The U.S. Government’s Energy Information Agency recently published that third quarter 2010 capital expenditures on production activities at the top 13 O&G companies are at a five-year high of $29.1B, exceeding the previous high in Q3 2008 of $28.2B. Driven in part by increases in drilling activities after the Gulf of Mexico Moratorium, capital expenditures are up 48% from third-quarter averages from 2005 – 2009, indicating a general upward trend in overall exploration and production (E&P) activities. Hand-in-hand with increases in capital expenditures, O&G companies are looking to connectivity providers to enable a highly connected, real-time, collaborative remote site to boost productivity, reduce downtime, and increase safety.

According to estimates from Shell, who recently deployed remote-monitoring centers at their Houston, TX campus, their real-time monitoring center saves the company more than $100 million/year in reductions in lost well-time, and ‘other benefits.’ Beyond the cost savings, real-time monitoring facilities provide two major functions. Firstly, it enables E&P companies to conduct more well planning by supporting collaboration and, secondly, enables real-time 24/7 monitoring of well data to enhance safety and reduce costly errors. While Shell admits crews objected to the ‘big brother’ monitoring at first, offshore personnel have now come to view these systems as a way to ensure that they can focus on what needs to be done to operate the rig, and still have a safety net to alert them if anything is abnormal. Overall, Shell has announced plans to deploy more remote-monitoring centers to other regions of the globe, and other O&G firms such as Exxon-Mobile, BP, and Chevron have plans to develop and deploy similar systems.

The Real-Time Well-site

Voice is the critical component of this suite of real-time well services, often at the top the list of requirements. For rig safety, company and/or government policy often dictate remote personnel must at least remain in voice communications with headquarter personnel. Of the over 8,500 VSAT and MSS units currently providing service to the offshore E&P industry, nearly 100% of them include provisions for voice services. On land, nearly 100% of the 15,000 VSAT and MSS units in the E&P industry include provisions for voice services. Nearly 100% of the 4,200 VSAT and MSS units servicing petroleum tankers include a voice service to support operational and crew comfort needs. Even petroleum pipelines, a traditional narrowband market, are in the midst of a voice revolution to sites that can be provisioned on-the-fly to enable service technicians to dial-in to centralized monitoring centers. While voice services are the foundation for an emerging suite of real-time services, data and video are emerging components of the real-time well-site.

During interviews for NSR’s Oil and Gas via Satellite study, interviewees identified that along with voice services, nearly all E&P VSAT and MSS units supported some form of SCADA-like data service over the usually IP-based network. SCADA services are the cornerstone of the petroleum pipeline industry, but the increased adoption of data standards in the E&P environment are enabling the collection, distribution, and analysis of remote well-site statistics among business units and across companies. WITSML (Well-site Information Transfer Standard Markup Language) is perhaps the widest supported standard with members such as oil giants BP, Chevron, Exxon-Mobile, Shell, contractors such as Schlumberger, Halliburton, Baker Hughes, and IT companies Microsoft, IBM and Oracle. A platform-agnostic standard, WITSML and standards like it support an emerging trend for real-time collaboration and decision-making, reducing cost over-runs and optimizing E&P capabilities.

Supporting voice and data requirements, video is emerging as the latest service entering the remote O&G environment. Used to support collaborative decision-making between contractors and O&G companies, and to diagnose technical problems between remote personnel and onshore experts, video is positioned to become a standard service at the remote site. This position is further heightened by the push away from support of onshore facilities in developed markets of North America and Europe, lengthening supply-chains and extending unprofitable downtimes. With this push, the lack of onshore facilities increases the need for telemedicine centers, where video plays a life-saving role. Video, along with real-time data, and voice will be the trifecta enabling the collaborative rig environment going forward, and which satellite players must be able to support as the O&G industry moves into more remote environments.

What does it mean for the Satellite Industry?

As the requirements for voice, data, and video increase, satellite providers must not only meet these increasing bandwidth requirements, but also provide Quality-of-Service features to ensure voice service priority. Ku-band services will continue to comprise the bulk of in-service O&G units, but the emergence of High Throughput Satellite (HTS) offerings in 2013 and onwards might entice the highest-usage end-users to adopt these services.

Inmarsat’s Global Xpress seems poised to benefit the most from a collaborative rig-environment, as it is the only HTS system with announced oceanic coverage, but Ka-band’s perceived reliability issues might prevent widespread adoption. Other HTS providers might benefit from land-based O&G activities but will face stiff competition from terrestrial services. Satellite providers will have to continue to readjust their offerings to not only meet bandwidth demands from O&G end-users, but also be able to follow end-users into more remote environments.

Requirements for the collaborative O&G site will be located throughout the globe, but services in traditional locations such as the Gulf of Mexico or the North Sea face competition from well-established terrestrial networks. Even though traditional O&G locations will continue to provide the bulk of revenues for the well-established satellite players, these players will need to offer or strengthen satellite-terrestrial hybrid networks. These networks will enable the real-time collaboration demands of management, and provide the redundancy governments or corporate policies require.

New discoveries and remote environments away from terrestrial infrastructure are the best path for growth for satellite players. Remote petroleum pipelines will provide a sizeable base for Ku-band operators, and tankers traversing northern shipping routes will be a growth segment for MSS providers. In short, the best growth segments for satellite services will be where satellite is the only game in town.

Bottom Line
Voice remains the dominant application for O&G end-users through 2020, but the bandwidth boom in coming years will give rise to increases in IP-based data and video services. Going forward to 2020, satellite’s growth in the O&G sector will be linked to its ability to support a highly connected remote site, follow the O&G industry into new discoveries in the Arctic and elsewhere beyond terrestrial infrastructure, and partner with terrestrial providers to create seamless hybrid networks in traditional O&G hotspots.