Oilfield Chemicals

Freedonia Group Inc
November 1, 2011
319 Pages - SKU: FG6683020
License type:
Table of Contents Related Reports
Countries covered: United States

US demand to exceed $13 billion in 2015
Demand for oilfield chemicals in the US is expected to surpass $13 billion in 2015. The oilfield chemical market suffered a downturn in 2009 due to the precipitous decline in oil and gas prices. However, oil prices have rebounded and shale gas development has proceeded at a rapid rate. Both of these factors have served to boost oilfield chemical demand despite a substantial slowdown in offshore activity since mid-2010 and low natural gas prices.

Challenges abound for domestic producers
The era of easy oil production in the US has been gone for decades. Since 1970, domestic crude oil output has generally fallen due to depleting reservoirs, environmental restrictions and a lack of investment. The natural gas situation is somewhat more complex. Limited ability to import natural gas has prompted greater reliance on maintaining domestic production levels. Conventional production has begun to suffer from an increasingly mature resource base. Improved technologies have boosted initial well flows, but they have also substantially accelerated depletion rates, forcing producers to drill more wells just to keep natural gas output at existing levels. However, sharp gains in unconventional gas production -- especially in shale plays such as the Haynesville and Marcellus Shales -- are expected to allow for growth in overall natural gas production.

Oilfield chemicals optimize production in new and extant plays
Continued growth in rig counts, the expanded use of well stimulation techniques and the ongoing push into other unconventional environments will provide a wide range of opportunities for the suppliers of both formulated oilfield chemicals and their raw materials. The fastest among these gains for formulated products will be from stimulation chemicals, due to overall growth in stimulation activity and the increased use of more sophisticated technologies such as multistage hydraulic fracturing of horizontal wells. Such increases will also drive gains for the raw materials (such as barite, surfactants and polymers) needed to formulate all oilfield chemicals.

Oil prices and shale gas development to boost demand Oil prices soared to nearly $140 per barrel in mid-2008, before dropping below $35 in early 2009. This led to a substantial curtailment of drilling activity, but renewed strength in oil prices -- which are expected to remain high through the forecast period -- will boost drilling activity and, in turn, demand for oilfield chemicals. Although natural gas prices have generally remained low, the enthusiasm in the industry for the development of shale gas plays, such as the Haynesville Shale in Texas and Louisiana, and the Marcellus Shale in several Eastern states, has led to rapid growth in gas drilling activity and increased shale gas production. This heightened level of activity is expected to continue as natural gas prices rise, making shale gas development more economically attractive.

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