It might seem illogical to invest in improvements during lean times, but spending on repairs, renovations and new capabilities when business is down and production is slow makes better long-term sense than trying to revamp when business is good and production is running at full capacity.
For instance, natural gas and oil prices have been depressed for the past couple of years, and the resulting impact is being felt in the process automation markets. Many show flat or little growth for 2015-16, while some are declining, according to ARC Advisory Group. However, ARC projects that present economic conditions will have only short-term impacts, and adds that price pressures are forcing process owner-operators to invest in integrated automation solutions that drive out costs, increase asset utilization and improve operational performance.
"There's definitely short-term pain, but there also are opportunities to be seized," said Tim Shea, senior analyst at ARC. "Natural gas has been trading at about $3 per million BTUs, and unconventional sources are becoming the new normal. In 2014, proven reserves were about 6,972.5 trillion cubic feet (tcf) worldwide and about 422 tcf in North America. However, shale gas developments outside North America are still years away due to a lack of domain expertise and technology, infrastructure. So, the long-term need for LNG in China, India and other developing regions will drive demand for natural gas up along with prices. As a result, LNG export projects in the U.S. are being built to help meet this long-term demand from overseas for natural gas as primary fuel."
Shea presented "Automation's Role in Shaping the Future of Unconventional Gas Markets" at the 2015 Honeywell User Group Americas symposium, June 23 in San Antonio, Texas.
"Although rig counts have been dropping, production has been increasing due to investments in automation and innovation," explained Shea. "Cheaper feedstock prices are also spurring development of U.S. methanol plants and fertilizer plants, which generates increased demand for natural gas."
Despite available opportunities, Shea reported that horizontal drilling and hydraulic fracturing still face some difficult technical, environmental and market challenges. "Critical issues are cost containment, production optimization and water management/logistics," explained Shea. "There's also competition from increasing gas projects in the Middle East and North Africa regions to enable domestic power generation and switch to CO2 injection. Sour gas projects are also happening in Middle East, which as creating H2S challenges and the need for advanced leak detection technologies.
"In addition, enhanced oil recovery (EOR) methods are critical. Its primary methods of water and methane gas injection are workhorses, but new technologies are coming online. Also, CO2 injection, chemical injections and advanced polymers are being leveraged to increase recovery rates, and help meet green objectives."
Faced with all these economic and technical challenges, Shea reported it's crucial for owner-operators to invest in process control and automation solutions. Fortunately, control and automation is an extremely good investment. "Automation is usually 1% or less of a typical process industry project spend, but it can have a huge influence, and generate 15-30% worth of positive impact on that application's operations," stated Shea. "The fact is there's not more easy oil. New projects are getting more complex, more remote, and need more skilled staff, and so they also need more investment in control and automation. There's a lot of useful automation and control technology available, but it's actually harder make the culture and work-practice changes needed to adopt those new technologies."
Shea adds that particularly useful process control and automation devices that make the best investments include:
- Multivariable transmitters (MVTs), which measure multiple sensor inputs, save money and space, and reduce process penetrations. MVTs are using Ethernet and wireless protocols to further extend their usefulness and return on investment.
- Smart sensors and field devices provide views into operations, but they're also networking with the Industrial Internet of Things (IIoT) to report to enterprise systems, and performing self and remote diagnostics to increase their value to users.
- Multiphase flowmeters (MPFMs) are experiencing robust adoption, and are helping users with separators replacement, reservoir management, real-time well testing and monitoring, production allocation and optimization, flow assurance, artificial-lift optimization and fiscal monitoring.
- Leak detectors (LDs) are increasing because they mitigate risk, and while software-based versions now make up the majority of their market, either type is only as good as the quality of their sensors and data.
- Artificial-lift optimization is growing because 90% of oil and gas wells need some kind of artificial lifting. These devices include electric submersible pumps, reciprocating rod pumps, progressive cavity pumps and plunger pumps. Multi-phase pumping is also growing as unconventional wells produce more associated oil, gas and natural gas-based liquids.
Upstream and midstream gas and oil are driving future of the industry," added Shea. "Growth is slowing down for 2015, but recovery is on horizon. There's a lot of room for improvement in automation in this industry—much of it will be driven by the lack of qualified personnel. Oil and gas is changing the way we look at automation across all industry segments. The challenge is: are you leveraging automation to the fullest? If not, why not and where?"