How much coverage should Processing and its sister publications of Global Processing and Water/Waste Processing devote to the oil and gas industry? Well, some, at least.
To start, the oil and gas industry, as a provider of feedstock and energy stores, lies just upstream of the chemical processing industries, including plastics and rubber. That’s one point of relevancy.
Second, hydrocarbon-based energy and the geopolitical and existential ramifications following from its use make up perhaps the single biggest story of our times. It largely determines productivity and where, in an era of globalization, plants are located.
The oil and gas industry makes headlines. Its global supply may be dwindling and the long-term consequences of its use remains matter of grave debate. Tapping into oil and gas found in shale rock is a decade ahead in the U.S. compared to elsewhere, due to land ownership law here. But controversy as to hydraulic fracturing’s impact is far from settled.
Finally oil and gas refining is clearly a process industry, and shares many commonalities with other process industries in terms of the kinds of equipment and control systems in use.
But it must be admitted that upstream oil and gas is a horse of a different color. Projects are financed differently and often executed in remote locations; as a commodity, oil and gas prices can swing wildly; and, excepting in exploration efforts, the industry exhibits a profound mistrust of information technology and especially enterprise resources planning (ERP) systems. Once the oil is found, they’d rather do it themselves.
The U.S. oil industry is largely centered in Houston. There, the service companies, including billion-dollar behemoths like Halliburton and Schlumberger, play a role similar to that of automation companies in process industries, while being even yet more expansive. When automation companies market to even downstream oil and gas, most keep it separate from efforts in other process industries.
Frost & Sullivan asserts oil and gas companies outside the US are taking radical measures to be competitive, including in Southeast Asia, Australia and New Zealand. F&S expects the automation and software spend for oil and gas there to reach $447.8 million in 2018, up from $282.1 million in 2011. The analysis notes that automation providers play already play a significant role in the region, thanks to global supply networks servicing low-cost manufacturing facilities in developing markets.
That warhorse of the process industries, the distributed control systems (DCS), “enjoys the highest popularity among oil and gas companies in Southeast Asia, Australia and New Zealand,” Frost & Sullivan Research Analyst Vineeth Purushotham says.
Oil and gas sector companies tend to rely on one solution provider to meet their automation needs, the report found. Cognoscenti of the market know the automation vendors have spent the last decade becoming service companies, based on a playbook out of IBM.