Unconventional resources development to fuel demand
Global demand for well stimulation materials is expected to register doubledigit annual growth through 2017, boosted by high oil prices, efforts to maximize productivity of wells both old and new, and a shift in activity to shale formations and other unconventional production environments, where well stimulation techniques are essential.
Unconventional resources development has been a driving force behind growth in well stimulation material demand over the past decade, boosting proppant sales and the fluids used to deliver them into fractures. These fluids, comprised of gelling agents, surfactants, specialty additives, and other chemicals, are generally formulated for specific wells. While significant demand began with the Barnett play in Texas, more recent growth in the US has been in liquid-rich formations. Demand in these and similar regions is driven by high oil prices, which spurs drilling activity; and by the depth and challenging geology of these wells, which require greater amounts of proppants and chemicals to complete.
North America to continue well stimulation dominance
The United States is the world’s largest well stimulation market, accounting for about 80 percent of the global total. More wells are drilled in the US than any other nation, and the US oil and gas industry has been quicker to embrace horizontal drilling and hydraulic fracturing technologies than anywhere else. Much of the rest of the market is concentrated in Canada, Russia, and China.
Canada has begun to develop resources in western shale formations, and in the portion of the Bakken that reaches into Manitoba. China will seek to increase its supply of oil and gas from both domestic and offshore sites as its energy requirements continue to grow. Its shale reserves are among the world’s largest, but efforts to exploit them are just underway, and coalbed methane also offers opportunities. Russia continues to maximize production from an older oil and gas infrastructure in the short term, and to develop its own shale and coalbed methane assets in the longer run.
Although much of the world’s oil and gas is produced in Africa, the Middle East, Latin America, and Western Europe, these locations account for a small, though rapidly-growing, share of global well stimulation material demand. In Europe, producers are hoping to sustain output levels in declining North Sea fields, and seeking opportunities for onshore shale development. In Latin America, stimulation is used in conventional gas fields as well as shale activity in Argentina. Growth is expected as a result of shale development in a number of other countries, as well as continued growth of oil production in Brazil and land-based natural gas drilling in Mexico. Kasakhstan and other former Soviet republics are also increasing their exploration activities.
Evolving stimulation technology to spur demand for proppants & chemicals
Fluids and proppants are critical to successful well stimulation operations and technology continues to evolve, causing rapid changes in the market for stimulation materials. A more recent preference for slickwater formulations in some shale and tight formations boosted demand for friction reducers. As proppant volumes skyrocketed, demand for sand proppants took market share from ceramics due to cost issues. In the future, stimulation fluid formulations are expected to continue to improve, driven by higher performance requirements and more stringent environmental regulations.