More Modest Outlook for Global Land Rig Market in 2015-2019 Due to Current Low Oil Price Environment
Given the current economic conditions, there is a more modest outlook for the land drilling rig market through to 2019. The recent decline in oil price is expected to result in a 19% drop in onshore wells drilled in 2015, with several operators having announced planned reductions in expenditure. This expected fall in drilling activity is likely to have a significant impact on rig demand, with the global operational and active rig populations forecast to decline by 11% and 12% respectively in 2015.
Based on a scenario in which the oil price returns to pre-crisis levels of $70-80 per barrel in 2016, the number of operational rigs is expected to rise by 19% over 2015-2019 as drilling activity recovers. Asia-Pacific is expected to see the largest regional increase in capable fleet size, with 230 units forecast to be added in 2015-2019.
Increased well depths and drilling complexity have resulted in rising demand for high horsepower (HP) rigs, with the global number of active rigs rated over 1,250 HP having risen by 33% in 2010-2014. This trend is set to continue over the forecast period at a CAGR of 5%. More complex well drilling requirements are also expected to drive an increase in expenditure on components such as top drives over the 2015-2019 period. An increase in the number of rigs being converted to AC power, as well as the use of technologies such as pad drilling, is expected as operators seek to maximise the efficiency of drilling operations.
The possibility of a further decline in oil price remains a potential downside risk to the forecast. Although the risk to conventional onshore drilling is lower, high Capex unconventional projects, including the use of Enhanced Oil Recovery (EOR) techniques could become uneconomic if the current economic conditions continue. In this event, demand for high HP rigs is likely to be impacted.
The report has been developed and expanded, following client feedback and extensive industry analysis, to include:
- Drivers, trends & themes - a discussion of the fundamentals that drive the exploration process, including those which impact the land drilling market.
- Manufacturing - detailed overview of the key elements of a land rig, the supply chain and sales process. Global analysis of the key rig equipment manufacturers operating in each regional rig component market. Rig equipment trends for top drive systems & rotary steerable systems, automation & AC power and pad drilling & walking rigs. Land rig construction forecast.
- Regional drilling market - comprehensive summary at the regional level including: onshore wells drilled, rig fleet growth, active drilling rigs required and key trends in each region. Since producing the previous edition of the report, Douglas-Westwood has gained improved visibility of core markets such as China, resulting in a 4% increase in the number of identified rigs.
- Regional competitive landscape of identified rigs - matrix of drilling contractors operating in each region, indicating the overall size, composition and countries of operation of each contractor's fleet.
- Market forecasts - comprehensive examination, analysis and ten-year view of the market, with historic data covering the period 2010-2014 and forecast data for 2015-2019, including: onshore wells drilled, rig fleet growth, active drilling rigs required and global trends.
Why purchase the World Land Drilling Rig Market Forecast?
The report includes the very latest market outlook based on DW Drilling & Production data and reflects the current low oil price environment.
DW's market forecasting is trusted by sector players worldwide, with clients including the world's top-10 oil & gas companies, top-10 oilfield services companies and top-10 private equity firms.
The report is essential reading for land rig contractors, rig manufacturers, oilfield service companies, oil & gas operators and financial institutions wanting to better understand where and when to make investment decisions.
Our proven approach includes:
- Unique and proprietary data - DW maintains a unique global in-house database of rig fleets: the DW Land Rig Database, which is updated year-round from published sources and insight gained from industry consultation - this involves discussions with a wide-range of companies including equipment manufacturers, engineering consultancies and private equity firms.
- Methodology - the rig demand model is based on drilling and production forecasts and the rigs identified in DW's Land Rig Database, with assumptions fine-tuned using knowledge which DW has gained through extensive consultations with industry.
- Country-by-country analysis - comprehensive examination of 35 key countries, including: oil & gas production, onshore wells drilled, active drilling rigs required, forecast rig utilisation, investment and key trends in each country, fleet capacity and features, plus the competitive landscape.
- Concise report layout - consistent with DW's commitment to delivering value for our clients, all our market forecasts have a concise layout consisting of industry background and supporting materials condensed to enable quick review with ‘speed-read' summaries of key points throughout.