Freedonia Market Research Analyzes Well Stimulation Materials Industry

Buoyed by historically high price levels for oil and gas, demand for well stimulation materials in the US is projected to increase 14 percent annually to $5.35 billion in 2012.  Although there will be some variation within product categories due to changes in the product mix, essentially all important product types are expected to register strong growth as US oilfield operators struggle to sustain production levels.  Proppants, the largest product category, has surpassed the $1 billion mark, and is expected to double in market value again by 2012.  These and other trends, including market share and company profiles, are presented in Well Stimulation Materials, a new study from The Freedonia Group, Inc., a Cleveland-based industry research firm.

Increasingly, operators are turning to well stimulation techniques such as hydraulic fracturing to boost output from wells that are considered past their prime, and also to maximize production from newer wells.  At lower oil and gas price points, the cost of stimulation operations is often not justified.  However, oil prices have risen from an average of $31 per barrel in 2003 to nearly $140 per barrel in June 2008.  As a result, the range of oil and gas wells for which stimulation becomes an attractive option has broadened demonstrably, driving demand for proppants, gases and other stimulation materials. 

Although areas with declining production are a key segment for well stimulation materials, a substantial share of stimulation activity will be focused on less fully exploited reserves, such as deepwater areas in the Gulf of Mexico and coal beds in the Rocky Mountain states.  The harsher environment of the Gulf, which requires drilling several miles through rock thousands of feet below the water’s surface, will boost demand for ceramic proppants designed to withstand the greater levels of pressure at such depths.  In contrast, coal beds are typically shallow, and can often be developed and made more productive using lower-cost materials such as raw frac sand and slickwater, low-viscosity water-based fluids. 

Across the board, nearly every possibility for increases in oil and gas will present growth opportunities for well stimulation materials production -- old wells and new, conventional and unconventional reservoirs, in shallow coal beds and in deep waters far offshore.  Products range from exceedingly high-performance materials for the harshest conditions to economical alternatives able to deliver adequate performance in comparatively low-stress, cost-sensitive environments. 

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.