Oil & Gas Engineering Services Market - Growth, Trends, COVID-19 Impact, and Forecasts (2023-2028)

Key Highlights

• Due to the industry's dynamic nature, the need to maximize efficiency and productivity, maximize uptime and return on assets. At the same time, minimizing costs is expected to drive engineering services adoption in the industry.
• Moreover, the oil & gas industry faces several challenges, such as declining oil prices, increasing penetration of renewable energy, electric vehicles, strict carbon footprint regulations, and new hydrocarbon sources. Hence, the companies are adopting strategic Industry 4.0 strategies to overcome these challenges.
• Advanced technologies application, such as analytics, machine learning, and many more, is expected to assist oil and gas companies in analyzing big data sets and providing meaningful insights. Hence, the engineering services adoption in the industry is expected to rise during the forecast period.
• The market is witnessing strategic collaboration amongst the players as a lucrative path toward expansion. For instance, Equinor, a Norwegian energy firm, awarded a contract to the Italian oilfield service company, Saipem, to provide engineering services globally. The agreement covers feasibility and conceptual studies, front-end engineering and design (FEED) work, detailed engineering and follow-on work, and R&D support. Through the partnership, Saipem will assist Equinor with its upcoming energy-related projects in the offshore, onshore, and floating wind sectors.
• Gas demand decreased by 5 to 10% compared to pre-crisis growth predictions due to the epidemic. The COVID-19 pandemic and its economic implications are receiving intense government attention, which diverts attention from the energy transition. Both the current crisis's short and long-term effects will significantly impact the sector. When and how drastically the oil and gas ecosystem will change will rely on supply-demand trends and other stakeholders' activities, including regulators, governments, and investors.

Key Market Trends

Downstream Segment to Exhibit Significant Growth

• The Downstream sector of the Oil & Gas Industry includes the operations that occur after the production phase until the point of sale. Certain downstream operations include refining, processing, transportation, and selling petroleum products. The increasing demand for safe and reliable operations while minimizing the total cost of operations is expected to drive the industry's adoption of downstream oil and gas services.
• Downstream oil and gas services play an essential role in maximizing the refining process while impacting the desirability and marketability of the finished product. The downstream supply chain involves significant operations such as effective database management, marketing by-products, and effective management of distribution.
• Downstream oil and gas services include asset integrity management, industrial technical inspection, petroleum testing, refining and distribution, hazardous location equipment testing, and database software solutions. Some include Enterprise Asset Management (EAM) solutions, which address core Asset Information Management and Plant Asset Maintenance Management applications.
• At least temporarily, the Russia-Ukraine conflict hampered the possibilities of a COVID-19 pandemic-related global economic rebound. Economic sanctions on several nations, a rise in commodity prices, and disruptions in the supply chain due to the conflict between these two nations have all impacted numerous international markets.
• Recent years have seen a sharp rise in the world's energy consumption, which is expected to continue. Renewable energy consumption is predicted to rise and reach 24/7 exajoules by 2050. According to BP, the total amount of renewable energy used in 2000 was 42 exajoules.

North America Expected to Dominate the Market

• North America is expected to dominate the Oil and Gas Engineering Services Market due to the increasing number of oil & gas projects in countries such as the United States and Canada. According to US Energy Information and Administration, US crude oil production in their forecast averages 11.7 million b/d in the last year and 12.4 million b/d in the current year.
• The country is witnessing a significant number of strategic collaborations as a lucrative path to grab the opportunities provided by the oil and gas industry in the region. For instance, in July last year, the Geothermal Energy from Oil and Gas Demonstrated Engineering Funding Opportunity Announcement (FOA), which will award up to USD 165 million to expand US geothermal energy deployment by utilizing technologies and labor from the oil and gas industry, was announced by the US Department of Energy (DOE). Using technology and best practices from the oil and gas sector, this initial FOA is anticipated to offer USD 10 million to establish a consortium that will provide a roadmap for overcoming geothermal energy's technological and knowledge gaps.
• In October last year, India and the US announced the creation of a new energy task force to facilitate the extensive integration of renewable energy required to support the clean energy transition. The declaration will elevate the India-US partnership's strength in the vital energy sector. The declaration was made following a bilateral meeting between US Energy Secretary Jennifer Granholm and Union Minister of Petroleum and Natural Gas Hardeep Singh Puri.
• Also, Canada is one of the largest oil and gas producers globally, as the industry plays an essential role in the country's economy. As per the Canadian Association of Petroleum Producers (CAPP), the oil production in the country is expected to reach 5.4 billion bbl/d in 2030, and oil sands are expected to account for 70.7% of the total production.
• In October last year, as Imperial advances, its ambitions to build a top-notch renewable diesel complex at its Strathcona refinery outside of Edmonton, Alberta, Canada, Fluor Corporation was given a contract for reimbursable front-end engineering and comprehensive design, engineering, and procurement services. The new complex will generate about 20,000 barrels of renewable diesel per day from locally sourced feedstocks, making it the largest renewable diesel production facility in Canada.

Competitive Landscape

• May 2022 - The West White Rose Project offshore of Newfoundland and Labrador will resume after a hiatus of more than two years, with the first oil from the platform expected in the first half of 2026, according to Canada's Cenovus Energy and its partners. Following the COVID-19 pandemic, the project's construction was put on hold in March 2020 to stop the virus from spreading. Husky Energy, which at the time ran the project, amalgamated with Cenovus Energy in January 2021. By the end of 2029, the project is anticipated to produce at its highest level of about 80,000 barrels per day (bbls/d), or 45,000 bbls/d net to Cenovus.

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