The oilfield specialty chemicals market grew to nearly $16
billion in 2010, driven in large part by the rapid expansion of shale oil and gas
drilling and production in North America, according to a
new IHS Chemical global market study.
The market was particularly strong in the US and Canada,
which accounted for more than $8 billion or 52%, the IHS
Chemical 2012 Oil Field Chemicals Report says.
World demand for these chemicals is expected to grow at an
average rate of 3.5% during the next five years, the study
says, with sales expected to increase to almost $19 billion by
The next closest global consumer of oilfield chemicals, the
report noted, was Latin America, particularly in Brazil, which
came in at 11% in 2010, or nearly $1.8 billion of sales.
The Russian/CIS and African regions each followed with 8% of
the global demand for oilfield chemicals, or slightly more than
$1 billion in sales. The Middle East, Asia Pacific and European
regions each followed with 7% of global demand, or close to $1
billion each in market share.
Despite the global economic crisis, the market grew during the
past four years, and a rising oil price through mid-2008
increased the attractiveness of renewed drilling efforts, the
However, price inflation, concurrent with shortages of key
chemicals ingredients, combined to make a tight supply/demand
balance for some products.
Due to favorable oil and gas prices and advances in technology, there has been a
significant increase in hydraulic fracturing particularly in
North America, said Ray Will, principal analyst at IHS
Chemical and co-author of the report.
This has made natural
gas production possible in previously uneconomic reserves
in shale deposits bringing record quantities of gas to market
in the US, he added.
Naturally, this increase in drilling and production
has resulted in higher volumes of drilling, stimulation and
cementing chemicals. In turn, increased supplies of natural
gas have caused price declines, making gas more competitive
both for electricity production, and as a raw material for
chemicals production here in the US.
According to the report, issues relating to health, safety
and the environment do have a major impact on the current and
future use of oilfield chemicals.
The area where environmental regulations have had their
greatest impact is offshore, with North America and Western
Europe leading the way with a formal regulatory framework.
The general issues related to the environmental impact of
oilfield chemicals are all associated with the effluent
discharges made during field operations, IHS said.
Recently, North American and European attention has shifted
to concerns over hydraulic fracturing or fracking,
and new regulations are coming into force regarding this
Since the Deepwater Horizon accident in the US Gulf of
Mexico, the US Secretary of the Interior created three new
regulatory agencies to oversee the industry, with the Bureau of
Safety and Environmental Enforcement considered the most
important for the oilfield chemicals business, and many state
agencies are advancing their own regulations.
In addition, the US Securities and Exchange Commission (SEC)
is asking oil and gas companies to supply detailed information
including chemicals used, in order to minimize environmental
In part, the requirement for disclosure will tend to
favor more environmentally friendly chemicals, Will said.
As environmental regulations become more stringent,
chemical manufacturers have an opportunity to develop more
environmentally friendly products.
Oilfield chemicals typically fall under three categories:
drilling fluids, cementing and stimulation, and oil
Drilling muds and fluids are chemical systems used to lubricate
the drill bit, to control formation pressure, and to remove
formation cuttings. They can be oil- or water-based depending
on the geologic formation.
Cementing uses chemicals to cement steel pipes or casing to
the sides of the borehole. Stimulation chemicals encourage the
flow of crude oil to the well.
Two commonly used stimulation techniques are acidizing and
fracturing - an essential part of hydraulic fracturing. Oil
production chemicals are used at all stages from oil production
at the wellbore to delivery of crude to the refinery.
Products include corrosion and scale inhibitors, biocides
Though growth in demand for oilfield chemicals has been
significant in Latin America, the report noted, political
instability has limited activity in Venezuela, the report
While Africa has also seen significant growth across the
continent for oilfield chemicals, which is expected to continue
for the next five years, political instability is also a threat
to activity - particularly in Libya and Sudan.
According to IHS, Iraq has the greatest growth potential for
the oil field chemicals sector during the next four years, as
it seeks to rejuvenate oil fields and explore for new
But again, political factors will continue to have a major
impact on the market potential, according to the report.
Many of Iraqs new fields present significant
technological challenges such as drilling in deepwater or
working in high-temperature, high-pressure and corrosive
conditions, said Will. These wells will require
larger volumes of more expensive chemicals than most
conventional wells, so the volumes of chemicals used, and the
value of those chemicals, will go up.
Since most of Europes oil field production is the
North Sea, aging wells have been accompanied by corrosion and
In addition, European environmental concerns have led to
restrictions or outright bans on many chemicals formerly
employed, so alternative products or techniques that are
generally more expensive have been employed.
According to the report, growth in the drilling, cementing and
stimulation sectors will be low in this region, but the
production chemical sector will continue to grow strongly.
The Asia-Pacific market will show strong growth in the
drilling, cementing and stimulation markets, while production
chemicals are likely to grow more slowly due to much of the new
development coming from shale gas fields, IHS said.
The global oil field chemical industry is dominated by large
corporations such as Halliburton, Schlumberger and Baker
Hughes, which are also active in the wider range of oil field
services such as exploration, drilling, design and
All three have added to their traditional
cementing/stimulation services by acquiring or creating
business units dedicated to drilling fluids and production
One of the most significant challenges Will sees for
oilfield chemical providers going forward is quality and
consistency of product.
A major supplier of oil field chemicals must provide
the international oil companies with products and services of
high-quality on a consistent basis, and increasingly, it must
do so on a worldwide basis, Will said.
This business is all about customer service, so it is
personnelintensive, and its products are personalized to
meet specific customer needs. Service companies typically have
400 to 600 products, many of which have evolved over time as
specialized formulations for a particular application or
While the service companies would prefer to simplify
their product lines, doing so is difficult, because their
customers are resistant to accepting substitutes for products
that work well.
In addition, Will noted, the services element of the
business requires these companies not only to provide the
reliable chemical formulations needed, but also to provide
high-tech testing equipment to ensure quality and safety, and
when required, to provide rapid response teams to address any
problems encountered by the field operator.
This makes it harder for smaller companies to compete
in the oilfield chemicals space, due to the scope and size
needed to meet customer requirements globally, Will
For more information on the report, contact firstname.lastname@example.org.