Oilfield chemicals market size is forecast to reach US$14.3 billion by 2027, after growing at a CAGR of 4.0% during 2022-2027. Oilfield chemicals, such as drilling fluid, demulsifiers, and other similar chemicals are used in oil and gas extraction operations to protect equipment and pipes from corrosion and to separate oil and water from oil, which normally forms an emulsion. These chemicals are employed in well drilling and production facilities to improve extraction processes by increasing the operational efficiency of the oil drilling technique and petroleum refining, as well as achieving optimum performance and enhanced oil recovery. The oilfield chemicals market is primarily driven by the growth of the onshore oil and gas industry. However, the costly disposable processes of the oil field chemical are a major challenge limiting the oil field chemicals industry growth.
COVID-19 Impact
The Covid-19 pandemic forced nations all across the globe to stop the development and production of non-essential products. As a result of this oil and gas, new development projects and production were temporarily shut down to stop the spread of the Corona Virus. For instance, in March 2020, Philipps 66 announced that the Liberty Pipeline development project in the USA would be delayed because of difficulties caused by the Covid-19 pandemic. Also, as a precautionary measure in response to the COVID-19 outbreak, pipeline construction work on the Coastal GasLink Pipeline Canada was halted on March 17, 2020. In April 2020, the Covid-19 pandemic forced the Indian state of Odisha to shut down numerous businesses and building projects, including the Dhamra LNG Terminal. These halt in the projects resulted in revenue losses for the oil field chemicals market. Nevertheless, in 2021 to strengthen the economies from the negative impact of the Covid-19 pandemic industries were encouraged to start their production activities, which benefited the oilfield chemicals market growth. Moreover, it is expected that the impact of the Covid-19 pandemic will end by the start of 2023, this would result in the oil field industry growth scenario back to its pre-Covid period.
Oilfield Chemicals Market Segment Analysis – By End-Use Industry
The onshore segment held the largest share in the oilfield chemicals market in 2021 and is growing at a CAGR of 5.2% during 2022-2027. Oilfield chemicals such as demulsifiers, corrosion inhibitors, and others are widely utilized for onshore oil and gas projects because these chemicals easily separate the water from the crude oil, which reduces the cost of subsequent water treatment steps. The increasing onshore oil and gas projects across the globe are accelerating the demand for oil field chemicals. For instance, Rosebank & Lochnagar Oil & Gas Fields (UK) will be constructed by 2024, Sriracha Refinery Expansion & Upgrade (Thailand) would be developed by 2024, Alaska LNG (USA) to be completed by 2025, and other similar onshore oil and gas project will create an opportunity for the oilfield chemicals industry. Thus, the growing onshore development projects will drive the demand for oil field chemicals, thereby propelling the oilfield chemicals market growth.
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Oilfield Chemicals Market Segment Analysis – By Geography
North America region held the largest share in the oilfield chemicals market in 2021 up to 39% and is growing at a CAGR of 6.3% during 2022-2027. The oil field chemicals are deployed in onshore and offshore oil and gas projects to improve the drilling and exploration of gas and oil by increasing the oil drilling process’s efficiency and productivity. In the North American region, the onshore and offshore oil and gas development projects are increasing, which is accelerating the oil field chemicals market growth. For instance, onshore natural gas projects such as Driftwood LNG (Calcasieu Parish LNG Liquefaction Plant USA) will begin operation in 2023. Moreover, in March 2021, Pemex, Mexico’s state-owned oil and gas firm, reported that it had discovered about 1.2 billion barrels of oil and natural gas in an onshore complex in the state of Tabasco, close to where the company plans to build a new refinery. With this, the production of oil and gas will increase, which is anticipated to boost the demand for oil field chemicals. In addition to this, in January 2021, three offshore exploration drilling projects run by BHP, Equinor, and Chevron have been approved by the Canadian government. Hence, increasing onshore and offshore projects, as well as new oil and gas explorations in North America, are projected to drive the oilfield chemicals market growth.
Oilfield Chemicals Market Drivers
Growing Offshore Oil and Gas Development Projects
The oil produced in the oilfield contains a significant amount of water, which is mixed in with the oil during the drilling process or spontaneously, particularly in offshore drilling and wells. It’s critical to separate the oil from the water to cleanse it and reduce corrosion in the pipes and containers that transport the oil. As a result, offshore oil and gas projects use demulsifiers, corrosion inhibitors, anti-corrosion agents, and other oil field chemicals. According to Westwood Global Energy Group, in 2021, twenty-one offshore oil and gas projects have received final investment decisions. Moreover, Sangomar, a project in Senegal built by Woodside Energy of Perth, Australia, with a production potential of 75,000 to 100,000 barrels of oil per day, is scheduled to begin production in 2023. Also, the offshore Cyprus-Greece Gas Pipeline project will begin operation in 2025. Thus, the new offshore oil and gas projects across the world will boost the production for oil and gas, this will result in projected to expand the oilfield chemicals demand, hence, prospering the market growth.
Growth of Drilling and Cementing Application
Oil field chemicals including drilling fluids and polymers are high-performance, temperature-stable, and contamination-tolerant materials that can aid and improve the drilling process. Furthermore, oil field chemicals are employed in cementing because they are particularly good in retaining water in cement slurries across a wide temperature range. Many oil extraction projects have begun, with drilling and cementing in the early stages, which is expected to increase the demand for oilfield chemicals. For instance, in January 2022, Equinor, a Norwegian energy company, has begun drilling the Ginny exploratory well in the Norwegian Sea. Also, in December 2021, EXALO Drilling SA and Invictus Energy have inked an agreement to drill the Muzarabani-1 exploratory well at the Cabora Bassa project in Zimbabwe. In September 2021, Oil and Natural Gas Corporation (ONGC) has awarded Shelf Drilling a three-year contract for operations in Mumbai High, offshore India, for the Parameswara jack-up rig. As a result, the new oilfield drilling projects across the world are projected to boost the oilfield chemicals market growth.
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Oilfield Chemicals Market Challenges
Costly Disposal of Oilfield chemicals
The major challenge related to the oil field chemicals is the disposable high cost and strict environmental norms, which is limiting the market growth. The disposable cost of oilfield chemicals is high because it has to go through various procedures such as radiological analysis, transportation, composition analysis, non-norm waste disposal, administrative costs, pretreatment capacity decrease, and authorizing and manifesting fees are all factors that must be considered before disposing of the oil field chemicals. Moreover, new guidelines by the government are also limiting market growth. For instance, in April 2021, The European Union has released a new Hydrocarbons Guidance Document that tackles 13 onshore and 10 offshore activities in the oil and gas extracting sector that have the greatest potential for harming the environment and human health. The activities include handling chemicals,?drill cuttings, and hydrocarbons, as well as fugitive emissions. Thus, these factors are posing a major challenge for the oilfield chemicals market growth.
Oilfield Chemicals Industry Outlook
Technology launches, acquisitions, and increased R&D activities are key strategies adopted by players in the oilfield chemicals market. Major players of the oilfield chemicals market are:
1. Nouryon
2. Ashland
3. Albemarle Corporation
4. Baker Hughes Company
5. CES Energy Solutions Corp.
6. BASF SE
7. Croda International PLC
8. Clariant
9. Dow
10. Chevron Phillips Chemical Company
Recent Developments
In February 2019, Saudi Arabian Oil Co. announced the opening of the first specialty oilfield chemicals manufacturing reaction plant in Saudi Arabia, which will boost the production of specialty oilfield chemicals in Saudi Arabia.
In January 2019, Ecore MENA Ltd, a prominent specialty chemicals distributor in the Middle East and North Africa, has been acquired by TouGas Oilfield Solutions GmbH. TouGas’ marketing and distribution infrastructure in the region will be considerably enhanced as a result of this deal.
Key Takeaways
North America region dominated the oilfield chemicals market, owing to the increasing approval of natural gas pipeline projects in the region. For instance, in the year 2021, Driftwood LNG Pipeline, Gator Express Pipeline (Phase 1), Gator Express Pipeline (Phase 2), and more such projects were approved in North America.
Manufacturers are opting for environmentally sustainable chemicals such as biocides due to regulatory norms, which are expected to boost market growth during the forecast period.
Drilling fluids additives such as polyanionic cellulose, lubricants, and more are been increasingly utilized in drilling applications because they minimize the damages during the operation, these are beneficial for the market growth.
Moreover, barrels are widely utilized for the packaging of oilfield chemicals, as it protects the content from damage, and increase durability, thus, it is prosperous for the oilfield chemicals market.
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