Digital Oilfield Market

The global digital oilfield market was valued at $24.3 billion in 2022 and is projected to reach $32.0 billion by 2030, growing at a CAGR of 5.6% during the forecast period. The market's growth is driven by new technological advancements in the oil and gas industry, increased return on investment, and the growing need to maximize production from mature wells.

COVID-19 Impact on the Global Digital Oilfield Market
The digital oilfield market experienced a decline in 2020 due to the outbreak of COVID-19, which had a significant impact on various industries. The worldwide spread of the pandemic resulted in reduced demand for oil and gas as a result of lockdown measures and a decline in transportation activities. The combination of geopolitical events and the pandemic led to a collapse in oil prices in March 2020, affecting the demand for oil, natural gas, and well intervention services.

The effects of the pandemic disrupted digital oilfield operations, including the suspension or deferral of drilling activities, shutdown of exploration and production, and decreased upstream capital expenditure. Oil companies such as Shell and Exxon Mobil delayed the construction of LNG projects to address oversupply issues. Some companies, like BP, experienced financial losses and reduced their annual budgets in response to the crisis.

The COVID-19 crisis halted the growth of the digital oilfield market, with production halts and delays in well construction and maintenance. Storage capacity limitations led to a rapid buildup of oil stocks and negative prices in some regions. Several digital oilfield service providers filed for bankruptcy protection and reported sharp declines in revenue in 2020 compared to the previous year.

For example, Halliburton, Schlumberger, Baker Hughes, and Weatherford International witnessed significant decreases in their annual revenues in 2020. The overall impact of COVID-19 on the digital oilfield market has been challenging, leading to restructuring and financial difficulties for many industry players.

Digital Oilfield: Dynamics

Driver: Increased Return on Investment in the Oil & Gas Industry
The digital oilfield concept combines operational technology (OT) and information technology (IT) in smart fields to improve decision-making and enhance operational performance, leading to increased return on investment (ROI). It reduces downtime, lowers total cost of ownership (TCO), and enhances operational productivity. By capturing data from various parts of the oil and gas value chain in real-time, digital oilfield technologies optimize reservoir, well, and facility performance, resulting in improved ROI.

Oil and gas companies worldwide are investing in digital technologies to double their cost-savings. These investments aim to reduce cost-per-barrel, increase recovery rates, and minimize non-productive time. For example, GE and Noble Corporation partnered to launch the world's first digital drilling vessel, with a target of achieving a 20.0% reduction in operational expenditure. Such initiatives unlock the potential of digital solutions for offshore drilling operations.

In North America, companies like ARC Resources have deployed digital assets for exploration, development, and production of oil and natural gas. By optimizing control operations and gaining access to valuable production information through analytics software, ARC Resources has significantly reduced operational costs per well. Scalable and upgradable digital oilfield technologies are crucial to achieving high ROI and long-term project success.

Restraint: Data Retrieval, Analysis, and Scarcity of Quality Information Hampering Decision-Making
The collection and productive analysis of real-time data pose significant challenges in the digital oilfield market. While predictive analytics can condense large data sets, making them more valuable, cross-functional utilization of this information is vital for providing useful insights. The abundance of raw data from digitalized production facilities leads to a scarcity of quality information, hampering decision-making in upstream production. Data integrity and validation are essential for accurate results and minimizing gaps/errors. Additionally, the collection and analysis of data make software vulnerable to cyberattacks.

Operators need proper knowledge and skill sets to collect and analyze data effectively. Deriving value from intelligent oilfield data is crucial for evaluating past decisions and improving future operations. Governments in Asia Pacific are installing technologies to monitor and analyze subsidized fuel sales, such as real-time digital nozzles used by Pertamina in Indonesia. The continuous retrieval and analysis of data require careful attention, making it a major restraint in the digital oilfield market.

Opportunity: Growing Demand for Offshore/Ultra-Deep-Water Discoveries
Technological advancements in exploration technology for deepwater activities present opportunities in the oil and gas industry. Improved recovery and accelerated production can be achieved through offshore automation and advanced subsurface controls. Oil companies like Petrobras have implemented digital integrated field management programs to optimize production. Investing in command centers and remote monitoring allows cross-disciplinary teams to collaborate and solve problems faster.

Challenges: Interoperability of Multiple System Components from Different Solution Providers
Digital oilfield systems offer effective monitoring and supervisory capabilities in the upstream sector. However, integrating various components from different vendors poses challenges in terms of interoperability. As companies often assemble components from different vendors based on their requirements, there is no standardized product in the market. Compatibility with existing systems, such as SCADA, becomes a constraint for adding alternative systems or software. Overcoming this challenge requires developments in integrating various services to ensure seamless interoperability for oilfield operators.

In the digital oilfield market, the software & service solutions segment is the second-largest contributor during the forecast period.
Within the software & service solutions segment, there are different categories, including IT outsourcing, software, IT services & commissioning, and CPM. Software solutions provided by integrators and service providers are used for data exchange, data handling, seismic mapping, remote surveillance, video conferencing, and automation support. IT outsourcing involves business intelligence support, knowledge support, and other data-dependent tasks. IT services & commissioning are provided by external service providers who use third-party software for operations. Computer equipment and hardware are utilized in data centers, surveillance centers, and operation centers. North America and Europe have the highest market shares in the digital oilfield market.

The production optimization process is expected to be the fastest-growing market segment during the forecast period.
Production optimization is projected to dominate the digital oilfield market in the forecast period. Oil and gas producers face challenges of low oil prices, supply-demand imbalance, and slowing demand growth. Digital oilfields have become crucial for operators to sustain their business margins. Companies are leveraging advanced simulation and analytic tools to optimize production allocation based on well-gathering network and process conditions. Production allocation enables accurate recording, planning, and identification of production potential in existing assets.

In terms of application, the offshore segment is expected to be the second-largest contributor during the forecast period.
The offshore segment accounted for a significant share of the digital oilfield market in 2020. Companies explore offshore locations for oil and gas production due to the presence of untapped reserves. Offshore oilfield activities are more complex than onshore fields, leading to lower adoption of offshore applications. Key players in the offshore market include Halliburton, Schlumberger, and Baker Hughes. Despite fluctuating oil prices, the demand for offshore digital oilfield services is expected to increase due to deepwater drilling and production activities and the maturation of subsea wells. Advanced technologies are necessary to ensure the safety of offshore well conditions.

Europe had the largest share of the digital oilfield market in 2020.
Europe, including the UK, Norway, Russia, and the rest of Europe, held the largest share of the global digital oilfield market in 2020. The region has mature oil fields, prompting companies to increase digitalization and the use of new technologies to renew these fields. The European Unconventional Oil and Gas Assessment (EUGOA) study identifies untapped sources in 21 European countries, creating opportunities for new field developments that will require digitalization.

Key Market Players
The leading players in the digital oilfield market are Halliburton, Schlumberger, Baker Hughes, Weatherford International, and NOV. Other prominent players include ABB, Emerson, Rockwell Automation, Siemens, Honeywell International, CGG, Kongsberg, and Digi International.

Recent Developments:
• Schlumberger introduced MagniSphere in November 2020, a high-definition NMR logging-while-drilling service. This innovative service offers real-time producibility analysis for optimal well placement, leading to improved production and recovery in complex reservoirs.
• In October 2020, Weatherford International launched ForeSite Sense, a comprehensive reservoir monitoring solution that provides real-time information and critical downhole data. This solution enables profitability analysis based on pressure, temperature, and flow measurements.
• In September 2019, Baker Hughes and C3.ai unveiled BHC3 Reliability, an artificial intelligence (AI) software application developed through their joint venture. This application focuses on enhancing reliability in operations.
• Halliburton launched SPIDRlive in February 2020, a self-powered intelligent data retriever for unconventional well testing and fracture interaction monitoring. This technology enables real-time data acquisition without intervention, reducing costs and improving fracture understanding for enhanced recovery.