Global Oilfield Chemicals Market – Insights
Chemical components that are majorly used in oil & gas extraction operations are called as oilfield chemicals. Oilfield chemicals find applications in cementing, enhanced oil recovery, drilling fluids, well stimulation, production chemicals, and workover & completion.
Oil, which is produced in the oilfield usually contains large amount of water that gets mixed with the oil through oil drilling process or naturally, especially in offshore drilling and wells. It is important to separate the oil from the water so as to purify it, as well as to reduce the corrosion of the containers ferrying the oil and pipelines. Among the applications, demulsifiers are used for this purpose in the oilfield. Demulsifiers are used to reduce the density of the oil, causing easier separation of the two chemicals, while at the same time reducing the corrosion of pipelines that might lead to higher maintenance costs of equipment.
Rise in oil production and exploration activities is generating the need for oilfield chemicals. Rapid expansion of shale oil & gas drilling & production and growth in deep-water & ultra-deep-water drilling projects is further expected to boost the market demand for oilfield chemicals. According to India Brand Equity Foundation (IBEF), Oil and Natural Gas Corporation (ONGC) is expected to invest US$ 2.73 billion on drilling oil and gas wells in 2019. As the country looks to cut reliance on oil imports by 10 per cent, it is expected that foreign investors will have opportunities to invest in petroleum and natural gas projects worth US$ 300 billion in India by 2022. Therefore, significant increase in oil and gas exploration project is expected to boost the demand for oilfield chemicals during the forecast period.
However, increasing environmental concerns and price fluctuation of crude oil are expected to hamper the market growth of oilfield chemicals. Furthermore, emergence of eco-friendly oilfield chemicals is expected to provide substantial growth opportunities in near future.
The global oilfield chemicals market was valued at US$ 58,350.2 million in 2018, and is expected to register a CAGR of 5.5% in terms of revenue over the forecast period (2019 – 2027) to reach US$ 94,069.7 million by 2027.
Figure 1. Global Oilfield Chemicals Market Share (%), By Region, 2018
Source: Coherent Market Insights, 2018-19
Among applications, upstream holds dominant position in North America and is accounted for the largest market share in the global oilfield chemicals market in 2018. Exploration and production activity has surged 12% and as reported by The North Dakota Industrial Commission, since OPEC's agreement, oil and gas operators will be shifting from running minimum number of rigs to incremental increases throughout 2017, so long as oil prices remain above US$ 50 per barrel.
Oilfield chemicals find application in water treatment process. As population is growing, current water supply has to satisfy increasing demands. Hence, chemical industry uses innovative ways of water treatment, in order to make water acceptable for end-use, such as industrial, cooking, irrigation, and drinking purpose. For instance, according to the article, ‘Treated wastewater use in Saudi Arabia: challenges and initiatives’ published by International Journal of Water Resources Development in December 2015, Saudi Arabia set the goal to achieve 100% use of treated wastewater by 2025 and it is projected that around 6.8 million m3 per day of treated wastewater will be available for use in Saudi Arabia by 2035. Therefore, increasing number of water treatment projects is expected to boost the demand for oilfield chemicals during the forecast period.
Figure 2. Global Oilfield Chemicals Market Share (%), By Application, 2018
Source: Coherent Market Insights, 2018-19
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 oilfield chemicals market. For instance, in 2017, Shell Petroleum Development Company of Nigeria Ltd (SPDC), a subsidiary of Royal Dutch Shell Plc., commenced production plant at Gbaran-Ubie Phase 2, a key project in the Niger Delta that will help to boost gas supply to the domestic market and maintain supply to the export market. The company expects to reach peak production at Gbaran-Ubie Phase 2, in 2019 with around 175,000 barrels of oil equivalent per day.
Major players operating in the global oilfield chemicals market include, Baker Hughes Inc., Halliburton, Schlumberger Ltd., Weatherford International Ltd, Diamoco Group, Royal Dutch Shell Plc, Solvay S.A, and The Egyptian Mud Engineering & Chemicals Company.
Oilfield chemicals enable the production of oil & gas and make it more efficient. Various chemicals are used at diverse stages of process, starting from the borehole drilling, to stimulation and production, and finally to the closing of the borehole. Organic and inorganic, both chemicals are used as base chemicals that provide distinct and sophisticated functionalities such as matrix fluid or as weighting agents in order to increase the specific weight of the drilling fluid.
Oilfield chemicals are used as cementing super plasticizers, corrosion inhibitors, emulsion breakers, drilling additives, and paraffin dispersants. Global oilfield chemicals market continues to witness strong growth as it has led to cost-effective production, extraction, and exploration of oil and natural gas. Oil field chemicals contribute in achieving the greater efficiency and productivity, which cost-effectively maximize the recovery of oil and gas reserves, while minimizing the impact on the environment.
Based on applications, oilfield chemicals has been segregated into upstream, midstream, and downstream chemicals. Furthermore, under upstream segment, drilling chemicals category held the significant market share of around 15.0% in the global market in 2018. The growth in unconventional and offshore fields is likely to propel the demand for oilfield chemicals in the coming years.
Among regions, Asia Pacific held dominant position in the global oilfield chemicals market in terms of revenue share, in 2018. Factors such as increasing demand for petroleum-based fuel from transportation sector is predicted to boost the demand for oilfield chemicals in the region. Furthermore, growing number of deep-water drilling operations is likely to provide impetus opportunities for industry players in Asia Pacific in the near future.
Key features of the study:
“*” marked represents similar segmentation in other categories in the respective section.
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