In the Oil and Gas Recovery, Satellite Will Rise
Despite slumps in technology spending, there is light on the horizon. New satellites, fit-for-purpose HTS, and increasing data-intensive trends could see satellite break away from the oil and gas market weakness in the future.
It’s no overstatement: there is seemingly always something going on in the Middle East. And now, with nuclear-related sanctions lifted from Iran, the region has, perhaps, even more eyes on it. The geopolitical implications of Iran are significant; the country has the potential to redefine the Middle Eastern landscape. Oil rich and with numerous other valuable resources virtually untapped, Iran will likely resuscitate its economy, and the world will feel the wake of this large nation kicking off from the sin-bin pond into the global economy’s flowing river. The first evidence is the shaky price of oil. Iran stepping back from production cuts earlier this year left other members of the Organization of Petroleum Exporting Countries (OPEC) and the oil and gas (O&G) market as a whole in even greater turbulence.
While it’s interesting to see what comes out of Iran’s shackles being removed, the satellite industry is left to fretfully question the result of a turbulent O&G market. It’s highly probable that slumping revenues for O&G companies will squash technology investments. What does this mean for satellite growth? And for what duration? According to Judson Jacobs, senior director of upstream exploration and production at IHS energy consulting, many oil companies currently still see satellite as too expensive. This sentiment sours further when considering the pressure that O&G operations are under to cut back spending.
“We certainly see oil prices hampering technology investments and tracking this spending, we’ve seen a sharp decline from 2014 to 2015. Both the oilfield service companies and oil companies are spending 15 to 20 percent less on formal research and development. Many companies are cash-stretched right now and are emphasizing the investments that can deliver near-term value, that being 12 to 18 months. As revenues continue to decline in 2016, I expect to see their technology spend bottom out this year and in 2017 before picking up a bit,” says Jacobs.
“Largely, the companies we see investing in advanced communication networks are considering whether to put in either a sub-sea fiber optic network, or to deploy a canopy private wireless network onshore. In some cases, offshore assets are looking to shift operational support and control responsibilities onshore, and require the high bandwidth and reliability that a dedicated fiber optic link can deliver. Companies attempting to move to these new operating models using satellite have encountered substantial reliability issues caused by extreme weather events, solar storms and other factors,” he adds.
HTS and MEO: the Market Disruptors?
The “too expensive” notion and signal interruption are seemingly damning for satellite's role in this sector. However, with the flight of High-Throughput Satellites (HTS), the subsequent more affordable bandwidth and never-before-seen models offering cost-per-bit pricing, there is potential for positive change. One network making this potential more favorable is the Medium-Earth Orbit (MEO) constellation introduced by satellite operator O3b. Satellite has typically been confined to O&G’s remote sites, particularly on the exploration side where there is still a high reliance on traditional Geostationary Earth Orbit (GEO) satellites, latency and all, due to the very wide searches for reserves. Considering the remoteness and harshness of the environments where exploration takes place, there aren’t really any other options but to use satellite, making it the last resort, if not the only resort, for connectivity due to the technology’s ubiquitous nature. However, on the production side, in the instances where GEO’s propagation time could be a deterrent, MEO offers attractive speeds and yields a solid performance in areas less affected by rainfall, increasing the opportunity for satellite to go from a last- or only-resort backup to greater prominence at production sites.
Realizing this opportunity could impact the prevalence of fiber, wireless and even line-of-site radio at closer to shore production sites. Many of these are currently availing these alternative communications due to the cheaper fiber installation costs and new wireless connectivity options such as 4G or LTE. Many of the sites using these would likely have direct redundant fiber links, with some potentially using satellite as a back-up link for business continuity.
With increasing fit-for-purpose applications, there is a great future in O&G for HTS, especially with remote assets that would benefit from occasional use services such as seismic exploration work and crew welfare. This future can only improve as industry players see more remote assets being monitored. Furthermore, they add, the hardware is affordable and it’s relatively quick and easy to deploy. While HTS, with the majority of its services being in Ka band, isn’t suitable for all corporate connectivity at critical sites, there are still many opportunities afforded where HTS is fit for purpose. Clear examples are in increasing video trends, including streaming of subterranean video, and real-time drilling data management.
“There is a growing trend in large energy companies to increase consolidation of upstream and downstream operations in order to increase efficiency. HTS can service both, so again it’s fit for purpose. A perfect example is to consider how pipeline management will require greater connectivity to service the pipelines and make them secure. HTS is perfect,” says Keith Johnson, senior vice-president of energy at SpeedCast, a communications specialist for O&G among other industries.
Live video monitoring and surveillance are additional areas where HTS is fit for purpose, adds Craig Penfold, chief commercial officer at Avanti Communications. This significantly drives data volumes and, in order to enable the data-hungry applications needed, a flexible, high quality and secure communications network is required, he says, adding that Avanti has created a solution to Ka-band's rain fade problem. In order to achieve rain resilience, which Penfold identifies as a market differentiator, the company has used mitigation strategies, several different technologies, and network planning, resulting in Avanti’s Ka-band HTS now being more suitable in tropical or high rainfall areas.
Downsizing and the Rise of IO
The financial squeeze on O&G hasn’t just impacted spending on formal research and development; the industry has had a flurry of redundancies, resulting in a loss of expertise. This downsizing will likely see a rise in Integrated Operation (IO) centers followed by increased use of video and telemetry data being transmitted back and forth between the center and the remote asset. According to field service providers and communications specialists, O&G companies will be focusing on IO in the coming years to seek more efficiencies and to lower operating costs. This trend will put networks under even more pressure.
This pressure translates to opportunities, explains Rolf Berge, chief technology officer at Harris CapRock. As operators increasingly develop and deploy real-time IO and even remotely controlled operations, the need for reliable communications increases. Because of tools and systems on oil rigs becoming more sophisticated, the real-time nature of data, internet availability for crew in field to reach family and friends, and remote monitoring that allows staff to collaborate in real-time with central operations centers, HTS will be a key enabler of these requirements.
“IoT and the big data it produces are two trends that impact operations and associated communications. The number of connected devices and sensors is expected to grow exponentially in the near future. These in turn produce reams of data that need to be transferred to corporate offices, managed and analyzed to improve decision making and operations performance. We will also see IO, real-time monitoring and remote control grow in sophistication, requiring solid communications. We expect this to be a source of growth driven primarily by oil field service providers seeking to better utilize big data in their operations and forecasting,” says Berge.
The promise of economical bandwidth is often quoted as a core benefit of HTS, and many new HTS services will emerge. However, it is the applications for which users need capacity and the amount of bandwidth they actually require that will ultimately determine which technology is optimal, says Corry Brennan, EMEA sales manager of Simplex at Globalstar. “There are numerous aspects to consider when evaluating HTS and other lower bit rate systems, and one of these is the orbital location of the satellites themselves. LEO satellite networks offer some specific benefits due to their configuration that can be very well suited to certain applications. Assuming similar ground processing parameters, LEO satellites demonstrate about 10 times less propagation time. In addition to significantly less latency, LEO satellites are also less complex and lighter, making them more economical to launch, operate and replace. These factors all help to keep the relative operational costs for LEO-based systems lower. This in turn results in solutions that can be more affordable as well as energy-efficient,” says Brennan.
While acknowledging HTS’ place in O&G, Brennan adds that new data-intensive applications will emerge, including those that take advantage of IoT, for which lower power, lower bandwidth systems are ideally positioned.
“There are numerous ways in which O&G is realizing efficiencies through the intelligent use of satellite communications. IoT can be leveraged to help enable remote monitoring of pipelines, for example, and sensor technology can transmit data on the temperature, pressure and status of remote assets, saving significant time on fault detection and diagnosis, and optimizing maintenance and repair schedules. With the continued growth of IoT, we definitely envisage more new applications emerging which require the reliability and reach of satellite communications,” says Brennan.
While the pressure facing operations to reduce capital expenditure and costs has seen many companies delaying certain upgrades to equipment or the switch to newer technologies, the fact remains that long-term cost savings, reliability, resilience and efficiencies can be gained by moving to advanced technologies. Using this tempestuous time to make necessary changes and the best use of the new technologies available will enable better ROI’s. When the turbulence hitting the O&G market subsides and the price of oil climbs back up, these companies will be even more profitable.
The Rise of Satellite Applications in O&G
New applications will progressively emerge in the oil and gas (O&G) market, say communications providers, and many of these will require the reach of satellite. This comes as the need for surveillance, asset tracking, crew welfare, real-time drilling and production data management, and live video monitoring, to name but a few, is growing. Buoying this trend is the realization by O&G companies that although they are under mounting pressure to reduce capital expenditure, they can achieve efficiencies and long-term cost savings through adopting new technologies.
An example of such an application is asset tracking for which Shell has used satellite communications to cut asset management time, costs and paperwork. According to the global oil giant, after deploying a tracking and asset management system based on the Globalstar satellite network, a positive return on investment resulted in just three months. With 250 tracking devises deployed, Shell is able to receive valuable data transmitted over the satellite network to more closely manage its high value movable assets on land and offshore in the Netherlands.
Video requirements are another driver of such applications. Thanks to the combination of technological improvements and opportunities to improve safety, video has become more widespread. Remote security monitoring is now possible along with video streaming of underwater operations, including pipeline inspection and well-head monitoring. Such an application saw oilfield services provider Oceaneering International use connectivity from satellite telecommunications firm Harris CapRock to remotely pilot and automatically control its Nexxus Remotely Operated Vehicle (ROV). Satellite bandwidth is used to operate the ROV, enabling the pilot to execute assignments from simple video monitoring to highly complex vessel inspection tasks. With the satellite link, Oceaneering International can pilot the ROV from offshore, another vessel, or from an onshore command center.
Another example is petrochemical producer SABIC deploying a Globalstar-based solution to ensure that its 500 rail tank cars, containing potentially explosive chemicals, arrive at their destinations in the supply chain safe and on schedule. Important requirements for SABIC included knowing the precise location of the rail tank cars, which are spread across Europe, in order to provide customers and partners with predictable delivery times. SABIC also needed to ensure that the tank cars were being used with maximum efficiency.
Due to many O&G installations being in remote and harsh environments, satellite will be the enabling technology as these new applications emerge. Where terrestrial can’t reach, satellites are best poised to deliver the connectivity needed in today’s increasingly globalized oil and gas operations. VS