SmarTech Publishing’s new Additive Manufacturing Opportunities in Oil and Gas Markets report, shows that additive manufacturing (AM) is still at an early stage of adoption in the oil and gas industry, however it also claims that in the near future, all sectors of this industry — upstream, midstream and downstream – is going to benefit from AM.

Oil and gas prices are at record lows and many smaller companies in the industry are struggling, while the larger companies are reported to be considering mergers and drastic staff reductions in order to cut losses and improve gross margins, the latter being the worst they have been in 30 years. In this poor environment SmarTech Publishing believes that AM will prove a very useful tool to cut costs and streamline processes.

In the past, oil and gas firms have traditionally not invested in advanced manufacturing technologies, even though industry profit margins – around 20% – would have facilitated it.  SmarTech Publishing believes it will be harder now to make that transition and that AM may open a new era of prosperity for some firms in oil and gas.  But in its report, SmarTech Publishinganticipates that falling energy prices and constricted operations due to relatively inflexible cost structure are catalyzing the desire for innovation.

AM Returning Oil and Gas to Prosperity

GE’s oil and gas division has taken up a leadership role in deploying AM processes presumably learning from its already extensive use of AM in its aerospace manufacturing group.  In Italy GE is printing metal end burners for gas turbine combustion chambers as well as nozzles through an automated production line. In India, GE plans to use AM to enable as many as 44,000 fuel nozzles to be manufactured per year. In Japan, GE has been using Mastsuura 3D printing technology to produce control valve parts since early 2015.

While GE is clearly a pioneer in this space, SmarTech Publishing believes that the largest oil and gas giants, the E&P companies, will soon begin to use AM extensively. If energy prices rise again, E&P companies will have an easier time investing in AM.  But even if they do not, they may still have no choice but to invest in AM to streamline processes and cut costs.

We think that E&P companies will primarily use AM for refining and processing equipment, but also for prototyping and modeling for exploration and operational equipment. Today, however, the oil and gas industry is just beginning with AM adoption.  Even the most advanced adopters of AM still live in earlier stages of the SmarTech Publishing AM adoption model.   (See Exhibit A.)

Exhibit A – Companies Investing

Although, AM could help return the oil and gas industry to prosperity, the industry is quite conservative, which is one reason why the potential of AM has remained largely unexplored Transocean and OneSubSea, two prominent organizations involved in various aspects of subsea oil and gas operations and services, report that they do not believe there is currently significant implementation or investment into advanced or novel manufacturing technologies in the subsea sector.

Likely AM Strategies for AM

Exhibit B shows SmarTech Publishing innovation trajectory in the oil and gas industry.  As we have already noted, we expect the oil and gas industry to learn a lot from what has already been done with AM in the aerospace industry.

These are applications stemming from metal AM, however SmarTech Publishing believes that the Oil & Gas industry also stands to benefit, in the shorter term, from polymer based 3D printing for the production of physical 3D models.  Two examples here to indicate how AM can move beyond aping aerospace:

• One E&P giant, Shell, has published a successful case study on this type of application.  This covers a polymer 3D printed prototype of the highly complex system that will connect the Floating Production Storage and Offloading (FPSO) vessel of its Stones Project to pipelines from the seabed.
• Similarly, the implementation of multi-material and multi-color 3D printing technologies could prove invaluable for creating physical representations of three dimensional seismic imaging data, enabling exploration professionals to better communicate across business units and between teams, as well as to more accurately gauge well production potential through physical modeling of the geologic features in the area.

Exhibit B – Willingness To Invest

SmarTech Publishing’s new report details many other opportunities for AM in the oil and gas industry. And for the oil and gas industry to fuel the AM industry’s growth, in the most cost-efficient and sustainable way, is bound to be mutually beneficial.

The latest “Opportunities in Low-Cost 3D Printers: Technologies, Materials and Markets 2016” report by SmarTech Publishingindicates that, while low cost 3D printers may not yet ready to cater to consumer demands, they are ideal in addressing internal prototyping and product development demands by companies and professionals. Today, the “desktops” in “desktop 3D printing” (a term that is generally considered to be interchangeable with “personal” and “low-cost” 3D printing) are inside the studios of engineers, architects and medical professionals, rather than those inside the consumers’ homes.

Enter the Prosumers

This has resulted in the development of the new “prosumer” market segment, which includes low-cost systems positioned slightly beyond $5,000 (a price-point which has defined low-cost and personal 3D printing in the first few years of its expansion, primarily within maker and artisan communities).

These prosumer 3D printers are, by and large (92%), based on thermoplastic material extrusion technology, even though they are now beginning to include a selection of low-cost photolymerization based systems (8%). Although still very small, the low-cost photopolymerization segment has experienced the most significant growth rate (+116%) in 2015.

Through technological improvements (driven by intense competition) and increased process repeatability, these 3D printers have been able to address the low to medium level prototyping requirements of both small and medium size companies (in some cases even those of large enterprises). They have done this by offering adequate performances at significantly reduced prices, with a widening range of compatible materials.

Although low-cost 3D printing has proven to be more of an option to augment existing business areas (in product design, architecture or basic tooling), rather than a driver for new businesses, SmarTech Publishing does identify one new business segment that has shown a steady overall growth: localized “B2C” (business to consumer) low-cost 3D printing services.

Once again the prime audience for these local businesses is not necessarily the consumer per se, as much as the single professional who has identified a cost-effective use for basic extrusion or photopolymerization 3D printing services. These could be architects and product designers working on personal projects, as well as makers, inventors and educators. The bottom line is that professionals who use CAD software in their line of work are likely to benefit from 3D printing at some point, although not to the point where they would invest in purchasing a personal 3D printer.

SmarTech Publishing does not anticipate – at this point – a future in which 3D printers will be owned by a majority of the population as a standard household item, the increased availability of high-performance materials for low-cost 3D printers has been and will continue to enable these local B2C 3D printing services to cater to a growing demand for “lifestyle customization” of consumer products. These include toy robot, drones and quadcopters, modification or “mods” of technological devices, as well as sporting accessories in a widening range of disciplines.

A Technological Meeting Point

As thermoplastic extrusion 3D printers evolve to meet the demands of professionals (with a consequent rise of the price point to between $5,000 and $10,000) a new range of low-cost photopolymerization-based systems have started to make their way into this new “prosumer” price range. They include Autodesk’s Ember DLP 3D printer and DWS’s Xfab (both priced at just over $5,000), as well as 3D Systems’ Projet 1200 ($4,900) and, in the “original low-cost” (sub-$5,000) range, Formlabs’ Form 2.

Over the course of 2015 and early 2016 a few notable systems based on alternative technologies have also begun to populate the prosumer range. These include mcor Technologies’ ARKe laminated object manufacturing 3D printer (currently the only low-cost system with full color capabilities), and MarkForged Mark One (and Mark Two) for carbon fiber composite manufacturing. Both are priced between $5,000 and $10,000.

While the low-cost 3D printer market is currently almost entirely populated by thermoplastic extrusion systems, However, it is destined to grow to encompass other technologies that are currently only available for professional and industrial grade 3D printing, such as binder jetting and polymer powder bed fusion/sintering.  These are still too expensive to be called low cost – but the trend to lower cost machines using diverse technologies is unmistakable.

The shift has already begun: In 2015 Italy’s Sharebot, Poland’s Sinterit and Switzerland’s Sintratec have presented sub $40,000 SLS systems that are now close to commercialization. The French giant Prodways recently presented its first $100K SLS system (powered by Farsoon technology). On the binder jetting front, China based Addwii has presented a sub $40,000 full color binder jetting system while 3D Systems is still toying with the idea of entering the low cost market with its own market leading technology.

All these dynamics may soon live through a significant acceleration with the official market entrance by HP and the IT’s giant stated intention to make 3D printing a strategic priority. Its ultra fast MJF technology is affordable, highly scalable and – together with its open materials policy – may fuel a significant push in product, process and materials innovation. Its effects on the low-cost 3D printing market are not clear at this point but they are going to be closely monitored and will certainly be seen in SmarTech’s future reports.

Since 3D Systems pulled out of the consumer market and Stratasys moved MakerBot production to Asia, a new “pack” of low cost 3D printing market leaders has succeeded by successfully catering to the needs of “prosumers” and enterprise level adopters. The latest report “Opportunities in Low Cost 3D Printers: Technologies, Materials and Markets 2016” from SmarTech Publishing identifies who these companies are and why they have been able to succeed where larger ones have failed.

Mistakes Made

SmarTech Publishing believes that the main reason why the low cost 3D printing market has been described by the mainstream business and investment media as “in shambles and doomed”, is that the three major investors in the adoption of consumer 3D printing – industry leaders Stratasys and 3D Systems, along with China-based Tiertime (PP3DP) – have registered substantial losses in their consumer divisions during the course of 2015 and generally fell short of meeting sales targets.

This has resulted in a general shift in policies, with the extreme case of 3D Systems pulling entirely out of its Cubify consumer 3D printing push. This does not mean that 3D Systems has entirely quit the low cost 3D printing segment. Its Cube Pro filament extrusion 3D printer is still on the market and is one among a selected few that can proficiently offer nylon 3D printing capabilities, something that is very well received by professional and SME’s.

Stratasys pulled the plug on its US-based (Brooklyn, NY) MakerBot operations as it subcontracted out manufacturing of its entire MakerBot range. The only exception to such cutbacks is Tiertime, which has responded to challenge in the consumer areas by focusing more heavily on it and releasing a more consumer-ready platform (the UP Mini 2) to its UP line of low cost desktop 3D printing systems.

Coming from a strictly professional experience in the manufacturing sector, both 3D Systems and Stratasys also made some errors in their strategy to address consumers, demonstrating a lack of understanding of low cost 3D printing dynamics and of consumer technology markets in general.

Seeking to implement an Apple-like business model, both companies sought to capitalize on the hype by offering systems with prices driven up by complex engineering and electronics, finalized in elegant design and ease of use. At the same time, they limited experimentation and modifications by implementing a partially or entirely closed materials and software system.

In the end both of these approaches made the systems more difficult to operate instead of easier, with MakerBot’s Smart Extruder common malfunctions being the most representative icon of this trend. Both approaches also proved to be strategically wrong, as desktop 3D printer adopters – both professionals and Makers – valued materials selection, affordability and reliability more than plug & play functionalities and aesthetics.

Enter Next Gen Leaders

But as these first generation low cost 3DP vendors struggle to get their strategies right, SmarTech Publishing reports that, a new generation of industry players has been rising to cater to the real demands of the low cost 3D printing industry.

They are led by Netherlands-based Ultimaker. The Dutch company has ultimately picked up the role of market leader in this segment by offering a family of 3D printers that are relatively affordable, sufficiently reliable and able to meet the basic desktop 3D printing demands of both makers and professionals. This has resulted in sales of over 27,000 units in 2015 and a market share of just over 10%.

A similar success has been enjoyed by Taiwan based XYZ Printing. Instead of a relatively pricey and stylish 3D printer with open materials like Ultimaker, it XYZ focused on an ultra-low cost machine (sub $1,000) with a closed materials system. A number of other companies has followed suite, offering even better performances in terms of reliability and materials compatibility, at a price below, or just over, $5,000.

In the opinion of SmarTech Publishing, the reason why a perceived market failure by large industrial manufacturers has turned into a huge market success for new companies is easy to understand.  The demand for low cost printers is still too small for large industrial printers firms to make much of a contribution to their revenue goals by focusing on the low cost segment.

This is why 3% market share is a huge success for a company like Aleph Objects (undoubtedly a rising star in the US market) and a 7% market share is a huge failure for 3D Systems. The low cost 3D printing industry belongs to the smaller players for now and the proof is that the market is becoming more fragmented instead of consolidating into the hands of fewer large companies.  However, all of this may change in time – much as it did in the PC market.  But that change is not likely to occur for a while

In fact, along with Ultimaker there were a number of smaller low-cost 3DP companies that have experienced double and triple digits growth in 2015. These, as seen above, are mostly manufacturers of thermoplastic extrusion based systems, with a few notable exceptions. With an estimated market share of 1.89% (due to its sales being mainly confined to the European continent in 2015) Poland-based Zortrax has been one of the most successful ones, offering a highly reliable 3D printer at an affordable price (around $2,000) and a partially closed materials system.

Several other brands have also stood out in 2015, including Aleph Objects, Leapfrog, Flashforge, Airwolf3D, TypeA Machines, Afinia, Robo 3D, with some other newer players such as Roboze, Fusion3 ad 3ntr coming in 2016. They were able to successfully cater to professional and prosumer end-users demands. Formlabs is currently the only company offering a phopolymerization-based system in this price category. The former MIT spinout now holds a market share of 3.5% and has sold 9,700 3D printers, which – as the company’s Head of Customer Development & Services, Luke Winston once said, “is very likely to be more than all other SLA 3D printer manufacturers combined”.

A Materials World

According to the SmarTech Publishing report on low cost 3D printers, one of the reasons why this market has remained so vibrant in spite of the many challenges it faced is because of its widespread open materials policy, with significant new business opportunities still expected to present themselves both in the thermoplastic and binder jetting powder markets over the next decade.

In 2015 the market for filaments was estimated to be worth $194 million, up 56% compared to the previous year. With the addition of an estimated $10.2 million from photopolymer 3D printing materials (up 142%), the entire low-cost 3D printing materials market was worth $204 million. It is expected to grow more than twenty-fold to $4.5 billion within the next ten years. Even then the great majority (84%) of low-cost 3D printing materials will be thermoplastic filament based, however binder jetting and thermoplastic powders will begin to represent a more significant share of the pie (2.8% and 3.5% respectively).

Further opportunities will arise for low cost 3D printing both in terms of materials and hardware as more industries become adopters. These include both current adopters, such ad educational institutions, and future high value adopters, including the aerospace and automotive sectors.

A particularly good example of this trend is the recent adoption of Ultimaker 3D printers by IT giant Siemens to create PLA casting molds for the rapid and low-cost casting of stainless steel components.

In time, SmarTech Publishing expects that low cost 3D printers, within the reach of even the smallest of businesses, will unlock similar business model innovations through their ability to allow manufacture of components and prototypes in a scalable and cost effective way without the need for large capital investment. Those companies that will be able to meet this demand are going to be leading the next decade of low cost 3D printing evolution.