Drones have taken on a particularly dystopian aura in public discourse, thanks to the Obama Administration’s controversial policy of using them to conduct remote warfare. In 2015, as the Financial Post notes, the skies above America will be made accessible to drones as well. While this may provoke concern in many circles, the oil and gas sector is thinking differently.
Late last fall, for example, BP Plc (NYSE: BP) conducted a 20 minute test flight over Alaska using the Aeryon Scout. Companies like BP are musing over the feasibility of using drones for maintenance and observation purposes.
Using such drones, BP can survey pipeline networks and other infrastructure, thus helping in the timely detection of pipeline faults. The cost savings—compared to conventional manned helicopter flights—are quite significant.
Alaska is a particularly congenial testing-ground for this new application, since the regulations and guidelines that will govern domestic drone usage—likely quite strict in the early stages—may well be more relaxed when it comes to this northern state. Indeed, BP hopes to put out the first such drone in Alaska within the next three years.
And when you consider that the total extent of America’s natural gas pipeline network exceeds 300,000 miles, the idea of unmanned drone maintenance becomes a lot more attractive.
The Financial Post lays out some simple math to illustrate the case. A standard manned helicopter monitoring a pipeline for one hour runs up costs of about $3,000. Meanwhile, a drone outfitted with a heat-sensing camera would cost around $85,000. Do the math, and you’ll find that the latter will break even in just 29 hours.
BP, which began exploring the drone option back in 2006, isn’t alone. Royal Dutch Shell Plc (NYSE: RDS-A) began in 2005 and devised its program with an ecological bent. Shell wants to use drones to monitor marine mammalian movement near the company’s operations off Alaskan shores.
Aeryon Labs, which makes the Scout, has designed the drone to be far smaller than the military drones popularly depicted in the press. It boasts the technological advantage of offering far greater manipulability and flexibility than conventional helicopters. All things considered, it could certainly go some way toward improving monitoring of pipelines. After all, a U.S. government report on pipeline safety has previously indicated that as many as one-third of leaks were reported first by the public and then by the companies concerned.
Current Regulatory Framework
Considering all the advantages to the use of drones in the oil and gas sector, we should wonder why this isn’t gaining more traction. As the Financial Post notes, Enbridge Inc. (NYSE: ENB) and TransCanada Corp. (NYSE: TRP)—two of Canada’s biggest pipeline companies—continue to rely on the conventional monitoring methods.
Partly, it’s the fact that drones have yet to prove themselves in the commercial theatre. However, there’s also the question of range. The Scout can manage a 20-minute flight, which is often not at all satisfactory. And you can’t just make the drones more efficient, because the sensor equipment that would be needed for longer durations becomes too bulky.
Our analysts have traveled the world over, dedicated to finding the best and most profitable investments in the global energy markets. All you have to do to join our Energy and Capital investment community is sign up for the newsletter below.
This equipment needs to undergo a process of miniaturization, which (paradoxically enough) would happen faster the more this gains traction. Also, none of these drones employ or feature collision avoidance systems, which would add more bulk (and more complexity).
Until the FAA scenario changes, people simply aren’t interested in introducing drones on a major scale; the costs are too high, and the regulatory framework is too unfriendly.
2015 will see one crucial change in this framework. Presently, only public agencies and universities may fly drones within domestic airspace. From September 2015 onward, that will expand to include commercial usage, which is what the oil and gas companies are waiting for.
However, that’s not really the main issue. Existing regulations include conditions like drones only being flown during daylight, within the remote operator’s line of sight, and at least 5 miles away from any airports nearby. None of those are very conducive toward drone usage for monitoring a nation-wide pipeline network. These regulations will take some years to adjust appropriately, and that’s why drones won’t be seen en masse anytime soon.
But Alaska, given its remote location, could possibly overcome several of these hurdles faster than any of the other U.S. states. We’ll have to wait and see.
If you liked this article, you may also enjoy: