The rapid expansion of shale oil and gas drilling and production in North America has boosted demand for oil field specialty chemicals, according to a new study by research firm IHS.
The report says that the global market for oil field specialty chemicals reached $25 billion in 2014, up from just under $16 billion in 2010.
However, the same rate of growth is unlikely to be sustained over the next few years as the significant drop in oil prices has resulted in a decrease in exploration activity.
“During the past five years, we saw unprecedented market growth for oil field chemicals, which has been driven by the rapid development and production of shale oil and gas resources in North America,” said Stefan Schlag, director of inorganic chemicals and mineral and mining products at IHS Chemical and lead author of the report.
“We expect demand for these chemicals to continue to grow, but at a much slower rate than in the previous period.”
Sales of oil field chemicals are projected to grow at an annual rate of approximately 4 percent to more than $30 billion in 2019.
Schlag explained: “IHS doesn’t expect lower oil prices to have a major impact on sales of chemicals to the production segment, but we expect lower prices will likely have more of an impact on sales of chemicals for drilling, stimulation and completion activities.
“The primary reason for this is that actual oil production volumes are expected to continue to increase — in line with expected continued growth of world crude oil demand. However, lower crude oil prices have slowed exploration drilling and the drilling of new boreholes, especially for more complex unconventional and deepwater oil projects. These projects typically have higher production costs, and are in many cases not economic at current oil prices.”
The report author went on to note that markets for oil production chemicals show almost no correlation with regional, raw oil production volumes.
“In fact, rather than production volumes, it is the complexity of the oil production process itself (conventional, deep water or unconventional) that has a large impact on the demand for oil field chemicals,” he concluded.