U.S. demand for oilfield chemicals will total $14.4 billion in 2023, driven by rising drilling activity and increased well lengths, consulting firm Freedonia Group forecasts.
These trends are leading to greater consumption of chemicals per well, causing the projected demand growth for oilfield chemicals to outpace drilling and production activity, Kallanish Energy reports.
According to Freedonia Group:
- The prevalence of unconventional drilling will buoy chemical demand
- Increasing environmental concern and pressure from regulators will shape the product mix in favor of higher-value, more environmentally-friendly alternatives.
The drilling of unconventional plays is expected to continue to dominate drilling activity through 2023, and the higher costs and greater level of complexity associated with unconventional oil and gas wells will require higher performance oilfield chemicals, further driving value demand growth.
“However, growth will not be as rapid as during the 2008-2018 period due in part to oil and gas prices remaining below peaks reached earlier in the decade,” Freedonia Group stated.
Uncertainty surrounding oil prices could also discourage the drilling of more complex wells, which typically utilize larger volumes of oilfield chemicals, according to Freedonia Group.
While recently proposed fracking bans by Democratic Presidential candidates are unlikely to affect near-term prospects, a number of regulations have been introduced that seek to limit the potentially harmful environmental impact of the oil and gas industry.
These regulations ranging from curbing the use of environmentally harmful chemicals, to guidelines regarding water management issues, and the appropriate disposal of hazardous wastes.
“These concerns will continue to drive development and use of higher value products as the industry attempts to forestall formal regulation by embracing more environmentally friendly alternatives, including biodegradable shale inhibitors and less toxic biocides,” Freedonia forecasts.
“This will in turn boost oilfield chemical demand due to the higher price of these chemicals compared to the products they are replacing.”
