Digital Oil Rigs Market: Increase in Demand for IoT Solutions in Energy Industry
- Rise in demand for energy across the globe has driven huge investments in energy production, and transmission & distribution sectors. This has resulted in high growth of the energy industry over the past few years, especially the renewables sector due to their ability to provide clean energy. Moreover, this trend is anticipated to continue in the near future.
- The energy industry is plagued with low efficiency and high operational energy loss due to poor resource management leading to slow decision-making process and increased operating costs
- The energy industry is implementing IoT (Internet of Things) solutions across the value chain to enhance resource management and operational efficiency, enable faster decision making, and control and reduce operational costs
- Industrial IoT is enabling implementation of advanced energy production and distribution technology, management, and services, while leveraging existing investments in infrastructure and operations
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Key Drivers of Digital Oil Rigs Market
- Volatility in crude oil prices is a major driver for the growth of global digital oil rigs market. Demand & supply scenario and geopolitical instability has driven oil prices in the past. Moreover, decline in oil prices are a result of low demand and high supply of crude oil. For instance, increased crude oil output from the U.S., along with geopolitical issues among OPEC countries, Iran, Russia, and the U.S. led to decline in crude oil prices from US$ 110 per barrel to US$ 26 per barrel in early 2014.
- Low prices of crude oil results in high losses for the crude oil industry, as their exploration and production requires huge CAPEX and OPEX investment, which is recovered if minimum oil prices are US$ 50 per barrel or above. However, these prices have driven the industry to optimize its resources. This has resulted in the adoption of IoT in the industry in all its operations to provide real-time data for analysis and data modelling for faster decision-making and optimum utilization of resources. Thus, volatility in oil prices is expected to fuel the adoption and implementation of digital oil rigs during the forecast period.
- Process and environment safety is also a key driver for the growth of the global digital oil rigs market during the forecast period. Processes in oil & gas drilling are critical and thus, a small human error can lead to loss of property and life, along with damage to the environment. For instance, the British Petroleum oil spill in the Gulf of Mexico caused damage to the equipment and the marine ecosystem. Oil companies have to pay huge compensations and penalties for any such accidents, which not only effect their profitability, but also deteriorate their creditability. However, adoption of digital oil rigs can help avert these situations by eliminating the human factor in the process, resulting in safer and low-cost operations. Moreover, IoT also improves a company’s creditability.
Security Concerns Related to IoT to Restrain Global Market
- Security concerns related to the IoT are expected to restrain the global oil rigs market growth. Technology is vulnerable to hacks and viruses that disrupt operations and result in losses for companies. Companies are investing in conventional security measures for servers, workstations, and smartphones. However, with technological upgrades, these measures are unable to provide full security to the network. Threats of cyber attack and their impact on industrial operations are anticipated to restrain the growth of the digital oil rigs market during the forecast period.
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North America Likely to Lead Global Digital Oil Rigs Market
- North America is expected to lead the global digital oil rigs market during the forecast period, followed by Middle East & Africa. The growth of this market in North America can be attributed to increase in investment in IoT in the region, especially in the U.S. The country is anticipated to hold a major share of the North America digital oil rigs market in 2018.
- In Middle East & Africa, the growth of the oil & gas industry, along with rise in investment in digital oilfields is anticipated to drive the digital oil rigs market in the region during the forecast period
- The digital oil rigs market in Europe is likely to witness slow growth during the forecast period, as the region is shifting its focus from fossil fuels to renewable sources to meet its energy demands. This may result in a decline in investments in the oil & gas industry in the region.
- China is anticipated to hold a major share of the digital oil rigs market in Asia Pacific
Key Players in Global Digital Oil Rigs Market
Prominent players operating in the digital oil rigs market include:
- Hughes Network Systems LLC
- General Electric
- Schlumberger Limited
- HONEYWELL INTERNATIONAL INC.
- Baker Hughes, a GE company
- C3.ai, Inc.