U.S. drilling fluid demand is projected to rise 11 percent per year to 1.45 billion gallons in 2021, driven by a recovery in drilling activity and increases in the average fluid used per well, Freedonia found. The industry research firm noted drilling fluid demand grew to $1.6 billion in 2016.
The petroleum industry uses various types of drilling fluids for different circumstances. Some oil-based fluids are made from mineral oil, which may come from base oil plants, and lubricants are used as additives in some. In addition, some drilling fluids may be made from base stocks such as polyalphaolefins.
During the industrys peak years, 2006 to 2016, average drilling fluid used per well nearly doubled, because of the growing popularity of unconventional versus conventional drilling. Unconventional wells use more fluids because the wells are longer. Average fluid per well continues to grow, though at slower rates, as unconventional drilling holds a large portion of drilling activity, Freedonia reports.
The Cleveland-based firm predicted in 2015 that U.S. demand for all oil and gas drilling products and services would grow by 3 percent each year by 2019. Freedonia no longer believes this to be accurate because of declines in oil prices between 2014 and 2016.
Now, the company expects demand to grow over 12 per cent per year from 2016 to 2021, in value terms. This growth rate reflects a rebound from the decreased drilling activity since 2015, said Dan Debelius, an analyst for the company. Drilling fluids will continue to account for 10 percent of all oil and gas drilling products and services, Debelius noted.
Drilling activity and fluid consumption will not recover evenly across the U.S., however. Economically attractive areas, such as Texas, Oklahoma, the Gulf of Mexico coast and Louisiana are predicted to have healthy drilling activity, with Texas and Oklahoma experiencing the strongest growth.
Texas and Oklahoma have shown the best drilling economics in the U.S., allowing oil and gas companies to make a profits with oil prices around $50 per barrel, Debelius told a reporter. He continued, This is, in part, a result of their unique geology and high levels of infrastructure that make them more attractive to operators.
The U.S. still has the largest drilling fluids market globally, according to Freedonia. Due to the oil price collapse, which affected the U.S. more dramatically than other countries, the U.S. holds a smaller share than during peak years.
Debelius believes the drilling industry is resilient. Companies have found ways to drill profitably in a number of geographic areas in the U.S. despite the low oil prices environment, said Debelius.
Freedonias 108 page study titled Drilling Fluids & Chemicals Market in the US can be purchased for $4,900. For more information visit www.fredoniagroup.com.