IHS: Process safety service demand in oil downturn
Did you know that by 2019, there will be greater demand for process safety system services than hardware in the oil and gas industry?
In 2014, the majority of process safety system revenues in the upstream market sector were made up from hardware sales; however, with faster growth projected to 2019, services are expected to be allocated the largest amount of spend from 2017.
Whilst there have been reductions in investment in the sector since the oil price fall in 2014, the continued strong demand for services represents good opportunities for automation vendors:
Awareness of safety
Responsiveness to plant safety requirements has increased in recent years, largely driven by high-profile safety-related incidents, and awareness of the international safety standards IEC 61508 and IEC 61511. The standards emphasize the importance of adopting a systematic approach to managing risk through implementation of the safety lifecycle and, as part of that, the importance of process safety system services (from identifying hazards, through Layer of Protection Analysis, to periodic testing) to continuously ensure that safety is maintained and risk is managed.
Growth of brownfield investment
The oil price fall in 2014 has shifted producers’ focus from increasing output to increasing efficiency. While it is quite clear that this negatively impacts process safety system hardware sales, it is not necessarily the case for services. Instead, what is more apparent is a change in the mix of services demanded by end-users as they focus more on optimising and upgrading existing facilities. This can result in more expertise and funding (which were limited due to more profitable greenfield commitments) assigned to making improvements and meeting the latest standards. As producers assess the profitability of their operations and seek to maximise productivity of existing wells, many will find the need for improved efficiency of plants and facilities. This will boost demand for services that help streamline production, and better position producers in the current environment of low oil prices.
– Andrew Orbinson is market analyst in machinery at IHS Technology. IHS Technology is a CFE Media content partner. Edited by Joy Chang, digital project manager, CFE Media. email@example.com
Original content can be found at Control Engineering.