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Subsea Energy Operations Set-Up for Long-Term Growth

The energy industry is in an interesting place at the turning point of 2018 and 2019. As just a sample, representatives of energy's more traditional businesses who are set in their ways and lobbying for decreases in regulation hold the line on one side of things. Conversely, environmental watchdog groups look at the industry through the prism of concerns over climate change, while still other organizations aim to innovate in - or put their investment capital toward - alternative production methods like wind and solar.

Caught somewhere in the middle of all this is the subsea or deepwater oil-drilling market segment, which has experienced no small amount of upheaval over the past decade. However, analysis provided by industry experts during 2018 points toward an upward trend for this niche of energy extraction - one with the possibility to persist for at least the next several years if not longer. Connectivity solutions for the subsea energy sector are a key AMETEK EIP product offering, so we're always vigilant of the field's ebb and flow. Let's look at some of the latest growth projections.

offshore oil rigs

Falling prices create greater demand for deepwater projects

During the mid-2010s, when subsea oil drilling activity declined considerably, the disproportionate correlation of operating costs and revenue was one of the primary reasons cited by industry analysts and company leaders for the drop-off. An excess of crude oil inventory also contributed to falling prices per barrel during this time, adversely affecting all corners of the oil industry. But according to the Deepwater Drilling Market Report 2018-2028 issued by the Visiongain research firm, OPEC's recent decision to cut oil production in all member nations brought crude barrel prices back up to more profitable levels. As such, the deepwater drilling market will attract about $30.3 billion in spending by the end of 2018, a modest but noteworthy uptick from the $29.8 billion spent in 2017.

Simpler projects for greater effectiveness

The rate of subsea oil drilling isn't likely to return to its peak levels seen before the Deepwater Horizon rig disaster and oil spill of 2010. Offshore projects that oil producers including Total, Royal Dutch Shell, Equinor and BP have started (or are planning for) are much smaller and simpler in scale. Financial Times reported that this lowers overall operating costs, in part due to the reuse of existing deepwater rig infrastructure. Using fewer overall drill rigs carefully deployed above major oil plays further cuts expenses, prevents wasted material and personnel resources and - by avoiding superfluous drilling - can even reduce the environmental impact of this type of energy extraction.

Better safety procedures

In the wake of the Deepwater Horizon disaster, the subsea oil industry took a considerable hit on multiple fronts, including public relations and bottom-line revenue. The vestigial effects of that tragedy still reverberate in the minds of professionals in that field - to say nothing of the emotional burden carried by friends and family of the 11 men killed on the rig. If nothing else, the incident led to the passage of stricter offshore drilling regulations.

Even though The New York Times reported that some of those stipulations have been relaxed by the current business-friendly presidential administration, more than a few energy companies are sticking to more comprehensive safety policies of their own accord. Whether out of genuine altruism or a shrewd understanding of the need for reputation protection (or, even more likely, some shade of gray between), major offshore operators like Shell and Diamond Offshore Drilling Inc. have instituted more thorough training ranging from equipment use to on-site behavioral best practices, as well as better job planning. Environmental protection projects are also becoming more common, such as Shell's programs to prevent marine fauna such as humpback whales in Brazil and yellowfin tuna in Malaysia from being harmed by its rigs in the waters of those regions.

Control systems market on the rise
Without cutting-edge control systems - as well as microelectronic components from AMETEK - offshore oil operations can't function at peak levels. As such, Mordor Intelligence's report verifying positive long-term growth projections for this market segment represents undeniably good news for the energy sector. Producers will be able to maintain better oversight of drilling efforts in a manner beneficial to oil extraction, efficient operations and personal safety.


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