Digital Oilfield Technology Proving Effective in Reducing Cost of Oil Production


The need of oil companies to reduction the production cost and increasing participation of software firms is driving the growth of the digital oilfield technology market across the globe. Already generating $26,570.4 million revenue in 2017, the market is expected to advance at a CAGR of 4.6% during 2018–2023 (forecast period), ultimately growing to $34,871.6 million by 2023. Digital oilfield technology refers to the software and hardware used to optimize the production of oil in order to reduce production costs and generate the maximum revenue.




On segmenting by process, the digital oilfield technology market can be categorized into reservoir optimization, drilling optimization, production optimization, and others. Among these, the production optimization category held the largest revenue share (over 35.0%) in 2017, as it helps companies identify underperforming wells or assets and come up with a solution. In Europe, the number of mature oilfields, where the production has peaked and started declining, is increasing. This is resulting in a growing demand for digital technology for production optimization, which is why this category is predicted to grow with a CAGR of 4.8%. 

Further, the device segment of the digital oilfield technology market has gateway and remote terminal unit (RTU) as its two subdivisions. Of the two, the RTU subdivision led the market in 2017 with over 50.0% revenue share, due to the growing adoption of such systems to monitor various parameters of an oilfield and collating and storing the data at a central location. The growing number of oilfields being digitized is one of the major reasons for the present and expected future market dominance of RTUs. 


However, the gateway subdivision of the digital oilfield technology market is predicted to advance faster, at 4.7% CAGR during the forecast period, as gateways are instrumental in transmitting the data collected by RTUs to the IT network of the oil company. Therefore, with the increasing need to make data sharing and analysis easier and faster, gateways will be adopted more in the future compared to RTUs. 

Across the globe, oil companies are increasingly digitizing their oilfields to achieve optimum production and operation cost reduction. The digital technology in oilfield helps make drilling and transportation efficient and the production process transparent, thereby leading to decreased operational costs. Another reason for the growth of the digital oilfield technology market is the increasing volume of data and the need to analyze it. This why, software companies, including Microsoft, IBM, SAS, Progress, and EMC Corporation, are increasingly foraying into the field of big data analytics for oilfields.  


Hence, we see that the market will continue to progress during the forecast period owing to the increasing cost reduction steps taken by oil firms.

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