The global oil and gas asset integrity management services market size was valued at USD 19 billion in 2021. It is estimated to reach a predicted value of 38 billion by 2030 at a CAGR of 7.9% during the forecast period (2022-2030). Asset Integrity Management (AIM) is the practice of managing an asset to ensure its ability to perform its function effectively and efficiently. The market studied involves services offered at all stages of the oil and gas life cycle, from conception to engineering and design, construction, operation, inspection, and repair/replacement. This ensures that all the equipment and related components have been running properly. Globally, maturing assets in the oil and gas industry are expected to drive the asset integrity management services market. The oil and gas sector has exploited assets, such as offshore platforms, rigs, and pipelines, well past their lifespan. Most of the assets are anticipated to see ongoing use in the upcoming years due to the rising need for manufacturing, which will drive the market under investigation.
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Maturing Assets in the Oil and Gas Sector
The industry's assets, such as offshore platforms, rigs, and pipelines, are primarily used beyond their design life. With the continuous rise in output demand, most assets are anticipated to be employed more throughout the projected period. Furthermore, harsh ocean currents, corrosive saline water, and regular hurricanes can affect offshore oil and gas sites. Platforms are stationary instead of mobile drilling rigs, which can be moved ashore for repairs. The maintenance records are unreliable because many platforms are old or have been sold and bought numerous times.
Moreover, the typical lifespan of a pipeline in the oil and gas industry has been estimated to be 20-40 years, but with the current corrosion management, that lifetime has substantially increased. As of 2020, the average age of Gulf of Mexico (GOM) pipelines was 23 years. The average life will continue to increase as the existing infrastructure is called upon to produce new subsea tiebacks. Therefore, to prevent accidents or leakage, good inspection and maintenance of the aging pipeline system will be of top priority for ensuring the safe production of GOM oil and gas in the coming years. Therefore, the increasing age of pipeline infrastructure is expected to propel the market's growth.
Rising Investments in Gas Infrastructure
For several years, natural gas has witnessed a growth in its global production and consumption due to the countries shifting from coal to natural gas as a primary energy source. In 2019, the global natural gas production was 3989.3 billion cubic meters (bcm), which rose from 3146.2 bcm in 2010. Many countries, such as India and China, have long-term plans to reduce greenhouse gas emissions by reducing coal usage. To meet their long-term goals, the countries have already increased their natural gas consumption, which can be seen as a transition phase to decrease emissions from coal-based power plants.
The increasing exploration and production of natural gas reserves are mainly driven due to the rise in the industrial demand from the refining, petrochemical, specialty chemicals, and fertilizer industries. As an illustration, the Indian government said in 2020 that it would spend over USD 60 billion to build up gas infrastructure in the nation through 2024 and raise the proportion of gas in the energy mix from 6% to 15% by 2030. Such an announcement by the government is expected to boost the market for gas-based power generation on the country's east coast of India. Furthermore, the LNG trade is expected to increase globally, resulting in increased demand for natural gas pipeline networks and an upcoming pipeline integrity management opportunity.
High Volatility of Crude Oil Price
Regarding price volatility, the oil and gas sector ranks among the major industries. In the last twelve years, the sector experienced three sudden falls in crude oil prices, first in 2008, second in 2014 and third in 2020. The volatility of the oil prices is majorly due to the supply-demand gap and geopolitics scenario. The oil and gas asset integrity management market was restrained due to the diminished financial conditions or financial distress of the oil and gas operators caused due to the reduced oil prices. This was directly reflected in the AIM service providers' revenue in 2020. For instance, in 2020, the Oceaneering Integrity Management and Digital Solution segment's revenue fell from USD 266.9 million in 2019 to USD 226.08 million in 2020. Hence, the high volatility of crude oil prices and the COVID-19 situation are expected to hinder the market, thus restraining the market growth in the forecast period.
Offshore Decommissioning Activities
The Outer Continental Shelf (OCS) of the GoM is one of the world's most highly developed and mature basins. There are around 3,060 platforms in the GoM OCS region as of February 1, 2021. This region also accounts for the largest market for decommissioning activity in the world, and the market is set to expand during the forecast period. The "lower for longer" oil price environment has led to growth in asset decommissioning in the offshore oil and gas sector. A significant amount of idle iron needs to be removed from the GoM. Before implementing restrictive regulations, such as NTL 2010-G05 and NTL 2016-N01, operators postponed decommissioning structures stating their utilization in future well drilling activities or as auxiliary infrastructure. This trend has led to a significant increase in idle iron, which, in turn, is now resulting in the growth of decommissioning of both shallow and deepwater assets in the GoM OCS region. During 2021-2029, the United Kingdom Continental Shelf (UKCS) is expected to witness decommissioning activity of nearly 7,790 km of the pipeline network. As a result, the increasing decommissioning of old oil and gas pipelines is expected to create a considerable demand for pigging, flushing, filling, and plugging of the pipeline before the complete removal or abandonment of the whole system in the coming years.
The global oil and gas asset integrity management services market is segmented by location of deployment, sector, and region.
By location of deployment, the global oil and gas asset integrity management services market: is segmented into onshore and offshore. The onshore segment dominated during the forecast period. The onshore segment has several advantages over the offshore segment, such as the low capital expenditure (CAPEX) and accessibility to the location, making it easier for exploration and production than offshore locations. Therefore, the onshore oil and gas industry will likely witness growth in a low-price environment. The average life span of an onshore oil field is 15 to 30 years. With many active onshore rigs, various onshore operations and infrastructure are either approaching or aging far past their operational life expectancy. Services, such as asset integrity management (AIM), will play a crucial role in increasing the efficiency of a well and the rig. Additionally, the focus on upgrading the existing facilities led to the complexity of the systems involved in various operations in the supply chain, which increased the demand for asset integrity management services.
The offshore segment is the second largest. The offshore fields account for about 30% of global crude oil production. The Middle East, North Sea, Brazil, the Gulf of Mexico, and the Caspian Sea are the major offshore oil and gas producing regions across the globe. Additionally, the market for offshore asset integrity management services is anticipated to benefit significantly from the abundance of resources and enhanced possibilities for recovering oil and gas from deepwater and ultra-deepwater areas.
By sector, the global oil and gas asset integrity management services market: is segmented into upstream, midstream, and downstream. The downstream segment accounted for the largest market share The global refining sector is witnessing significant demand growth due to the increasing demand for refined products from the chemical and petrochemical industry. The crack spread has increased due to higher margins, which is an essential factor for the profitability of oil refineries and encourages investment in new projects. The sector uses high pressure and temperature for its operations, making refinery operators focus more on predictive and preventative asset integrity management programs such as oil analysis, vibration analysis, thermal imaging, pressure testing, craft training programs, etc. The global crude oil refining capacity in 2019 was 101,340 Thousand Barrels per day (TBPD), which rose by 7.28% from 94,462 TBPD in 2011. Additionally, the capacity for refining or processing gases is anticipated to grow during the projection period due to the use of natural gas in the energy sector to produce electricity, growing the downstream sector for asset integrity management.
By region, the global oil and gas asset integrity management services market: is segmented into North America, Asia-Pacific, Europe, South America, Middle East & Africa.
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North America accounted for the largest market share during the forecast period. Over the past ten years, the United States has led oil and gas operations. The country has a vast oil and gas infrastructure, ranging from oil and gas drilling and production platforms to a vast pipeline network to complex refineries across various parts of the region. As of 2020, there were 135 operable refineries in the country, while most US refineries are between 50 and 120 years old, with an average age of about 40. The total number of operable refineries has declined from 223 in 1985 to 135 in 2020, and at the same time, the operable refinery capacity has increased from 15.6 Mbps to 18.6 mbpd. This indicates the continuous advancement in refinery technologies and increased operational efficiency of the US refineries. Therefore, maintaining these refineries' operational efficiency and safety is of utmost importance to the operators. Furthermore, as of 2019, the country has 224,045 oil pipelines and 1,638,176 gas pipelines. The consumer demand for natural gas more than doubled after World War II, prompting the installation of almost half of the current major natural gas transmission pipeline network and a sizable amount of the local distribution network. With the shift toward natural gas as a primary energy source in various applications, the pipeline mileage is likely to ramp up in coming years, thereby increasing the need for pipeline integrity management services.
Europe is the second largest region. Russia is at the forefront of oil and gas-related activities in the region. The country has a vast oil and gas infrastructure ranging from oil and gas drilling and production platforms and massive pipeline networks to complex refineries across various regions. It is a significant exporter of oil and gas and has a significantly developed pipeline infrastructure. On the upstream front, traditionally, the market has been driven by the onshore sector, but recently offshore has been gaining momentum due to reduced onshore oil production and maturing oilfields. Furthermore, Russia has a massive network of pipelines for exporting oil and gas to Europe and other foreign countries, including China. Gazprom controls most of the pipelines and has over 172,600 kilometers of pipeline, including domestic and international. Due to the uninhabited nature of most of the country's region, following extreme weather, maintenance and repair work can become extremely difficult, especially in winter. The country's pipeline infrastructure witnesses some of the harshest weather and requires intrinsic asset integrity management services to maintain continuous operations. The country is actively developing new pipelines to support its existing infrastructure and further develop its gas exporting capacity and capability, which is expected to create a significant opportunity for the market players.
Asia-Pacific is the third largest region. China is the most significant natural gas producer and crude oil in the Asia-Pacific region and has accounted for around 50% and 26% of the total production of crude oil and natural gas, respectively, in the region in 2019. The country has an enormous oil and gas infrastructure, including drilling rigs, production platforms, refineries, pipelines, and terminals. As of March 2020, the country had around 98 crude oil pipelines with a total length of 25,430 km, 87 refined product pipelines with a total network length of 27,945 km, and more than 73,400 km of natural gas pipelines. Such as huge pipeline network, which includes new and old pipelines, is expected to create a significant demand for AIM services during the forecast period. In addition to the midstream and downstream infrastructure, upstream oil & gas infrastructure such as onshore and offshore drilling rigs or platforms are expected to further propel the demand for AIM services in China during the forecast period.
The key players in the global oil and gas asset integrity management services market are Bureau Veritas SA, Oceaneering International Inc., Penspen Ltd, Intertek Group PLC, Aker Solutions ASA, Fluor Corporation, Technip FMC, Applus Services SA, ABS Group, ESR Group, GE Digital, Worley Limited, FLYABILITY SA.