How is Increasing Oil Production Leading to Growth of Digital Oilfield Technology Market?


The rising economic prosperity across the globe has boosted the demand for end products from various industries, including oil & gas. The demand for oil & gas is surging on a daily basis as its chief application is providing fuel for running numerous machines and automobiles. Oil & gas exploration and production (E&P) activities are time-consuming and require huge investments for extraction and purification of crude oil and shale gas. This puts a huge economic burden on companies dealing in this sector. Therefore, such companies are trying to find ways to keep their production cost in control so that they can price their product appropriately to have an edge over competitors. The digital oilfield technology, which includes video data analytics, artificial lift systems, and sensors, is being developed to help improve the drilling and transport aspects of the E&P activities, thereby offering high return on investments by increasing the efficiency of production, and at the same time lowering the operational costs. 

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A combination of data analysis techniques and advanced software is termed as digital oilfield technologies that are used for improving the profitability of oil & gas production operations. The digital oilfield technology is used for processes, such as drilling, reservoir, and production optimization. During 2013–2017, the technology was used the maximum for product optimization. It refers to numerous activities of measuring, modeling, analyzing, and implementing actions to improve productivity in the field, such as a well/reservoir/surface. It ensures recovery of oil from developed reserves, while at the same time, maximizing returns. An important part of product optimization is the updation of pipeline and well model procedures, which is essential for the maintenance of quality of the optimization-based tool. Owing to the aforementioned factors, the demand for digital oilfield technologies for product optimization would continue to grow in the future as well. A study conducted by P&S intelligence has predicted the digital oilfield technology market to advance at a 4.6% CAGR in the coming years.

Among all the regions, namely the Middle East & Africa, North America, South America, Europe, and Asia-Pacific, the demand for digital oilfield technologies was the highest in Europe during 2013–2017. The region is home to mature oilfields, and the demand for this technology was majorly driven by the presence of oilfields in the North Sea, Norway, the U.K., and Russia. This led to the surging demand for digital oilfield technologies for enhanced oil recovery techniques and well intervention.

With extensive E&P activities going on, the number of onshore oil & gas reserves are rapidly declining. Therefore, major oil producing companies are shifting their focus on offshore discoveries. Two of the world’s biggest oil companies, Chevron and BP, in January 2018, announced that major deep-water discoveries in the North Sea and Gulf of Mexico were made by them, which is indicative of growing offshore oilfield exploration activities in the future. For ultra-deep-water projects, the operating water depth limit for drilling and production goes from few hundred feet to over 10,000 feet. These projects require highly specialized equipment to carry out activities at the surface and at the seabed, and digital oilfield technologies, such as 3D seismic testing, remote sensors, autonomous drones, and robotics help improve production efficiency. Therefore, these technologies are extremely helpful for companies venturing into deep water projects and hostile environments for oil & gas extraction; this can be an amazing opportunity for the technology manufacturers to maximize their revenue.

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