The frac stack market is expected to register a CAGR of more than 5% during the period from 2022 to 2027. As global oil prices fell enormously during the COVID-19 pandemic, the frac stack and fracking market suffered immensely, as most producers halted fracking operations due to lower oil prices. There is rising production from unconventional resources, as most of the conventional oil fields are aging at a faster rate and will not be able to meet the growing energy demand. This is expected to drive the frac stack market during the forecast period. Additionally, the shale boom in United States, which has led to massive growth in production volumes and the commercialization of fracking technology, has reduced the capital costs of fracking operations globally, which is expected to drive the market during the forecast period. However, environmental concerns and a lack of capital market and incentives are restraining the market growth.
- The onshore sector has accounted for around 70% of the global crude oil production. The demand for fracturing is growing to maintain or increase production from existing fields and the increasing popularity of unconventional reserves such as shale and tight ones. As hydraulic fracturing increases in the onshore sector, the frac stack market is expected to get larger.
- The application of the Internet of Things (IoT) to use a large amount of data generated during the exploration and production (E&P) activities has led to a growing demand for safety concerns and improving the efficiency of the fracking process using advanced analytics and simulation software. The application of big data analytics and IoT systems in fracking operations is expected to lead to significant growth opportunities for the frac stack market in the coming years.
- North America is one of the largest markets for frac stacks, led by United States, primarily due to the shale boom, which has led to the increased exploitation of its shale reserves that need to be fractured for economical production.
Frac Stack Market Trends
The Onshore Sector is Expected to Dominate the Market
- Hydraulic fracturing is used to increase the rate of crude oil and gas being recovered from conventional and unconventional reservoirs. The demand for fracturing is growing as conventional fields are aging, and more unconventional reservoirs are to be tapped.
- In 2021, global oil discoveries fell to the lowest level in 75 years, falling from 12.5 billion barrels of oil equivalent (boe) in 2020 to 4.7 billion boe in 2021, nearly a 62.5% Y-o-Y decline. As a result, several operating companies have shifted their focus toward the exploitation of unconventional onshore reserves such as shale and tight gas reserves, which have a lower risk and require lower capital investment than large offshore projects. The increased hydraulic fracking of unconventional onshore reserves is expected to increase the demand for frac stacks during the forecast period.
- Saudi Arabia's state-owned oil company Saudi Aramco has begun producing shale gas from one location and is exploring the North Arabia basin, the South Ghawar basin, and the Jafurah basin. Saudi Aramco has started the development of the Jafurah shale play and expects it to yield up to 2 Bcf/d of gas, 418 MMcf/d of ethane, and 630,000 boe/d of gas liquids and condensates by 2030. As Saudi Aramco increases its unconventional drilling and production operations, the demand in the frac stack market is expected to increase in the future.
- Therefore, the increasing popularity of hydraulic fracturing technology outside North America, especially in China, is expected to drive the frac stack onshore segment during the forecast period.
North America is Likely to Dominate the Market
- North America is one of the largest markets for frac stacks, led by United States, mainly due to the increased exploitation of its shale reserves that are fractured for economic production.
- As the economic impact of COVID-19 has started to subside and geopolitical tensions in major oil-producing nations such as Russia, Kazakhstan, and Libya have reduced global oil output, oil prices have started to rise due to the increasing demand. Due to this, oil and gas producers in United States are paving the way for faster production by expanding new well completions in the Permian Basin of west Texas and New Mexico, the primary shale plays in the country.
- However, growing health and safety concerns about groundwater contamination caused by fracking chemicals and increased seismic activities due to high-pressure fracking have created significant social concerns, which have led to strict regulation of the fracking industry in United States. Due to increased safety and environmental regulations, the cost of fracking has increased, which is expected to restrain the market growth during the forecast period.
- Canada has also been a major hotspot for fracking, and fracking has been ongoing in Cardium, Duvernay, Montney, and Viking Formations in Alberta, Bakken Shale in Saskatchewan, and the Montney and Horn River Shale in British Columbia. Additionally, the province of Alberta has one of the largest reserves of tar sands globally, and the commercial exploitation of tar sands requires massive fracking operations. The development of large unconventional shale reserves and oil sands is expected to drive the demand for fracking equipment such as frac stacks.
- Therefore, due to large and domestic unconventional reserves, a mature fracking sector, and a robust domestic demand, along with hydrocarbon export infrastructure, North America is expected to remain the largest market for frac stacks during the forecast period.
Frac Stack Market Competitive Analysis
The frac stack market is moderately consolidated. Some of the key players in the market include Oil States Energy Services, CCSC Petroleum Equipment Ltd Co., Schlumberger Limited, The Weir Group PLC, and Covenant Testing Technologies LLC.
- The market estimate (ME) sheet in Excel format
- 3 months of analyst support