Driven by Shale Development, Oil Field Chemicals Market Reached $25 Billion in 2014, but Oil Price Declines Slowing Growth, S...
July 14 2015 - 1:00AM
Business Wire
Oil price declines expected to slow oil field activity on a
short-term basis, driving reduced demands for drilling, stimulation
and completion chemicals
Driven in large part by the rapid expansion of shale oil and gas
drilling and production in North America, the world market for oil
field specialty chemicals at the service company level reached $25
billion in 2014, up from nearly $16 billion in 2010, but
significant declines in oil price have dampened the demand outlook
for oil field chemicals for the 2015 to 2019 period, according to a
new global market study from IHS (NYSE: IHS), the leading global
source of information and analysis.
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The IHS Chemical 2015 Specialty Chemicals Update Report - Oil
Field Chemicals covers historical developments and future
projections for supply, demand, capacity and trade in the global
oil field chemicals markets for 2015 to 2019, and projects sales of
oil field chemicals will grow annually at a rate of approximately 4
percent to more than $30 billion in 2019, based on volume growth
and price changes in effect at the end of 2014.
“During the past five years, we saw unprecedented market growth
for oil field chemicals, which has been driven by the rapid
development and production of shale oil and gas resources in North
America,” said Stefan Schlag, director of inorganic chemicals and
mineral and mining products at IHS Chemical and lead author of the
report. “We expect demand for these chemicals to continue to grow,
but at a much slower rate than in the previous period.”
Oil field chemicals typically fall under three categories:
drilling fluids, cementing and stimulation, and oil production.
Drilling muds and fluids are chemical systems used to lubricate the
drill bit, to control formation pressure, and to remove formation
cuttings. They can be oil- or water-based depending on the geologic
formation. Cementing uses chemicals to cement steel pipes or casing
to the sides of the borehole.
Stimulation chemicals encourage the flow of crude oil to the
well. Two commonly used stimulation techniques are acidizing and
fracturing — an essential part of hydraulic fracturing. And
finally, oil production chemicals are used at all stages from oil
production at the wellbore to delivery of crude to the refinery.
Products include corrosion and scale inhibitors, biocides and
demulsifiers.
Said Schlag, “IHS doesn’t expect lower oil prices to have a
major impact on sales of chemicals to the production segment, but
we expect lower prices will likely have more of an impact on sales
of chemicals for drilling, stimulation and completion activities.
The primary reason for this is that actual oil production volumes
are expected to continue to increase—in line with expected
continued growth of world crude oil demand. However, lower crude
oil prices have slowed exploration drilling and the drilling of new
boreholes, especially for more complex unconventional and deepwater
oil projects. These projects typically have higher production
costs, and are in many cases, not economic at current oil
prices.”
Despite the year-end slowdown in E&P activity driven by the
oil price slide, hydraulic fracturing continued globally in 2014,
but primarily in North America. In 2014, total chemical consumption
related to fracking was valued at nearly $8.6 billion, with the
U.S. and Canada accounting for the lion’s share of demand at $8
billion, or approximately 94 percent of total world consumption of
stimulant chemicals.
Latin America was a distant second in terms of demand for oil
field chemicals, accounting for slightly less than 9 percent of
global demand or $2.2 billion of sales. The Middle East followed
with 8 percent of global oil field chemical demand or $2 billion in
sales. The CIS followed, with 6.5 percent of global demand for
these chemicals or $1.6 billion in sales.
Said Schlag, “It may seem counterintuitive, but markets for oil
production chemicals show almost no correlation with regional, raw
oil production volumes. In fact, rather than production volumes, it
is the complexity of the oil production process itself
(conventional, deep water or unconventional) -- that has a large
impact on the demand for oil field chemicals.”
The global oil field chemicals industry is dominated by three
oil field services companies—Schlumberger, Halliburton and Baker
Hughes, and these companies are becoming larger through
acquisitions, which will allow them to offer a wider range of oil
field services such as exploration, drilling, design and
engineering. Despite the expected near-term market volatility for
specialty chemicals, the oil field services sector saw significant
merger and acquisition activity at the end of 2014, with
Halliburton announcing the largest deal--a $35 billion acquisition
of Baker Hughes in November. That deal is expected to close in the
second half of 2015, pending U.S. government approval.
Prior to the acquisition announcement, Schlumberger led the oil
field services sector, including oil field chemicals sales, with
total 2014 sales exceeding $48 billion, or more than 46 percent of
the total oil field services market, followed by Halliburton at
slightly more than $32 billion in sales in 2014, or nearly 31
percent of market share. Baker Hughes followed in third position at
nearly $24 billion in 2014 sales, or almost 23 percent of the
market. Based on 2014 market share figures, a combined Halliburton
and Baker Hughes would dominate the oil field services market with
slightly less than 54 percent of global market share.
To speak with Stefan Schlag, please contact Katarzyna Kosior at
katarzyna.kosior@ihs.com. For more information on the IHS Chemical
2015 Specialty Chemicals Update Report - Oil Field Chemicals,
please contact Nisha Keskar at nisha.keskar@ihs.com.
About IHS
(www.ihs.com)
IHS (NYSE: IHS) is the leading source of information, insight
and analytics in critical areas that shape today’s business
landscape. Businesses and governments in more than 165 countries
around the globe rely on the comprehensive content, expert
independent analysis and flexible delivery methods of IHS to make
high-impact decisions and develop strategies with speed and
confidence. IHS has been in business since 1959 and became a
publicly traded company on the New York Stock Exchange in 2005.
Headquartered in Englewood, Colorado, USA, IHS is committed to
sustainable, profitable growth and employs more than 8,800 people
in 32 countries around the world.
IHS is a registered trademark of IHS Inc. All other company and
product names may be trademarks of their respective owners. © 2015
IHS Inc. All rights reserved.
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IHS Inc.Kat Kosior, +44 20 8276
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832-458-3840melissa.manning@ihs.comorPress Team+1
303-305-8021press@ihs.comTwitter: @IHS_News
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