The international oilfield chemical technology market faces a number of challenges from outside of the industry. Iranian ambitions and Trump administration efforts to curtail them could produce instability in the Middle East. This will affect the global market much less than in previous generations, but will still carry an impact. Pressures from some nations to adhere to ever more stringent environmental demands could have a long term impact as well.
That all said, the market for various chemicals used in oilfield production has expanded in recent years and should continue to do so. Products such as industrial degreaser sprays will remain in high demand as production expands globally, particularly in the United States.
What Products the Industry Uses
The oilfield industry relies on a wide variety of chemical products to ensure the smooth and safe functioning of equipment. These products include:
- Industrial degreaser sprays
- Chemical cleaners
- Drilling fluids and other lubricants
- Completion and coiled tubing fluids
- Various specialty production chemicals
- Chemical products specific to hydrofracturing operations
These chemical products mainly ensure that equipment remains clean and lubricated as it drills for and extracts oil.
State of the Industry
As American production continues to elevate the United States into the top rank of oil and gas producers, most experts predict that the price of oil will remain under $100 a barrel. In many cases, this means that the price of oil is less than the cost of production. Low prices mean thin profit margins, which pushes companies toward adopting measures for efficiency and cost savings.
Companies that produce top quality oilfield chemical products should be able to take advantage of this trend, particularly those that optimize equipment performance and deliverability, as well as those that help to promote environmental compliance. Corrosion inhibitor chemicals, for example, will experience growth because they lengthen the useful life span of pipeline equipment. Corrosion of pipelines represents one of the biggest factors in downtime. These and other products that help prevent costly breakdowns and keep equipment running more effectively should see solid growth in the next few years.
Emulsion breakers and other products that help to separate oil from water should also witness solid gains.
By 2024, the global market for oilfield chemicals will reach over $37 million, with a little under one-third of that spent in the United States.
What to Expect Going Forward
Oil exploration and field development will continue to move into nontraditional fields, especially offshore and deepwater environments. This new direction in oil extraction will require increasing use of chemicals that are different from traditional vertical land well development.
The use of horizontal drilling, often associated with deep wells that use hydrofracturing, will continue to expand in the United States. Although the shale sources of oil and gas in Texas, West Virginia, Pennsylvania, and elsewhere promise large scale production for generations, the industry will continue to focus on efficiency and optimizing production from each individual well. As was stated before, this commitment requires the use of high-quality oilfield chemical products to ensure the best possible functioning of equipment and other resources.
Another major challenge, or opportunity, lies in the increasing global demand for more eco-friendly chemicals, especially in oil and gas production. The new environmentalism not only focuses on the impact of the final product but also its production process. How big of an impact does the company make when making its chemical products will increasingly factor into regulation and awareness. Companies will face tremendous pressure, especially from Europe, to create products that will affect the environment less than has been the case in the past.
While challenges abound in the field, companies that look ahead should continue to prosper and even thrive in an admittedly difficult and uncertain environment.