The oilfield services market is a key element of the upstream oil and gas sector with a significant focus on offshore assets. It includes a comprehensive kind of services and equipment used throughout the production stages.
Firms operating in the oilfield services market deliver essential assistance. That includes the production, upkeep, and repair of equipment for oil extraction and transport. Key services include identifying energy sources and formation evaluations. It also manages energy data and performs geological analyses, among others.
What Makes It Popular?
The expansion of the oilfield services market size globally is largely fueled by the push to decrease service costs and increase production output. Moreover, customized service packages from prominent upstream providers lead to significant cost savings for operators which amount to millions of dollars.
- Rising shale gas extraction
An uptick in shale gas extracting process through hydraulic fracturing and various stimulation processes is likely to drive the requirement for oilfield services. Additionally, the increasing requirement for oil and gas from offshore regions is contributing to the oilfield service sector growth in the years ahead. The industry has been profoundly impacted by the outbreak. It has led to disruptions in global commodity and financial markets with a notable decline in demand. Therefore, it hinders operations and disrupts supply chains. The pandemic led to widespread lockdowns. It forced several oil and gas companies globally to pause their exploration services and projects.
While certain OPEC countries are implementing more flexible business strategies and enhanced market opportunities for B2C and B2B sectors, the trade war has triggered economic disputes. It results in dramatic price declines and supply chain interruptions. These factors have adversely influenced investment, production cuts, and demand. It is likely affecting the oil and gas industry in the long term. The offshore sector’s oil production is projected to experience the highest growth rate in the years ahead. It is fueled by expanding investments in subsea operations along with a surge in energy demand.
- Technological innovations
The oil and gas market will possibly experience substantial growth due to the growing number of discoveries and advancements in technology. This improves production yields from oilfield reserves.
The oilfield services market is likely to see significant growth due to the increasing extraction of shale gas. It is likely to expand supply and stimulate industry advancements. Shale refers to natural gas that is trapped in shale formations. These formations low permeability prevents the gas from flowing into wells readily.
With technological progress including directional drilling along with hydraulic fracturing, shale gas producing process from complex reservoirs has increased. Shale exploration involves utilizing various types of services and equipment in the oilfield. An example is China which possess the largest shale reserves and obtains a huge portion of its production from the Sichuan Basin near Chongqing. The country intends to ramp up production by leveraging advanced drilling tools and shale exploration techniques.
Enhanced exploration activities in the industry will contribute significantly to market growth. Rising energy demand and promising investment opportunities are likely to spur increased production and activities in the oil and gas sector. As an example, i3 Energy PLC granted an agreement to Baker Hughes GE for drilling at its North Sea assets, Liberator and Serenity.
The major share of global oil production is likely to come from conventional onshore oil. As a result, the projected increase in exploration activities in the industry is likely to enhance market growth in the years ahead.
The Challenges
However, the crude oil price instability is likely to act as a barrier to market expansion. Variations in crude oil supply are contributing to the crude oil price volatility within the industry. The variability in crude oil price significantly impacts market demand. It also increases competition between the United States, OPEC, and non-OPEC nations. Higher oil prices delay and suspend upcoming investments as well as projects. This leads to a reduction in drilling activities and a downturn in oilfield services. Therefore, crude oil price volatility is likely to hinder market growth.
The market provides equipment rental and analytical services. Even though equipment rental represents a significant portion of the market, its growth is likely to be slow as demand for analytical services and field optimization rises. The field operation is gaining market share because of the extensive variety of services used in executing on-field projects. In contrast, the analytical service is likely to grow thanks to its broad application scope. That includes real-time analytics, monitoring services, and sample analysis. These collectively improve production outcomes from current fields.
The growing focus on oil recovery along with well testing in current oil and gas fields is likely to give the production segment a larger portion of the market share. The segment covers a range of oilfield services. That includes artificial lift, support vessels, well testing, and various production services. With the increase in well drilling offshore for the exploration and processing of natural gas and petroleum, the drilling segment will occupy the second-largest share.
