In the past few years, our world has seen an exponential increase in the global demand for energy-specifically, oil and gas energy. The problem is that with the availability of oil in existing oil fields rapidly being depleted, many oil and gas companies are being forced to invest in upstream projects and offshore areas which present a number of big safety hazards and a lot of room for equipment failure.
Because of these huge risks, automation has become synonymous with the oil and gas industry. Indeed, the Global Automation Market in the Oil and Gas Industry is presently valued at well over US$ 5 billion and it’s forecasted to continue growing at a CAGR of 6.9 percent for the 2012-2016 period.
Not all of these numbers come from one specific type of automation however. Rather, the market’s value is divided across five segments which are outlined below:
Until 2012, distributed control systems (DCS) have accounted for about half of all of the market’s revenue because of the technology’s capacity for handling a variety of complex processes that are prevalent in the industry. Recently however, the functionalities of Programmable Logic Controllers (PLC) and Supervisory Control and Data Acquisition systems (SCADA) have vastly improved, making it hard to distinguish between the three types of automation products in the oil and gas industry.
There’s a good chance that these blurring lines will lead to one or two product segments eating into the share of another product segment-namely, distributed control systems. After all, PLC and SCADA solutions are now available with functionalities to rival DCSs and priced much more competitively. For these reasons, all signs point towards a preference of these products in the Oil and Gas industry for the coming years.
So what will these shifts mean for the automation market in the oil and gas industry as a whole?
Yes, the increasing adoption of much more affordable PLC and SCADA solutions lowers the price of the average automation investment which in theory has the potential to negatively impact the amount of revenue brought in by the market every year. That said, any decline in average sale price is likely to be offset by the fact that affordability will make the technology accessible to a wider spread audience thus leading to more customers.
It’s also important to consider that with the oil and gas industry’s need to improve efficiency and control costs, and a need to maintain safety regulations, there’s virtually no alternative to automation technology. This, combined with the exponential increases in energy resources across the globe, more or less confirm that the Automation Market in the Oil and Gas Industry won’t be going anywhere but up for the years to come.
For more information view our 2012-2016 report on the Global Automation Market in the Oil and Gas Industry.
