This study analyzes the US market for oilfield chemicals. Demand for oilfield chemicals is examined by application and by product type in US dollars, with selected data provided in volume terms in pounds. Additionally, demand for oilfield fluids is examined by type in gallon terms, with selected data provide in US dollars.
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The total value of chemicals used in oilfield applications is measured at three levels:
fluid level (e.g., drilling fluids, stimulation fluids, completion fluids), which includes water and other base fluids and additives
application level, which measures formulated oilfield products
base product level
Oilfield fluids can be segmented into four major product segments:
completion and workover fluids
Oilfield chemical applications are:
stimulation fluid additives
other stimulation fluid additives
drilling fluid additives
other drilling fluids additives
corrosion and scale inhibitors
asphaltene and paraffin inhibitors
other production chemicals
completion and workover additives
brines and salts
other completion and workover additives
fluid loss control additives
accelerators and retarders
other cement additives
Oilfield chemicals product segments are:
corrosion and scale inhibitors
other specialty chemicals
other commodity chemicals
natural and synthetic gums
starches and cellulose polymers
US demand for oilfield chemicals is forecast to increase to 9.2% annually to $14.4 billion in 2023. Demand will be supported by:
increasing numbers and footage of wells drilled, which will require larger volumes of oilfield fluids and boost demand for chemicals, particularly those used in drilling and completion activities
ongoing dominance of unconventional drilling activity, driving demand for stimulation chemicals
concerns regarding the environmental impact of drilling, supporting demand for more environmentally friendly (and higher cost) oilfield chemicals
Increasing Drilling Activity & Increased Well Lengths Driving Oilfield Chemical Demand
Though drilling and production activity are projected to show moderate growth through 2023, increases in average well length will continue to boost per well volumes required for drilling, stimulation, production, and completion. As a result, the consumption of oilfield chemicals per well will rise, resulting in a healthy pace of demand growth for oilfield chemicals, faster than the gains seen in drilling and production activity.
Continued Dominance of Unconventional Drilling Will Buoy Oilfield Chemical Demand
The drilling of unconventional plays is expected to continue to dominate drilling activity through 2023, and the higher costs and greater level of complexity associated with unconventional oil and gas wells will require higher performance oilfield chemicals, further driving value demand growth. However, growth will not be as rapid as the during the 2008-2018 period due in part to oil and gas prices that remain below peaks reached earlier in the decade. Uncertainty surrounding oil prices could also discourage the drilling of more complex wells, which typically utilize larger volumes of oilfield chemicals.
Although oil prices are forecast to trend up, they will see some volatility and remain below a peak reached in the earlier part of the decade. While this would have historically been a drag on drilling activity, the ability to produce oil more efficiently at a lower cost has somewhat reduced the impact of pricing on oil production by lowering the threshold at which drilling becomes profitable.
Environmental Concerns Expected to Shape Oilfield Product Mix
Regulations have been introduced that seek to limit the potentially harmful effects of the oil and gas industry, with these regulations ranging from curbing the use of environmentally harmful chemicals to guidelines regarding water management issues and the appropriate disposal of hazardous wastes. These concerns will continue to drive the development and use of higher value products as the industry attempts to forestall formal regulation by embracing more environmentally friendly alternatives, including biodegradable shale inhibitors and less toxic biocides. This will in turn boost oilfield chemical demand due to the higher price of these chemicals compared to the products they are replacing.
Nevertheless, the shift toward more environmentally friendly slickwater fracturing fluids that contain reduced chemical loadings will limit stronger advances, as will increasing use of recycled produced water, which often contains residual oilfield chemicals.