Global Drilling Chemicals Market – Insights
Drilling chemicals are majorly used in processes such as oil & gas exploration, metal & mineral extraction, coal seam gas drilling, and for bore well drilling. Drilling chemicals are useful in terms of cooling and lubrication of drilling equipment, maintaining the pressure, removing cuttings from bore wells, and providing support and stabilizing the bore well area. Drilling chemicals are widely used to aid drilling boreholes into the earth’s crust.
Among applications, onshore drilling segment holds dominant position in the market. Severe environmental conditions such as desert topography, extreme high and low temperatures, and dry environment necessitate deployment of various types of drilling chemicals either as a cooling agent or as a lubricant for the oil field drilling processes.
Increasing usage of drilling chemicals is majorly attributed to major investments in energy & mineral exploration. Increasing demand for base metals, precious metals, oil, and natural gas is also resulting in rapid growth of the global drilling chemicals market. This is primarily due to growing urbanization and industrialization in emerging economies. For instance, the residential construction sector was valued at US$ 515.9 billion in 2017, and witnessed a 10.6 % increase over 2016 in the U.S., according to the data provided by the U.S. Census Bureau.
Among base fluid type, synthetic based drilling fluids holds significant market share in the drilling chemicals market. Synthetic base fluids are used to provide cost-effective and safe technologies for drilling oil and gas wells. Their use decreases drilling time and provides environmental safety than other oil base fluids.
However, the global drilling chemicals market is affected by a few restraints. One of the major restraints is the impact of drilling chemicals on the environment. The U.S. Environmental Protection Agency (EPA) puts a limit on the use of oil-based chemicals in offshore drilling processes, owing to presence of high level of aromatic substitutes, which can be a major threat to marine organisms. Drilling chemicals can cause various environmental hazards during their usage and disposal, which can have a direct detrimental impact on the flora and fauna and humans.
The global drilling chemicals market was valued at US$ 10,829.0 million in 2018, and is expected to register a CAGR of 5.3% in terms of revenue over the forecast period (2019 – 2027), to reach US$ 17,266.8 million by 2027.
Figure 1. Global Drilling Chemicals Market Share, By Region, 2018
Source: Coherent Market Insights, 2018-19
North America accounted for the largest market share in the global drilling chemicals market in 2018, owing to increasing oil and natural gas production in the region along with potential developments in oilfield in countries such as U.S. and Canada. According to the U.S. Energy Information Administration, crude oil production in U.S. was 8,831 thousand barrels per day in 2016, which increased to 10,962 thousand barrels per day in 2018. Therefore, significant increase in production of crude oil is expected to boost the drilling chemicals market growth in the region during the forecast period.
Middle East is expected to witness the fastest growth in the global drilling chemicals market over the forecast period. Internal olefins are extensively used in drilling fluids or drilling muds, owing to its properties such as well-bore stability, lubricity, and stability at high temperatures. Rising crude oil and shale gas exploration activities have paved paths for oil & gas drilling operations, which in turn has boosted growth of the global drilling chemicals market. For instance, according to the U.S. Energy Information Administration (EIA), in the U.S., around 330 units of crude oil rotary rigs were in operation in June 2016, which increased to 861 units in July 2018.
Figure 2. Global Drilling Chemicals Market Share, By Base Fluid Type, 2018
Source: Coherent Market Insights, 2018-19
Major players operating in the drilling chemicals market include, Anchor Drilling Fluids Inc., MB Holding Company LLC, Tetra Technologies Inc., International Drilling Fluids and Engineering Services (Idec) Ltd., Canadian Energy Services Inc., Weatherford International Ltd., Global Fluids & Chemical Co., Baker Hughes, Newpark Drilling Fluids LLC., Diamoco Group, M-I SWACO, Schlumberger, Oren Hydrocarbons, Halliburton, and others.
Furthermore, key players in the market are focused on adopting strategies such as technological development and collaborations in order to strengthen their footprint in the global drilling chemicals market. For instance, in 2016, Baker Hughes introduced the next generation of fluids separation technologies, TRETOLITE SNAP water clarifiers and demulsifiers to improve fluid separation performance in challenging production environments to improve overall profitability.
Drilling chemicals are also called as drilling muds which are heavy, viscous fluid mixture that is used in oil and gas drilling operations to carry rock cuttings to the surface and also to lubricate and cool the drill bit. Drilling chemicals find application in simpler bore holes such as water wells, and for metal and mineral extraction. Depending on the application, drilling chemicals are classified into onshore and offshore chemicals. Therefore, increasing demand for drilling chemicals is expected to boost the drilling chemicals market growth over the forecast period.
According to International Trade Administration, in 2016, United Arab Emirates (UAE) produced 3.7 million barrels per day (b/d) of petroleum and other liquids, of which 2.9 million b/d was crude oil and remainder was non-crude liquids. The state-owned Abu Dhabi National Oil Company (ADNOC) and its operating companies are in the process of expanding the output of crude oil to 3.5 million barrels per day by 2020, which the country aims to maintain until 2027. Therefore, increasing production of crude oil is expected to boost drilling chemicals market growth during the forecast period.
Among applications, the onshore drilling segment is expected to witness significant market share in the global drilling chemicals market. In 2018, the segment accounted for approximately 70.0% share in the global drilling chemicals market in terms of revenue. The onshore oil and natural gas industry continues to evolve, developing best practices and improving well designs. This evolution resulted in reduced drilling and completion times, lower total well costs, and increased well performance.
Asia Pacific is expected to emerge as one of the potential areas for investment by the end of 2027. This is owing to significant growth of the oil and gas industry in India and China. According to India Brand Equity Foundation, the oil and natural gas industry in India is expected to attract US$ 25 billion investment in exploration and production projects by 2022.
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“*” marked represents similar segmentation in other categories in the respective section.
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