Demand for US oil field chemicals expected to grow

Demand for US oil field chemicals is expected to grow 6.1 %/year through 2007 to $ 4.2 bn, according to a recent study from Freedonia Group entitled, "Oilfield Chemicals."
The study analysed the current US oil field chemical industry, valued at $ 3.1 bn in 2002, by presenting historical demand data for 1992, 1997, and 2002 and forecasts to 2007 and 2012 by product.

The Cleveland-based analyst found this demand would be driven by a recovery in the number of drilling rigs and continued drilling of more difficult wells.
"Drilling fluids will provide the best growth opportunities," said Freedonia, with clay and barite doing "well" among commodity chemicals, and surfactants and polymers pacing "higher-value products." Fredonia found that, "Deeper and more complex wells and a continued move towards drilling in harsher offshore and deepwater environments will boost demand."

However, Freedonia added, despite these positive developments, there exist a number of trends that could stifle future market growth.
"Although natural gas production has risen in recent years, oil production continues to fall as UAS fields reach maturity. "Drilling and development moratoria and strong opposition to oil and gas drilling in environmentally sensitive areas-such as the Arctic National Wildlife Refuge and the southern portion on the California coast-will continue to limit drilling," the analyst said.

Products analysed in the study included drilling fluids, cementing chemicals, demulsifiers, corrosion and scale inhibitors, asphaltene and paraffin inhibitors, biocides, enhanced oil recovery products, stimulation chemicals, and completion and workover fluids. The largest segment of the formulated products market, namely drilling fluids, will see "above average gains and provide the best opportunities for growth through 2007," the analyst said.
Freedonia estimated the growth in drilling fluid demand to average 8.4 %/year though 2007. Freedonia added, commodity chemicals, such as clay and barite, which are the most commonly used raw materials in making drilling fluid, also will see rapid growth as drilling activity rises through the time period studied.

Freedonia reported that demand for stimulation chemicals will rise to an average of 6.6 %/year through 2007.
"Declining oil reserves and maturing US oil fields are expected to require greater amounts of chemicals to improve or maintain production levels," it said. "In addition, the US government's interest in limiting the nation's dependence on foreign oil will fuel demand for EOR and stimulation chemicals to increase domestic output."

The study also examined the market environment, reviewed oil field technology, detailed industry structure and market share, and profiled 35 key oil field services companies, Freedonia reported.