Oilfield Chemicals Market Is Estimated To Witness Strong Growth Owing To Increasing Oil Exploration Activities And Growing Demand For Enhanced Oil Recovery Chemicals
The oilfield chemicals market is estimated to be valued at USD 29.37 billion in 2024 at a CAGR of 3.3% over the forecast period (2024-2031). The market is driven by factors such as the rising demand for oil and gas globally and increasing oil exploration activities. Furthermore, the growing demand for enhanced oil recovery chemicals to maximize oil extraction from mature oilfields is also boosting the market growth.
The oilfield chemicals market growth is majorly driven by increasing oil exploration activities and growing demand for enhanced oil recovery chemicals. The rising global energy demand has led to significant growth in oil exploration and production activities around the world. This is driving the demand for various oilfield chemicals used in drilling fluids, cementing, stimulation, production, EOR, and completion applications. Moreover, with mature oilfields nearing depletion, there is increasing focus on enhanced oil recovery methods using chemicals to extract the remaining oil pockets effectively. Specialty chemicals are playing a crucial role in maximizing oil production from aging wells through EOR techniques. This growing EOR chemical demand is expected to propel the oilfield chemicals market during the forecast period.
Increasing shale gas and oil production activities
One of the major drivers of the oilfield chemicals market is the rising shale gas and tight oil production activities across regions like North America. Shale resources have emerged as an important source of oil and gas production in recent years. Their exploration and production require chemicals and hydrocarbons for various applications like drilling, fracturing, cementing, etc. As shale production continues to grow strongly, especially in the U.S., it will generate significant demand for oilfield chemicals over the coming years. Various reports project global shale gas production to more than double by 2040 compared to 2020 levels. This significant rise in shale output will positively impact the market growth.
Recovering crude oil prices
Crude oil prices recovering from the downturn of 2015-2016 is another key factor propelling the oilfield chemicals industry. Higher crude prices have encouraged oil producers to ramp up exploration and production spending, which spurs the demand for drilling and well completion chemicals. As projects that were earlier deferred due to low oil prices now achieve sanction, it will drive the consumption of various oilfield chemicals. Several industry analysts and research establishments have upgraded their oil price forecasts for 2022 and beyond, anticipating a tight supply scenario in the medium term due to underinvestment in the past few years. This improving price environment is expected to boost demand conditions for oilfield chemicals worldwide.
Environmental concerns regarding oil & gas production
One major challenge restricting the growth of oilfield chemicals is the environmental concerns associated with upstream oil and gas activities. The use of certain chemicals raises issues like water pollution, soil contamination, and health hazards. Regulators worldwide are imposing stringent quality standards and restrictions on the use of toxic chemicals. This increases compliance costs for producers. Furthermore, rising environmental awareness is also pushing end-users to find greener substitutes to incumbent products. Alternative chemical formulations with lower toxicity and improved eco-friendliness need to be developed to overcome this restraint.
Volatility in crude oil prices
Uncertainty over future crude oil price levels remains a key concern constraining long-term investments in exploration and production activities. Although prospects have strengthened in 2022, volatility cannot be ruled out considering the influence of geopolitical tensions, economic cycles, and potential resurgences of COVID-19. Contracting upstream budgets during oil price crashes negatively impact the oilfield chemicals industry. Oil producers are also cautious about increasing capital spending amid unpredictability in commodity markets. This makes the demand environment for oilfield chemicals vulnerable to risks from crude price fluctuations in the short to medium term.
Increasing EOR/IOR application
One potential avenue for growth is the rising implementation of enhanced oil recovery (EOR) and improved oil recovery (IOR) techniques. These advanced recovery methods employ specific chemicals to extract more oil from mature fields. As conventional reserves deplete faster, EOR/IOR adoption is expected to accelerate significantly over the coming decade and beyond, presenting incremental opportunities. Major exploration reserves are now available via EOR/IOR application across various parts of the world. This will translate to higher consumption of custom-designed chemicals for projects involving polymer flooding, surfactant-polymer flooding, low-salinity water flooding, alkali-surfactant-polymer systems, etc.
Exploration of unconventional resources
Another key opportunity lies in the exploration and production of tight and shale oil & gas reserves, which are growing into major assets. While shale plays have already taken off, other unconventional resources like tight oil and deepwater reserves are also being increasingly tapped. This fuels the demand for specialized drilling & well completion chemicals designed for complex geology and extreme operating conditions. Companies are developing novel chemical formulations suited for unconventional projects involving deep drilling, long lateral wellbores, high-pressure/high-temperature reservoirs, and others. The commercialization of innovative chemical technologies for unconventional reserves will support oilfield chemicals market expansion.
Link: https://www.coherentmarketinsights.com/market-insight/oilfield-chemicals-market-332
Key Developments
- In January 2024, two major players in the oil and gas industry, Schlumberger (SLB) and Nabors Industries, announced a strategic collaboration to accelerate the adoption of drilling automation solutions. This partnership aims to leverage cutting-edge technologies to enhance drilling efficiency, safety, and overall operational performance across the industry.
- In November 2022, NanoMalaysia Berhad, a leading technology company in Malaysia, unveiled its latest innovation in the oil and gas sector - the drilling fluid loss additive named Synergy 10AS Nano. This product launch marked the culmination of a rigorous four-year testing and development phase, showcasing NanoMalaysia's dedication to research and technological advancement.
- In 2022, Ingevity Corporation, a leading specialty chemicals company, announced its plans to introduce a new line of bio-based oilfield products at the American Association of Drilling Engineers (AADE) 2022 Fluids Conference and Exhibition. This event provided a platform for Ingevity to showcase its innovative solutions, which are designed to offer environmentally friendly alternatives for the oil and gas industry.
- In 2022, Castrol, a leading global lubricant brand, launched a new hydraulic control fluid designed to meet the evolving needs of the oil and gas industry. This product is formulated to provide enhanced performance, reliability, and safety in hydraulic systems used in drilling and production operations.
Key Players
Baker Hughes Company, Halliburton, Schlumberger Limited, Dow Chemical Company, Weatherford , Diamoco Group, Royal Dutch Shell Plc, Solvay S.A., The Egyptian Mud Engineering & Chemicals Company, Croda International Plc, Ideal Energy Solutions, LLC, Kemira Oyj, BASF SE, Clariant, ChampionX, Lubrizol Corporation, Stepan Company, Nouryon, Huntsman International LLC, and Albermarle Corporation
