Oilfield Chemical Demand to Reach $10.7 Billion in 2013

Demand for oilfield chemicals is projected to increase 4.4 percent per year to $10.7 billion in 2013, although the industry’s growth trajectory during this period will be uneven.  A pronounced slump in demand in the short term is expected to be followed by a significant recovery by the end of the forecast period. These and other trends, including market share and product segmentation, are presented in Oilfield Chemicals, a new study from The Freedonia Group, Inc., a Cleveland-based industry research firm.

As is usually the case in this industry, the decline and rebound will be attributable mainly to oil and gas pricing.  After hitting all-time highs in mid 2008, prices dropped precipitously in the second half of the year, as the global economic downturn began to affect demand.  As a result, drilling activity -- which had been at levels not seen in decades -- declined dramatically, dipping below 900 in early 2009 (from a high of more than 2,000 in mid 2008).  Such declines hit the oilfield chemicals industry hard, particularly the natural gas segment.  However, oil prices had begun to rebound by mid 2009, and this upward trend is expected to continue as the world economy recovers.  The rig count is projected to increase to nearly 1,600 in 2013, aided not only by higher oil and gas prices, but also the development of high profile new fields such as the Marcellus Shale in the Eastern US. 

In the short term, drilling fluids are expected to suffer sharp overall market value declines before rallying later in the forecast period.  Despite the poor current conditions, the overall level of oilfield activity -- and, as a result, demand for oilfield chemicals and their raw materials -- is expected to recover.  Well completion numbers are expected to grow over the course of the forecast period, boosting demand for completion chemicals.  Stimulation techniques such as hydraulic fracturing and acidizing will continue to grow, as an increasing number of wells are fractured or otherwise subjected to stimulation methods upon initial completion.  Enhanced oil recovery (EOR) techniques will remain an attractive option as prices return to levels more comparable to those seen in recent years, boosting demand for gases and other products used in these operations.  Although some components of the upstream oil and gas industry are undeniably volatile, others are comparatively stable.  Despite dramatic changes in rig counts and oil prices, US oil and gas production levels are quite consistent, and changes in production from one year to the next are typically modest, allowing for stable market conditions for such materials as production-related chemicals. 

The Freedonia Group is a leading international business research company, founded in 1985, that publishes more than 100 industry research studies annually. This industry analysis provides an unbiased outlook and a reliable assessment of an industry and includes product segmentation and demand forecasts, industry trends, demand history, threats and opportunities, competitive strategies, market share determinations and company profiles.