Demand for Oil, Gas Automation Software in Decline

Demand for automation software in the upstream oil and gas industry is currently in decline, according to Ali Raza, the vice president and general manager of advanced solutions at Honeywell Process Solutions.

Speaking to Rigzone at an annual meeting for Honeywell users in the EMEA region being held in Madrid this week, Raza said a key reason for the decline is the fluctuating low oil price environment currently affecting the upstream industry. The Honeywell VP added that interest in these types of systems first began to fall drastically when the oil price dropped last year.

"About a year, a year and a half to two years ago, when the oil price was just hitting the skies…we obviously saw quite a bit of uplift," he said.

"The way things were trending in oil and gas…was more on centralization, remote connectivity. There was a lot of focus on data analytics…so we got involved in multiple projects.

"After the decline [in the oil price in late 2014], I saw people just hitting the brakes right away and for a while there was nothing from oil and gas at all. Although, some of the bigger companies…still wanted to continue. They slowed down their projects but they still wanted to continue, because at that point I think one of the major concerns was cost optimization and basically trying to get savings out of cost optimization.

"In 2015, after the first quarter to 2Q, 3Q…some projects, which were kind of almost dead, were revived and the reason was primarily because they [upstream oil and gas companies] wanted to go for equipment reliability [solutions]."

In spite of demand for automation systems recently beginning to slow again, Raza expects it to pick up by the third quarter of next year.