The global drilling fluids market size was valued at USD 7.98 billion in 2015. The global market experienced a slump from its previous year on account of declining oil industry. Growing crude oil & natural gas demand in various energy-intensive industries such as power generation, manufacturing, and transportation has urged the exploration & production companies to increase their investments in onshore and offshore drilling activities.
The growing number of deepwater discoveries in the Pacific regions and the Persian Gulf coupled with increasing participants to strengthen their energy demand in the region is expected to drive the drilling fluids market growth. Rising concern towards spill containment, boreholes and holding solid wastes is anticipated to increase the product demand over the forecast period.
The U.S. Environmental Protection Agency (EPA) has promulgated Effluent Limitations Guidelines and New Source Performance Standards for discharge procedure of used synthetic-based (SBFs) and other non-aqueous drilling fluids. There are various environmental regulations across the globe that need to be followed by the E&P companies in both onshore and offshore locations to control drilling operations and minimize the environment impact is anticipated to positively steer future demand.
The increase in the rate of deep water discoveries of oil and gas reserves mainly in the “Golden Triangle” including offshore West Africa, the U.S. Gulf of Mexico (USGOM), and offshore Brazil, which accounted for around 85% of the total expenditure in 2014. Asia Pacific is the most attractive region for investment for deep sea drilling. The region accounted for over 10% of total capital investment in 2014. Hence, the demand is anticipated to grow higher in these regions.
One of the major factors that severely affects the global drilling fluids industry is their impact on the environment. EPA limits the use of OBFs in offshore drilling owing to high level of aromatic content in them which poses a serious threat to marine organisms. Drilling fluids possess various potential environmental hazards during usage and disposal which directly affects flora and fauna and indirectly affects humans. OBFs contain diesel oil and mineral oil which when used and disposed off into the environment cause hazards to both land and sea animals.
U.S. drilling fluids market revenue by product, 2014 - 2024 (USD Million)
Drilling fluids are classified as oil-based (OBF), water-based (WBF) and synthetic fluids (SBF). WBF dominated the global demand and accounted for over 45% of total revenue in 2015. WBF is also expected to emerge as the fastest growing product category over the forecast period. The segment is estimated to grow at a CAGR of 6.1% from 2016 to 2024. Stringent regulatory scenario to minimize the use of OBF is anticipated to remain a key driving factor for the growth of WBF over the forecast period.
Non-aqueous fluids or foam-based muds are anticipated to gain prominence in the global drilling industry, particularly in unconventional reserves. Increasing environmental concerns along with high demand for these alternate fluids is estimated to steer market penetration over the forecast period.
Onshore oil & gas emerged as the largest application segment accounting for 64.3% of total market revenue share in 2015. Harsh environments such as extreme temperatures, desert topography, and dry environment necessitate the requirement of drilling fluids as a lubricating and cooling agent for drilling equipment.
Offshore oil & gas is anticipated to emerge as the fastest growing application market for drilling fluids with an estimated CAGR of 6.3% from 2016 to 2024. Ongoing investment in existing offshore wells both in deep and ultra-deep waters particularly in the Gulf of Mexico (GoM), North Sea, Persian Gulf and the South China Sea is anticipated to drive product demand in the offshore sector over the next eight years.
North America drilling fluids market led the global industry with net revenue expected to exceed USD 3.0 billion by 2024. Increasing oil and natural gas production in the region coupled with significant oilfield development especially in the U.S., and Canada tight oil reserves may be attributed to high drilling fluids industry penetration. Shale boom in Canada and the U.S. is anticipated to play a vital role in driving the drilling fluids demand over the next few years.
Owing to ongoing revisions in legislative norms to exploit hydrocarbon reserves sustainably by providing financial aid tax benefits particularly in India and China, Asia Pacific is expected to witness the fastest growth at an estimated CAGR of 6.9% from 2016 to 2024. In addition, favorable government initiatives such as 100 % FDI in the hydrocarbon sector in India are anticipated further to aid the development of oil & gas industry in the region.
The global drilling fluids market is dominated by top drilling companies. Major companies operating in the global drilling fluids industry include Newpark Resources, Halliburton, Schlumberger, Weatherford, Baker Hughes, TETRA Technologies, National Oilwell Varco that offer a diverse range of product portfolio to cater the product demand in onshore and offshore oil & gas industries. Some of the other companies operating in the industry include Anchor Drilling, Canadian Energy Services, Flotek Industries, ScomiGroup Bhd, Catalyst LLC, and China Oilfield Services Ltd.
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