Northern Sky Research

Rising Bandwidth Demand, Consolidation and the HTS Puzzle

May 24th, 2011 by Brad Grady   More from this Analyst | Profile

Recent discoveries in remote areas such as the Arctic are pushing the Oil & Gas (O&G) sector further away from terrestrial service, which drives satellite connectivity in the digital oilfield.

NSR heard three distinct messages at the Global VSAT Forum’s (GVF) 4th Annual Oil and Gas Communications Europe 2011 conference in Aberdeen on 17 – 18th May. The conference offered an opportunity to hear firsthand accounts of three clear trends affecting this market: O&G industry bandwidth needs are ever increasing, consolidation on the satellite service side has opened previously closed doors to smaller providers, and there are concerns over High Throughput Satellite (HTS) Ka-Band offerings.

The O&G market certainly remains skeptical of the value that upcoming HTS Ka-band services can bring to the exploration, production and distribution segments. Today, these new and emerging HTS services lack clear messages on stabilized or enterprise-grade platforms, do not currently have key O&G areas covered, and the market has overarching concerns over the interoperability of the regional jigsaw puzzle of HTS Ka-band capacity.

As Inmarsat is still determining the content of its Global XPress offering, O&G providers and end-users are in a ‘wait-and-see’ mode before they make large purchasing decisions to assess the overall benefits and reliability of HTS capacity to their operations (and to see if Ku-band pricing will lower as a result.) NSR believes the O&G industry will seek Ku/Ka-band solutions to mitigate concerns over patchy HTS Ka-band services; meanwhile, HTS capacity providers will need to develop roaming capabilities with each other to be successful in this marketplace.

While the HTS value-proposition seems uncertain, NSR highlighted the ever increasing bandwidth needs of the offshore services industry it has studied in its recently released Oil and Gas via Satellite study, and participants and speakers alike overwhelmingly confirmed this trend. One contractor even stated that bandwidth needs that range in the half megabit per second range for a specific segment today could easily increase four-fold in the coming years.

Amidst the wait for HTS services, and bandwidth demand increases, the industry is slowly feeling the effects of the largest merger to date on the satellite services side; that of CapRock, Schlumberger GCS and Core180 into Harris Corporation. “Will bigger be better for all?” was the question posed by many attendees.

One smaller regional player offered the thought that this merger has a silver lining: “The merger has opened a previously closed door to smaller providers to offer the critical redundant link infrastructure vital to O&G operations.” Where O&G companies used to select a primary system from Schlumberger and a back-up from CapRock, now they must look to new, smaller providers to provide critical back-up infrastructure to support their operations. Although consolidation is still occurring, these complementary regional providers could be appealing as separate companies, rather than a large global service provider.

Bottom Line
The GVF’s Oil & Gas Europe conference gave a sense that there are a lot of unanswered questions about HTS, even if it is clear that bandwidth needs keep rising in the sector. As regional players face ever-increasing competition from larger service providers, supporting redundant links could be the door that opens new revenue streams as O&G end-users push further into the frontiers of connectivity.

Information for this article was extracted from NSR's report Oil & Gas via Satellite