Press Releases

Deep Drop in Oil Demand Slows Growth in Oilfield Process Chemicals Market

September 20, 2016

Wellesley, Mass., Sep 20, 2016 – A weak global economy, tightening fuel regulations, growing use of alternative energy, and more energy efficient engines all have dramatically cut global demand for oil. BCC Research reveals in its new report that oil and gas companies have redirected their focus toward increasing operating efficiency to preserve margins and maintain the reinvestment rates necessary to grow production.

Oilfield process chemicals support the exploration and processing of crude oil and natural gas in the field. Six applications compose the oilfield process chemicals market: drilling, production, stimulation, workover and completion, cementing, and enhanced oil recovery. This report updates an earlier (2014) BCC Research study.  In that report, values were calculated at the manufacturer level instead of the user level as expressed in this current report.

The global market for oilfield process chemicals should reach $26.9 billion and $29.6 billion in 2016 and 2021, respectively, demonstrating a five-year compound annual growth rate (CAGR) of 2%. Drilling chemicals as a segment should reach $9.8 billion and $10.8 billion in 2016 and 2021, respectively, reflecting a five-year CAGR of 2%. Enhanced oil recovery chemicals as a segment should grow from $945 million in 2016 to $1.2 billion by 2021, at a five-year CAGR of 4.3%.

The demand for more effective chemicals will increase during the forecast period as companies meet the challenges of more extreme conditions, such as deep offshore deposits, that will alter the performance characteristics and effectiveness of chemicals required to work effectively in these environments. Many chemicals that are used today will be replaced with more multifunctional chemicals and processes that enable the reuse and recycle of material generated in more remote and isolated locations.

In the past two years, the global demand for oil has dropped significantly for a variety of reasons. A key factor, the exploitation of new reserves, especially of shale oil, has glutted the market for oil. While market conditions favor the gas industry, gas production still should exceed consumption in the near to mid-term.

The sharp decrease in oil and gas process has reduced the economic attractiveness of many difficult, high-risk exploration and production (E&P) projects, as well as enhanced oil recovery (EOR) efforts. With production companies deferring such projects until prices increase and project economics improve, the impact of declining oil and gas prices on process chemical consumption has been magnified.

"Investments in the EOR segment fluctuate with the price of oil. Because it's an expensive technology, to be profitable, the oil price must be high. The recent decline in oil and gas prices has slowed the growth of EOR in the near term, but in the longer term, its economic outlook is favorable," says BCC Research analyst Andrew McWilliams. "Regarding E&P projects, the unit price of fossil fuels has dropped sharply since 2014. Because prices are expected to remain low in the near to mid-term, many producers are cutting back their investments here, placing downward pressure on the amount of oilfield process chemicals consumed."

Oilfield Process Chemicals: Global Markets (CHM039D) analyzes which chemical segments are growing, segments that are contracting, the technology challenges faced by the industry and their possible solutions and remedies. Global market drivers and trends, with data from 2015, estimates for 2016, and projections of CAGRs through 2021 also are provided.

Editors and reporters who wish to speak with the analyst should contact Steven Cumming at steven.cumming@bccresearch.com.

Oilfield Process Chemicals: Global Markets( CHM039D )
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