Leak detection systems have a primary operational focus related to upstream and midstream oil & gas transportation and associated applications including flowlines, gathering lines, transmission pipelines, offshore platforms, onshore platforms, and oil & gas processing facilities, including LNG terminals. ARC has made every attempt to exclude from the scope of this study any revenues associated with distribution pipelines or any distribution of natural gas or liquids (oil, NGLs, etc.) beyond the refinery. ARC’s intent of the scope of this research is to include only those supplier shipments for those systems in which said suppliers either provide their own associated sensors (i.e., hardware) and their own leak detection software, or those suppliers that provide their own leak detection software solutions for which third-party sensors (i.e., hardware) are leveraged to provide the necessary data for analysis.
There are suppliers that provide primarily a software-based leak detection solution that leverages measurements from pressure, temperature, and flow transmitters that are not associated with the software sale. Among the software-based LDS solutions, ARC has grouped balancing methods of different types such as volume balance, line balance, and modified volume balance within the category of mass volume balance. Additional CPM-based leak detection software systems covered in this study include negative pressure wave, statistical analysis, real-time transient model (RTTM) and extended RTTM (E-RTTM) systems and typically rely on real-time data provided by a SCADA system. ARC may discuss additional suppliers that are offering noteworthy leak detection system technologies that are not covered quantitatively in the scope of this study.
Leak detection system services include pipeline monitoring and for which pipeline leak detection is part of the services being provided. Some companies such as Baker Hughes and Halliburton provide non-operational leak detection services, typically relying on helium and nitrogen detection, for pre-commissioning of oil & gas facilities.
The deployment of solutions designed to detect leaks in upstream or midstream oil & gas operations is a mature technology, to say the least, as the most common solution was, and still is, visual inspection/detection by a person walking (or driving or flying over) the pipeline. In fact, all operators of hazardous liquid pipelines within the United States that are regulated by the DOT are required to perform a visual inspection of their system for leaks at least 26 times per calendar year. While the market is growing at a steady pace, it is expected to hold its appeal for an increasing number of pipeline operators and users who are beginning to view leak detection systems as a necessary form of insurance, rather than just a begrudging expense item required to meet the minimum of regulations.
Leak Detection Systems Industry Standards
There are several key industry standards and regulatory bodies that have had an impact on the leak detection systems market. Among them include the US DOT Pipeline Hazardous Materials Safety Administration (PHMSA), EPA, American Petroleum Institute (API), American Gas Association (AGA), Association of Oil Pipelines (AOPL), Pipeline Research Council International (PRCI), and TRFL, which is the abbreviation for “Technische Regel für Fernleitungsanlagen” (Technical Rule for Pipeline Systems) in Germany. There are also many other similar state or local government organizations or respective regulatory bodies found in most countries across the world where pipelines are operated and/or being built at some point in the future.
API 1130 divides liquid leak detection systems into internally based systems (i.e., Computational Pipeline Monitoring – CPM software) that rely on internal instrumentation to monitor internal pipeline parameters and externally based systems such as fiber optic, infrared, acoustic/ultrasonic and hydrogen carbon sensing cables that rely on instrumentation to measure external pipeline parameters. API 1149 is a best practice used in many countries around the world despite being an American standard. API 1149 is a theoretical analysis of a given leak detection system’s ability to find a leak of a given size, based on the specifications of a given pipeline. It weighs time to detection against the size of the leak. API 1149 provides a measure to weigh against when analyzing the cost of leak detection systems against the risk of undetected leaks.
Leak Detection Systems Industry Structure
The overall upstream and midstream oil & gas markets are made up of a rather diverse group of suppliers. There are several different classes of suppliers including oilfield service providers, such as Schlumberger, Halliburton, and FMC; large automation suppliers, and others are niche-focused suppliers of leak detection systems and related services to the upstream and midstream oil & gas segments. Some participants that are large automation suppliers in this marketplace may include providers of distributed control systems, programmable logic controllers, SCADA, industrial drives, HMI, operator workstations, supervisory computers, valves, flowmeters, transmitters, I/O devices, sensors, production management software, and control software. Many of these suppliers maintain relationships with one another.
Industrial automation companies rely on a complex web of distribution channels to get their products to the end user. Depending on the type of supplier, these channels may include direct sales, distributors and/or value-added resellers, and independent representatives. Products and services are sold to OEMs, system integrators, or directly to end users. Joint marketing agreements and alliance programs are also increasingly common. In these arrangements, one supplier's salesperson may sell and support not only their own product, but also complementary products from other suppliers. For example, many control companies’ market third-party application software. Similarly, oilfield service suppliers and those niche suppliers focused exclusively on the upstream or midstream oil & gas leak detection segments rely on a network of partners, such as engineering firms, EPCs, pipeline surveillance firms, system integrators, and consulting firms to reach the end user, but also employ their own direct sales force when dealing with the major owner-operators and larger independent players involved in the upstream or midstream value chain.