The global drill pipe market size was USD 935.0 million in 2015. Significant oilfield expansions particularly in North America and the Middle East along with improving drilling techniques with enhanced productivity have been the key factors steering industry growth over the past few years. The crude oil price slump since mid-2014 has led to substantial decline or discontinuation of drilling activities majorly in the U.S., Saudi Arabia, UK, and Canada. This has earnestly affected the overall operating profitability of most of the E&P companies operating globally. The above factors have dramatically hindered the drill pipes industry growth over the past two years.
Global Drill Pipe Market Revenue By Grade, 2014 - 2025 (USD Million)
Independent contractors are expected to ramp-up operations in the U.S. and Canada by the last quarter of 2016 hoping the WTI crude oil prices to stabilize by then. The anticipated recovery of onshore activities along with E&P companies striving to meet the current energy demand is also estimated to steer growth.
High production costs are estimated to hamper the overall market over the forecast period. Regulatory agencies such as Fund for Wild Nature (FWN) have issued numerous directives concerning petroleum production. This is expected to retard the overall industry, thereby hindering market growth over the forecast period. Growing atmospheric distress concerning hazardous fumes emission due to exploration is also expected to hinder market development.
The equipment rental services sector has also witnessed a steep decline in the new contracts over the past two years. This is expected to rebound by the end of 2016 with recovery in oilfield activities and anticipated stabilized petroleum prices by then. Discovery of new hydrocarbon reserves especially in the South China Sea, Pakistan, Israel, Australia, Senegal, and Egypt in the past few years is anticipated to provide lucrative opportunities to industry participants in the near future.
Increasing R&D spending by key vendors to optimize the production of drill pipes and improve the overall material strength to meet the API specifications is projected to support future demand.
API grade drill pipes held the largest share in global demand and are expected to continue their dominance over the forecast period. Standardization of the finished products along with the relatively low prices of this grade is anticipated to promote market penetration. Utilizing these products also ensure the reduced operational cost to the E&P and operator companies.
API grade products are mostly preferred in a normal environment, and conventional basins owing to the easy availability and reduced OpEx to both E&P and contractor companies. Exploration in unconventional and harsh environmental conditions particularly in shale, CBM, and tight reserves are expected to steer premium grade drill pipes demand over the forecast period.
Onshore dominated the global demand accounting for over 58% of the total revenue in 2015. Significant developments in onshore basins particularly in the Middle East, Venezuela, Nigeria, and the U.S. over the last decade has led to the domination of the segment in the global petroleum industry.
High IRR, high rate of rig activities, low-risk as compared to offshore drilling, and significant familiarity of the key operators in the sector has been the key factor responsible for the market penetration in the segment. The petroleum industry witnessed an estimated decline of around 35% to 40% in the overall rig count across all the regional markets.
Momentous development in several offshore locations such as the Golden Triangle which includes the Gulf of Mexico, Brazil, and West Africa, South China Sea, and the Persian Gulf are expected to drive demand in the segment over the forecast period. The segment is estimated to witness the fastest growth over the forecast period.
North America drill pipe market emerged as the leasing consumer accounting for over 30% of the total demand. Large investments by major E&P companies in both conventional and unconventional fields has been the major factor responsible for initial market penetration in the region.
Asia Pacific and Central & South America are anticipated to witness above-average growth rates over the next nine years. The expected increase in rig activities along with several new field developments including the offshore basins especially in China, Indonesia, Australia, and India is expected to drive Asia Pacific drill pipes industry growth.
The global drill pipe market is dominated by National Oilwell Varco, Inter Drill Asia Ltd., Superior Drill Pipe Manufacturing Inc., DP Master Manufacturing Pte Ltd., Shanghai Hilong Drill Pipe Co. Ltd., TPS TECHNITUBE RÖHRENWERKE GmbH, Tenaris Company, Drill Pipe International LLC, Vallourec, and RK Pipe LLC. Owing to the presence of numerous industry participants, the market is considered as moderately fragmented. Major companies have been observed to have initiated frequent M&As in order to gain market share.
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