Multiphase Flow Metering and Virtual Flow Metering Markets Overview – Q&A

ARC recently completed a comprehensive market investigation into the multiphase flow metering (MPFM) and virtual flow metering (VFM) solutions market.  Lead author, Tim Shea, was interviewed by Allen Avery on some of the key highlights uncovered during the research process that users and suppliers of multiphase flow metering and/or virtual flow metering solutions may find to be of interest.

Multiphase Flow Metering and Virtual Flow Metering Measurement Methodologies

Allen:            Hello and welcome to the ARC Automation Studio. I'm Allen Avery, a senior analyst here at ARC, and today's topic in the studio will be multiphase flow metering and virtual flow metering solutions centered around the oil and gas industry. Joining us today is senior analyst, Tim Shea who just completed the study on this topic.

Allen:              Thanks for joining us today, Tim. Now, we've worked together for a number of years, and know each other pretty well, but for the benefit of our audience, I wonder if you could tell us what your area of expertise is in the multiphase flow metering and virtual flow metering solutions markets, and how that enriches your analysis of the topic? Also, what are the measurement technologies that would help the audience better understand this topic?

Tim:               Thanks Allen. I've been covering the multiphase flow metering market at ARC since 2014, and ARC itself has been covering the multiphase markets since 2008.  One of the two main measurement methodologies that are under study today are multiphase flow metering solutions, which are multi-sensorial physical-based meters, typically using a gamma attenuation or a non-radioactive approach using magnetic resonance or impedance measurement (capacitance/conductance of the oil/water mixture) and bulk velocity measurement via sensor cross-correlation or others combined in a variety of different multi-sensorial approaches.

The other main measurement methodology was coverage on the virtual flow metering market segment, which is basically software-based calculations using existing pressure, temperature, and flow data, typically measured at the wellbore, to derive a virtual flow and phase composition reading.

Trends driving investment in multiphase flow metering and virtual flow metering solutions

Allen:              Now, I wonder what trends are driving customers to increase their investments in multiphase flow and virtual flow metering technologies?

Tim:                Well Allen, there are four major trends driving customers to increase their investment in MPFM and VFM solutions.

                       First, the potential number of wells that can benefit from MPFM or VFM is quite large. There are over 1 million wells operating worldwide, and about 100,000 drilled annually based on some industry sources. And some share of these wells can certainly support and benefit from an MPFM and/or a VFM solution.

Second, validation of product performance improvements in terms of accuracy and reliability is driving greater adoption. Over time, these units have been increasingly deployed in the different formations around the world and are being validated as providing a greater level of accuracy and measurement than was previously found in the past. This is validating the customer's confidence in these solutions to be deployed in the field.  VFMs can be a useful tool in helping them with the validation of an MPFM itself.  

Third, the need for real-time multiphase flow measurement is real and is growing in a number of applications and project locations. Onshore projects, albeit some challenging shale formations, are benefiting as are offshore and subsea projects for applications, such as well testing, production allocation, production optimization, and artificial lift, among others.

                  Lastly, VFMs increasingly are seen by operators and independent E&P firms as a lower cost complimentary option to an MPFM. Users are increasingly seeking ways to reduce costs, and more and more of these customers are looking to VFMs as a lower cost solution that can provide a backup or a validation of an existing MPFM, perhaps provide real-time field surveillance or production monitoring for wells that cannot support an MPFM. And there are other benefits as well.

Key drivers for growth in multiphase flow metering and virtual flow metering solutions

Allen:              What are the underlying drivers that have been critical to growth in the multiphase flow and virtual flow metering market?

Tim:             There are really three main underlying drivers that have been critical to growth in this market. First is the increasing demand for energy and the growing demand for natural gas for use in power generation. Industry sources indicate that global demand for energy consumption will rise between 1.5% and 2% annually over the next 25 years. Natural gas is seen by many as serving the role of a bridge fuel in the distant future when solar will be primary energy source. This near-term demand is going to be increasing the need for hydrocarbons, particularly oil and gas, and thus, the need for multiphase flow measurement to support that demand.

                    The second one is with the end of easy oil in the ‘lower for longer market’ these days, investments in operational improvements to ensure national interests are protected, particularly by national oil companies or integrated oil companies, as well as independents. They're all struggling to find ways to operate, and operate profitably, in these challenging times. Thus, ARC believes investments in an MPFM and/or VFM solution can provide some good return on investment and/or operational improvements.

                   Lastly, the most important driver has been the price volatility in oil and gas prices. Thus, any solution that can help operators deal with that volatility, improve operational performance and flexibility, as well as profitability is seen as really almost a necessary investment.

Strategies for impacting competitive landscape lie in serving needs of the customer

Allen:              What strategy should suppliers consider to improve their market position in the multiphase flow and virtual flow metering markets?

Tim:                The three key strategic initiatives for suppliers to consider improving their MPFM and VFM competitive positions are as follows. First, to continue to invest in product development to ensure proven performance and customer confidence. That is increasing the accuracy of the measurements, and also in many ways trying to reduce the cost, which is very critical. But also, to educate the users on what are the tangible benefits of the MPFM and VFM solutions. So, we see it as advancements in sensing technologies and/or simulation software, advanced analytics, and things like machine learning to help improve the accuracy, reduce uncertainty, and ensure reliable real-time measurements are critical to increasing adoption.

                        Second, we believe investing in and working with testing organizations to expedite product validations and certifications. We found that during our research, working with owner-operators and independents, that validation of these solutions in the field was the most critical factor for them to having a confidence to make an investment decision. So, to work with these organizations to understand the current and changing operational requirements, many of these organizations, like TUV, SUD, NEL and RPSEA, among others, can be a very vital good source for validation and credibility for the suppliers' solution.

                        Lastly, we believe in developing effective sales and marketing campaigns. Basically, what we mean is mean highlighting user success stories in different project locations and formations, so as to cover the broadest reach possible to generate awareness and interest, and really position an MPFM or a VFM as a “need to have solution rather than one that is nice to have”. It's that decision to get the user to see these solutions as a critical investment to enhance their operational performance that's going to be bringing successful endeavors in the future.

Allen:              Thanks for sharing your insights with us today, Tim. This concludes our presentation on the multiphase flow metering and virtual flow metering solutions market. Audience members who would like more information, or have any questions about the research, should get in touch with a client manager here at ARC or contact the author directly at tshea@arcweb.com. The video/audio of this discussion is available at Multiphase Flow and Virtual Flow Metering Solutions. Thanks for your attention and have a great day.