Upstream oil and gas companies embrace smart pumps, IIoT
Upstream companies are gravitating toward tools such as Industrial Internet of Things (IIoT)-enabled and energy-efficient pumps with demonstrable return on investment (ROI) to improve cost savings and profitability, according to a report by Frost and Sullivan.
Upstream companies are increasingly acknowledging digitization as an important enabler of cost savings and profitability, and are therefore gravitating toward tools such as smart pumps according to a Frost & Sullivan report. Among the many new-generation pumps in the market, Industrial Internet of Things (IIoT)-enabled and energy-efficient pumps with demonstrable return on investment (ROI) are expected to experience the highest demand.
"IIoT-enabled pumps and solutions that can turn Big Data into predictive information are disrupting the digitization strategies of oil & gas companies in developed countries such as North America," said Anand M Gnanamoorthy, industrial automation and process control industry manager at Frost & Sullivan. "However, to harness the full potential of the digital transformation in the industry, pump companies need to offer new IIoT-focused business models such as gain sharing, pay-per-use, and product as a service (PaaS). They need to follow this up with fresh marketing strategies that use case studies and white papers to increase the consumer awareness regarding such solutions."
While there is great enthusiasm among pump manufacturers to embrace IIoT in their products, they need to cherry-pick the technologies to reap the benefits. There is a glut of technologies in the market, as barriers to entry are low in IIoT, which has opened the door for technology startups and automation solution providers to challenge industry leaders. Meanwhile, pump manufacturers across the board will enjoy significant growth opportunities created by:
- Rising oil & gas prices: With oil and gas being the largest end user of pumps, the increased oil production will drive demand for a variety of pumps. The pumps market in the oil & gas industry generated total revenue of $8,014.8 million in 2017.
- The refining sector attracting investments in Asia-Pacific (APAC), the Middle East, and North America: Asia will account for the largest investments with China and India being key countries driving new projects and greenfield investments. The Middle East is the next-largest region and will account for almost a quarter of the total global spending by the end of 2024.
- Maintaining aging asset infrastructure and promoting asset health: Predictive analytics and smart maintenance will revolutionize the way pumps are operated, and compressors manufacturers need to develop capabilities to provide value-added services.
- Midstream investments in pipelines and liquefied natural gas (LNG): Companies are expected to invest in the transportation infrastructure, such as oil pipelines, and this is expected to boost the market for large engineered pumps.
"Although pump manufacturers are aware of the relevance of IIoT and predictive analysis to their business, many still prefer to adopt the wait-and-watch approach," noted Gnanamoorthy. "This is not the best strategy for this market because the first movers will have a huge advantage due to platformization, and the late adopters will be left fighting for an ever-shrinking share of the pie. It is vital to establish an analytics strategy in the next three years, as the typically long product development and launch cycles could make technology-shy companies quickly redundant."
Frost & Sullivan
– Edited from a Frost & Sullivan press release by CFE Media.
Click here to download the Frost & Sullivan report "Global Pumps Market in the Oil and Gas Industry, Forecast to 2024."