DRILLING FLUIDS MARKET ANALYSIS

The global drilling fluids market size was valued at US$ 8.03 billion in 2022 and is anticipated to witness a compound annual growth rate (CAGR) of 5% from 2023 to 2030.  The Drilling Fluids market is growing due to the increased consumption of fossil fuels. The demand for drilling mud for offshore applications is also driving the market growth. Moreover, rising global crude oil production and increasing utilization of natural gas as a fuel is expected to propel the growth of the drilling fluids market.

Global Drilling Fluids Market: Regional Insights

North America is projected to gain substantial growth in the global drilling fluids market over the forecast period. This is owing to increasing shale oil and gas and fracking exploration. Moreover, the increasing development of oil and gas fields from untapped reserves is also driving growth of the market in this region. Along with this, the drilling industry is witnessing massive investments and technological developments. This in turn is anticipated to propel growth of the global drilling fluids market in North America over the forecast period.

Furthermore, Middle East and Africa is expected to account for major share in the global drilling fluids market during the forecast period. Due to the high energy self-sufficiency ration of the region in the world along with rising number of production and exploration companies, the market is likely to gain substantial growth in this region. Moreover, with increasing rate of deepwater and ultra-deepwater explorations, specifically in the Persian Gulf and the Red Sea, are driving the demand for drilling fluid. As a result, the market is expected to gain major growth in the region.

Global Drilling Fluids Market: Regional Insights

Figure 1: Drilling Fluids Market Share (%), By Region, 2022

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Global Drilling Fluids Market Drivers:

Rise in onshore and offshore drilling activities to boost the market growth

Drilling fluids are crucial for drilling operations as they serve various functions. The use of these fluids in excavation of subsurface well is prominent. Drilling fluids have various functions including subterranean pressure control, well management, hydrokinetic transmission to the drill bit and downhole equipment, and wellbore stability. Drilling fluids including water-based fluids, oil-based fluids, synthetic fluids, and non-aqueous fluids are often used in onshore and offshore energy and petroleum operations. Thus, with rising drilling activities around the world, the global drilling fluids market is expected to gain strong growth over the forecast period.

Growing demand for shale gas to drive the market growth

The demand for gas-based technology of power generation is increasing all over the world with growing focus on cutting down carbon emissions. Several countries around the world including, Germany, India, and Canada are focusing on development of shale gas exploration resources. According to the International Energy Agency (IEA), the gas share in the global energy mix is likely to increase from 23% to 25% in 2035, which will overtake coal and become the second-biggest primary energy source after oil. Thus, the demand for drilling fluids is likely to increase in the coming year. This factor in turn is anticipated to propel growth of the global drilling fluids market over the forecast period.

Global Drilling Fluids Market Opportunities:

Rise in oil demand in Asia Pacific region is expected to generate growth opportunities in the global drilling fluids market over the forecast period. Countries across Asia Pacific have been one the leading oil-importing countries in the world. However, the complex geology of the region makes it reliant on other countries for the supply of its increasing energy demands. For instance, according to Coherent Market Insights, the consumption of oil per day in Asia Pacific was 34.6 billion barrels in 2020, which accounted for 35% of the overall oil consumption around the world. Thus, several companies are likely to increase their exploration and production expenditure in this region. This in turn will create ample opportunities in the global drilling fluids market.

Increasing deepwater and ulta-deepwater drilling activities are anticipated to offer multiple business opportunities in the global drilling fluids market over the forecast period. With the discovery of oil and gas reservers in West Africa, South America, and Asia Pacific, the deep-water and ultra-deepwater drilling activities are increasing rapidly. Most of the offshore activities are being carried out in deepwater zones, such as Nigeria, Angola, the U.S., Malaysia, Brazil, and Norway. Recently found frontier locations such as east coast of Africa including the eastern Mediterranean, and west coast of Australia are likely to boost expansion of offshore reserves. This in turn is expected to create growth opportunities in the global drilling fluids market.

Global Drilling Fluids Market Trends:

Increasing focus on development of advanced drilling fluid chemicals is a major trend

The demand for oil and gas is increasing across the world due to which key players active in the oil and gas sector are exploring deep and ultra-deepwater opportunities. As a result, the investments in offshore and subsea activities are growing rapidly. The major market players are focusing on investment in development of drilling fluids technologically equipped synthetic fluids that can operate successfully in harsh climatic conditions. For instance, Schlumberger began production of its fluids using synthetic technology. In September 2018, the company developed the CemFIT Shield mud-sealing cement system. Such developments in the sector are likely to support growth of the global drilling fluids market in the coming future.

Increasing demand in onshore applications is a growing trend

Onshore drilling comprises all the drilling sites on dry lands. According to Coherent Market Insights, onshore drilling accounts for 70% of the global oil production. Onshore drilling and offshore drilling are same only without deep water between the oil and the platform. With the constantly increasing oil and gas demand around the world, the number of drilling activities are increasing rapidly, specifically onshore drilling activities. As a result, the demand for drilling fluids is on the rise in onshore applications. This trend is thus likely to continue in the global drilling fluids market over the forecast period.

Global Drilling Fluids Market Restraints:

Changing prices of crude oil to hinder the market growth

The use of drilling fluids is increasing all over the world with growing expenditure on offshore oil and gas exploration and extraction activities. With the upstream efforts of the oil and gas industry, the crude oil output capacity are increasing. However, the crude oil prices are volatile, depending on economic conditions the prices continue to fluctuate, which further impacts demand for this oil. With increasing volatility of crude oil prices, the demand for drilling fluids is adversely impacted. This in turn is expected to limit growth of the global drilling fluids market over the forecast period.

High cost of deepwater and ultra-deepwater drilling to impede the market growth

The importance of drilling fluids is all drilling operations is high, particularly in deepwater environments, as these environments exhibit various technical challenges of drilling such as harsh conditions. This further creates significant vulnerabilities as well as high cost in the development of these fields. Deepwater operations usually are performed at high-risk, high-cost, and require long durations for completions, due to which they are at risk of short-term swings in cost of oil compared to onshore activities. Thus, preferring deepwater and ultra-deepwater drilling operations creates high risks in various aspects. This in turn is anticipated to hamper growth of the global drilling fluids market over the forecast period.

Figure 2: Drilling Fluids Market Share (%), By Product, 2022

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Global Drilling Fluids Market Segmentation:

The global drilling fluids market report is segmented into Application and Product.

Based on Application, the market is segmented into Onshore, and Offshore. Out of which, Onshore is expected to dominate the global market over the forecast period and this is attributed to the growing adoption of drilling fluids in onshore applications due to rise in oil drilling activities for catering the growing demand for energy around the world. Along with this, onshore extraction of oil and gas is less expensive and less complex compared to offshore operations, due to which, its demand is increasing. Thus, the segment is anticipated to show strong growth in the near future.

Offshore segment is also expected to witness significant growth in the near future and this is owing to the increasing expansion of offshore oil exploration for recovering oil prices. Moreover, the demand for drilling fluids in offshore applications is expected to increase also due to rise in number of offshore rig all over the world. As a result, the segment is likely gain strong growth in the coming future.

Based on Product, the market is segmented into Water-Based Drilling Fluids, Oil-Based Drilling Fluids, Synthetic-Based Drilling Fluids, and Others (Foams, Mist, Gas, Dust, and Aerated Liquid). Out of which, Water-Based Drilling Fluids is expected to dominate the global market over the forecast period and this is attributed to the increasing use of water-based muds in operations, as a result of rise in economic and environmental concerns. As these muds are made up of salts, minerals, and organic substances, their demand is increasing rapidly. Thus, the demand for water-based drilling fluids is driving growth of this segment.

Oil-Based Drilling Fluids segment is also expected to witness significant growth in the near future and this is owing to the rise in demand for drilling tools having improved thermal stability and lower corrosion. The demand for oil-based mud is likely to increase in the coming future due to its various benefits such as high lubricity. Thus, the demand for oil-based drilling fluids is increasing, which in turn is driving growth of this segment.

Global Drilling Fluids Market: Key Developments

In May 2021, Baker Hughes Company entered into an agreement with Akastor ASA for a joint venture company bringing together Subsea Drilling System (SDS) business of Baker Hughes with MHWirth AS, a completely-owned subsidiary of Akastor. The new joint venture company will deliver a full service of offshore drilling equipment to offer a wide range of products and services to consumers.

In November 2021, Maersk Drilling, a Danish offshore drilling contractor and the Noble Corporation in the U.S. announced to signed a definitive agreement of merger in a primarily all-stock transaction to create a combined company having a 20 floaters and 19 jack-up rigs fleet.

In 2021, Newpark Resources Inc. introduced next generation high-performance water-based drilling fluids, including Nviros and Hydros specifically designed for leading the way in unconventional and conventional operations, respectively.

In February 2020, Schlumberger Ltd. received an engineering and supply contract from Noble Energy for a 2000-ton single-lift process module, which will be installed on the Leviathan Platform in the Eastern Mediterranean.

Global Drilling Fluids Market: Key Companies Insights

The global drilling fluids market is highly competitive. This is attributed to continuous launch of new technologies due to ongoing R &D and efforts by value chain participants. Moreover, key players are adopting various business growth strategies in order to expand their presence on regional as well as global basis. Some of the key players in the global drilling fluids market are Baker Hughes Company, Schlumberger Limited, Weatherford, DIAMOCO Group, Conquest Drilling, QMax, ChemFor, Dynamic Drilling Fluids, Halliburton, Newpark Resources Inc., AES Drilling Fluids, NOV Inc., Stellar Drilling Fluids. LLC, Secure Energy, Total Energies, and Valence Drilling Fluids, LLC.

*Definition: Drilling Fluids (muds) are a semi-liquid, plastic compound of water mixed with sands, clays, cements and several other substances used in the process of drilling oil wells. There are numerous drilling-fluid systems, products and services available on the market today; each with its own unique set of properties, benefits and drawbacks.