Growing Focus on Improving Functional and Physical Properties of Downhole Cables to Impact Market Growth
The energy sector around the world is witnessing a significant transformation due to advancements in technology, evolving regulations, and shift toward sustainability. The oil gas sector in particular is also undergoing notable changes in terms of how onshore as well as offshore applications are carried out. The need to modernize cable systems and communication infrastructure in the oil gas sector has played an important role in inflating the demand for oil gas downhole cables in recent years. Oil gas companies are continually finding new ways to smoothen drilling, communications, and other applications. Companies in the oil gas sector are increasingly leveraging automation/control architecture, IPTV/CCTV/CATV networks, and other advanced systems for an array of applications.
For several decades in the past, the oil gas industry is finding new solutions that withstand hostile conditions and provide an efficient end-to-end communication. Stakeholders in the oil gas downhole cables market are primarily focusing on improving quality, reliability, and data integrity of their products to meet the requirement of end users. In addition, participants in the oil gas downhole cables market are also inclined toward reducing the weight and improving the overall flexibility of their cables. The significant growth in the production of unconventional oil gas, discovery of new oil gas fields, and advancements in technology are some of the major factors that are expected to drive the global oil gas downhole cables market past ~US$ 2.1 Bn mark by the end of 2027.
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High Adoption of Tubing Encapsulated Cables
The demand for tubing encapsulated cables is projected to remain higher than that of fiber optic cables during the forecast period. Tubing encapsulated cables are extensively being used across the global oil gas sector worldwide for a range of applications, including monitoring the pressure, temperature, and multiple other parameters in oil wells. In addition, tubing encapsulated cables are primarily deployed in long-term applications wherein durability is critical. In the current scenario, tubing encapsulated cables made from polypropylene have gained a significant amount of popularity due to the exceptional survivability of the cable. Stakeholders in the oil gas downhole cables market are more inclined toward the production of round encapsulated cables in comparison to the square counterpart to reduce weight and wastage of raw materials. Participants in the oil gas downhole cables market are also expected to focus on an array of other parameters, including crush strength, dynamic friction, cross-sectional twisting, and deployment retrieval, among others.
Growing Applications of Sensors in Oil Gas Applications to Augment Demand for Fiber Optic Cables
While the demand for tubing encapsulated cables is set to witness healthy growth during the forecast period, the demand for fiber optic cables is set to grow at a faster pace. Deployment of fiber optic cables across the oil gas industry has gained significant momentum in the past few years and the trend is set to continue over the course of the forecast period. Stakeholders in the current market landscape are increasingly offering customized fiber optic cables to fulfill specific applications of end users. The deployment of fiber optic cables is witnessing a considerable surge, particularly for application in hostile environmental and working conditions.
Moreover, oil gas companies are inclining toward the use of fiber optic cables in oil wells and pipelines for various applications, including temperature sensing and strain sensing. Stakeholders are also focusing on improving the physical and functional aspects of their products for deployment in corrosive, high pressure, high-temperature environments. The ascending demand for sensors in the oil gas industry has played an important role in increasing the demand for oil gas downhole cables such as fiber optic cables. The different types of sensors, including distributed strain sensors, distributed acoustic sensors, distributed pressure sensors, distributed temperature sensors, and ocean bottom seismic make use of fiber optic cables. In addition, increasing number of oil gas companies are inclined toward leveraging the benefits of optic installation to enhance their operational performance and accuracy.
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Oil Gas Downhole Cables Market: Overview
- Oil and gas downhole cables are introduced into a well in order to deliver and retrieve data about conditions of the wellbore
- Oil and gas downhole cables supply power and carry data to and fro from a wide range of downhole instruments, sensors, and electrically powered equipment. These cables are required to withstand extreme conditions such as high pressures and temperatures.
- Oil and gas downhole cables are of different types i.e. tubing encapsulated cables (TECs), fiber optic cables, hybrid cables, and electric submersible pump (ESP) cables
Rise in Unconventional Oil and Gas Production to Drive Oil Gas Downhole Cables Market
- According to the World Energy Council, the U.S. has 1,161 trillion cubic feet of technically recoverable unconventional gas. China has 1,115 trillion cubic feet of unconventional gas. The U.S. was the leading country in the production of unconventional gas in 2018. Its annual production of unconventional gas stood at 22 trillion cubic feet, while China’s annual production of unconventional gas stood at 10 trillion cubic feet in the year.
- Rise in the production of unconventional oil and gas is anticipated to augment the demand for oil and gas downhole cables in the near future. Oil and gas downhole cables are required to provide power and transmit signals to several equipment such as electric submersible pumps (ESPs) and pressure gauges. A pressure gauge is installed in a well to monitor pressure at a single point or multiple points.
- Thus, surge in the production of unconventional oil and gas, such as shale gas, is likely to boost the global oil gas downhole cables market during the forecast period
Volatility in Prices of Crude Oil Likely to Hamper Oil Gas Downhole Cables Market
- Crude oil prices witnessed a significant drop between 2014 and 2016. However, in 2017, prices started recovering. Average annual crude oil prices increased from US$ 40.76 per barrel in 2016 to US$ 69.78 per barrel in 2018.
- Prices of crude oil are affected by events that can potentially disrupt the supply of oil and gas. These include geopolitical and weather-related issues. Geopolitical events is a major factor creating uncertainty about future supply of or demand for oil and gas. This could lead to less exploration and drilling activities, which, in turn, could reduce the demand for oil and gas downhole cables.
- The Middle East accounts for a major share of the global oil and gas production. It is a highly unstable sub-region due to political issues. Prices of oil and gas in the Middle East have been rising steadily since the sharp decrease in prices of crude oil in 2014.
- Volatility in prices of oil and gas affects their production. This is expected to hamper the global oil gas downhole cables market during the forecast period.
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Rise in Deep-water and Ultra-deep-water Activities across Globe to Provide Opportunities to Oil Gas Downhole Cables Market
- The world is moving toward usage of renewable sources of energy. However, the demand for oil and gas has not declined. Renewable sources of energy help provide clean power. However, they are yet to become reliable sources of power, as backup power in the form of hybrid power plants is required. Growing population and growth of the industrial sector are fueling the global demand for energy.
- Global fuel consumption increased in 2018. For instance, oil consumption rose by 1.4 million barrels per day, while natural gas consumption increased by 195 billion cubic meters per day in 2018. This rise in the demand for fossil fuel is prompting companies to increase their fuel production.
- With fewer easy-to-access oil fields remaining, oil and gas companies have moved toward new areas, including operations in waters with depths ranging from 1,000 feet to 5,000 feet. This factor is estimated to propel the use of oil and gas downhole cables in the near future.
- The number of deep-water oil and gas projects is expected to rise significantly in the near future, with new deep-water exploration and production (EP) projects coming up in Brazil, Guyana, Nigeria, the U.S., Norway, and Angola
- Thus, rise in deep-water and ultra-deep-water EP activities is estimated to drive the oil gas downhole cables market during the forecast period
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Recent Developments, Expansions, Acquisitions, and New Contracts in Oil Gas Downhole Cables Market
- In November 2018, ABB Ltd. was awarded an integrated automation, electrification, and telecommunication order for the second quarter of 2018, valued at US$ 79 Mn, for the upgrade of the Bab onshore field in Abu Dhabi by China Petroleum Engineering Construction Corporation. This project would strengthen the company’s presence in the Middle East market.
- In 2017, the European Investment Bank (EIB) decided to loan US$ 126.07 Mn (EUR 110 Mn) to Prysmian Group for the latter’s RD program in Europe from 2017 to 2020. The financing has helped Prysmian Group enhance its research activities in the fields of nanotechnology; systems for monitoring and managing of underground and submarine networks; new cables and materials for more sustainable solutions; and hybrid power-telecom cables.