came out saying that he expects oil to fall further down and nestle in the $25 range over the next decade. "Oil demand will peak 2021-2020 and will go down 100 million barrels, to 70 million barrels within 10 years. And what that means, the new equilibrium price is going to be $25, and if you produce oil and you can't compete at $25, essentially you are holding stranded assets," Seba was quoted as saying, recently.
From the highs of nearly $110 per barrel in August 2013, oil has more than halved, to $50 per barrel as of May 2017. While the global economy is slowly transitioning from an oil based economy to one running primarily on renewables and nuclear energy, consumption of oil still remains very high. Global oil consumption has actually gone up, from about 93 million barrels per day in Q3 of 2013 to 96.7 million barrels per day as of Q1 2017. So while there is a transition towards cleaner, greener fuel, there is also an opportunity for oil producers to tap into the oil consumption boom, provided they can produce oil at cheaper rates.
TechSci research report titled “Global Digital Oilfield Market By Process, By Solution, By Region, Competition Forecast & Opportunities, 2012–2022” conveys the very same sentiment about falling oil prices and the need for oil based economies such as Saudi Arabia and UAE to optimize on current production by maximizing operating margins rather than relying on a boom sentiment in the oil market to generate revenues. This needs to be done by inculcating a slew of digital tools such as Supervisory Control & Data Acquisition (SCADA), Distributed Control Systems (DCS), Programmable Logic Controllers (PLC) among very many others. As per the report, global digital oilfield market is set to grow to almost $ 18 billion by 2022, on the back of the need to cuts costs, optimize workflows, improve recovery rates and lessen the time to produce first oil.
With the advent of cloud computing, and the implementation of the internet of things, it becomes all the more incumbent for upstream oil & gas companies across the world to continuously reduce their operational costs while utilizing the latest technologies. The TechSci research report lists out several other ways in which oilfields are getting ‘smarter’ with the advent of the age of smart technologies.
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