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Digitization is the fuel (no pun intended) that’s going to propel the oil and gas industry into its foreseeable future. The industry is counting on digitization to address its upstream, downstream and mid-stream challenges. With highly volatile prices, mounting threat from electric vehicles and increasingly stringent environmental regulations, the oil and gas industry faces massive hurdles such as finding ways to reduce costs, optimizing efficiency of its industrial base assets and improving its global environmental footprint.
Draup performed a comprehensive study to understand the digitization efforts of the Oil and Gas industry. Across the Oil and Gas space, ER&D spend is estimated to be around $50 billion and is expected to grow at a CAGR of 3.5% up until 2021. North America accounts for 45% of the total R&D spend with another 49% being distributed across Europe. Analytics, automation and IIoT are the primary digital spend segments.
Our efforts to dissect ER&D spends by top OEMs revealed that spending is highly consolidated among the top 5 manufacturers namely PetroChina, Royal Dutch Shell, Gazprom, ExxonMobil, and Total S.A. They have a combined ER&D spend of $18 billion. The industry is highly fragmented with the top 5 constituting nearly 33 percent while the next 10 players accounting for ~27 percent of the spend.
The R&D of top oil and gas firms is highly consolidated in Houston, Texas, which serves as a global hub for building oilfield equipment. Houston is also a hub for start-up activity and innovations in the oil and gas industry. The focus areas of these startups has been on operational efficiency and clean technology initiatives such as alternate energy.
Uptake is the only Unicorn in the Oil & Gas Industry, which is an Industrial IoT platform that analyses data to predict and prevent failures. It consumes enterprise data and transforms it into actionable insights resulting in immediate outcomes.
Maana, a digital knowledge platform, has investments from global players like Shell, Saudi Aramco, and Chevron. They provide a platform that turns human expertise and data into digital knowledge. Other startups like WellAware use connected devices to help O&G companies boost production and predict equipment maintenance needs.
IoT has disrupted the O&G space enabling companies to address multiple workflows. Exxon Mobil has partnered with Providence Photonics to deploy IoT equipped leak detection system whereas Caterpillar uses Pentaho’s big data analytics solution to provide real-time equipment predictive intelligence. Large O&G companies like Shell, Total, BP, and Saudi Aramco are significantly investing in IoT by mainly focusing on connectivity, advanced analytics, mobility, imaging, security, and artificial intelligence among other areas.
Several large corporations such as Shell, Total, BP and Saudi Aramco are investing significantly in the IoT ecosystem which is largely driven by startups. The intent is to address multiple workflows like inventory management, energy management, customer experience, and production optimization. Data-driven insights are also being used to improve overall operational efficiency.
Automation has also made a massive case-in-point in the O&G space. The Automated Activity Analysis workflow enabled Chevron’s Pacific Santa Ana drillship to achieve savings of more than $1 million in just three months by reducing its tripping time – pulling the drill string from the wellbore and running it back in.
Service Providers are developing Platforms/ Frameworks in key areas to address the newer requirements. This includes end to end IoT/connectivity platforms, remote control and monitoring platforms and unified analytics platforms. Apart from these areas, service providers are also increasingly investing on augmented reality and building element and security access management.
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