Urbanisation has been a major factor behind energy demand across various regions, especially among the emerging economies. It is expected that China and India would contribute a lion's share toward the energy demand in the future. As an emerging application area for RFID, the trends in this industry can mean flush or lean times for the RFID vendors. Radio frequency identification (RFID) is gradually attracting interests from different end-user groups. With the energy industry's measured acceptance of this new technology on the rise, the adoption trend is expected to witness a rising curve in the long term. Does this showcase opportunities for vendors in this space in the future? The answer is YES.
Urbanisation has been a major factor behind energy demand across various regions, especially among the emerging economies. It is expected that China and India would contribute a lion's share toward the energy demand in the future. As an emerging application area for RFID, the trends in this industry can mean flush or lean times for the RFID vendors. Radio frequency identification (RFID) is gradually attracting interests from different end-user groups. With the energy industry's measured acceptance of this new technology on the rise, the adoption trend is expected to witness a rising curve in the long term. Does this showcase opportunities for vendors in this space in the future? The answer is YES.
Among competing technologies, RFID has emerged as a winner in enhancing business processes across many industrial sectors. It is understood that the low costs associated with the implementation of bar code technology offers significant monetary benefits to the customers in the oil and gas industry. The industry lays greater emphasis on quality and reliability, as opposed to price, to avoid plant downtime. Hence, despite bar codes offering cheaper solution, customers in the oil and gas industry opt for RFID. Also, with these components being exposed to harsh environments, RFID with its robust design and packing is better suited for such applications. Furthermore, RFID reduces the human intervention, thereby, enhancing the operational efficiency.
The aforementioned characteristics of this technology satisfy the requirements of customers in this industry, resulting in greater demand for increased adoption with time.
With RFID being an emerging technology in the oil and gas industry, the vendors face quite a few challenges. Certain key challenges are:
Conservative mindset of the customers - Despite RFID being capable of offering enhanced visibility of asset, personnel, and materials, customers prefer to opt for traditional technologies due to their limited exposure to the technology. Although, RFID has been gaining foothold in the oil and gas industry in recent years, customer conservatism is expected to be the major road block for greater adoption in the future.
Low technical skills - As there is an increasing need for completely integrated solutions, the role of system integrators in the value chain holds greater significance. System integrators' unfamiliarity with the benefits of the technology and lack of technical expertise pertaining to these products pose a major challenge in this market.
The needs of the oil and gas industry and the trends pave the way for a rising adoption curve in the future. The immediate need of the industry is to enhance its operational efficiencies and manage other business processes in an efficient manner. Various processes in this industry are considered to be mission-critical and failure would result in loss. RFID enables customers to monitor products health, keep track of their assets, and manage the safety of their employees.
Oil and gas is popularly known as liquid gold as the availability of resources is depleting with time. Newly found reserves apparently are located at remote locations, which are sometimes inaccessible by humans. This drives the need for dynamic monitoring of components from a remote location, which is expected to be an absolute necessity. In addition, with rising regulations on employee health and safety in harsh environments, personnel safety is expected to emerge as a key factor driving demand in the future.
Thus, customers are expected to opt for RFID solutions to gain extensive visibility of each component, asset, and personnel.
Technology-driven advancements are expected to factor as major drivers in future adoption. The advancements may serve to enhance the product, reduce product costs or enhance the usability of the product. Although, both passive and active RFID technologies are used in this industry, active RFID technologies dominate on account of longer read ranges and compatibility with existing wireless networks. Also, with the value chain prevalent among different regions, tracking and visibility of asset across the entire value chain carries utmost importance among oil and gas vendors. Furthermore, the use of RTLS in monitoring and tracking is expected to gain traction with increasing growth in Wi-Fi technologies. Thus, continuous focus on research and development in this space has a positive impact on the market.
Future advancements in this space include printed electronics, cloud computing, and sensor-augmented RFID technology. Advent of printed electronics is expected to impact the costs associated with RFID implementations, thereby, furthering the adoption. Sensor-augmented active RFID are set to be the third generation among the various active RFID technologies. Sensors enable tracking, locating, and sensing, thereby, making it competitive and beneficial for the customers. With harsh working environments, working in inaccessible areas being the traits of this industry, sensors provide the industry with the extra dimension to enable smart monitoring. Increased competition and changing customer requirements drive real time business needs to predict, sense, and respond to market conditions. Thus, making smarter decisions and reacting faster enables companies to be ahead of competition.
RFID adoption in the oil and gas industry, which predominantly comprises mission-critical processes, opts for quality/reliability, and performance.
Performance - Performance-related parameters such as antenna efficiency, read range, read rate, information accuracy and ease-of-use are key to successful implementation. Better performance enhances customer loyalty and is considered to be the key purchasing factor in choosing an RFID vendor.
Customer References - Across the different components of an RFID system (Tags, Readers, Printers, and Middleware) customer references provide a major competitive edge. It relates to the suppliers' experience in this field and their brand name in the market. Core strategy involves offering complete solutions and developing strategic partnerships with vendors to enhance global footprint.
The global oil and gas industry has resembled the proverbial roller coaster over the past few years. It is understood that the demand for energy is expected to increase exponentially by 2035, with consumption levels expected to double in certain developing countries. With conventional energy sources being the primary source to meet the demand requirements, opportunities for RFID continues to exist in this industry.