A recent article by ARC Advisory Group discusses how the offshore sector will be affected by the digitalization in six different ways.
“Today, oil and gas companies are taking a vastly different approach, focusing relentlessly on increasing efficiency and lowering the costs of offshore exploration and production. There’s tremendous room for growth in offshore oil and gas with a focus requiring offshore technology to simultaneously become simpler, automated, and more sophisticated.”
Bearing in mind all the latest trends in the industry, ARC Advisory Group has outlined six potential ways how offshore sector will be affected by digitalization.
The increasing offshore activity is a function not only of rising oil prices, but also efforts to lower costs through digital technologies, automation, standardized designs and smarter planning. Companies are bringing in projects at half, or even less, of initial estimates by adopting digital technologies that ensure all the important data – from employee shifts to detailed drilling and well results that are available in the same place, so operators and contractors can access the information in real time from anywhere. E&P companies are focusing on keeping costs down through an offshore development’s entire life cycle, from the early design and engineering to a rig’s eventual retirement decades later.
It is estimated that around 700 billion undiscovered barrels of oil and gas equivalents exist globally, hinting that exploration will still be in business in the next 50 years. However, it’s expected offshore exploration to continue to weaken in long term as more potential brownfield projects will live longer amidst the advanced technology and digital culture. Exploration will likely be forced into deeper and more remote waters, which could be too expensive to develop given the availability of other competitive sources of supply.
Greenfield projects are new developments of new oil and gas fields. Historically, sanctioned greenfield projects have racked up total investments of about $3,700 billion in real dollars worldwide. In total, greenfield sanctioning has likely only achieved 40 percent of its potential with reference to total global reserves.
Brownfield projects are expansions or upgrades of existing oil and gas fields. Out of about the 3,000 oil and gas fields producing today, 50 percent could still be producing in 2030 due to improved depletion rates through the use of advanced technology. In addition, upcoming projects already under development or expected to be sanctioned represent an additional 2,500 oil and gas fields. Assuming that oil and gas will still be consumed for petrochemical use and power production through 2100, it is expected that investments would be five to six times as much on brownfield services as what has been spent as of today.
The most immature market in the upstream oil and gas market is decommissioning. It is estimated that only 3 percent of necessary decommissioning expenditures has already been spent, which entails the cost of removing, plugging and abandoning existing and to be developed oil fields.
Maintenance and operations
The maintenance and operations service segment are naturally the market with the most volume of work ahead, with more than 60 percent of the estimated market to be spent in the future. Well Services and Commodities, Drilling Contractors, EPCI, and Subsea are equally large markets that are expected to make significant contributions to the service sector in the next 50 years.