The directional drilling services market is expected to grow at a CAGR of approximately 5.55% during the forecast period 2020-2025. Factors such as drilling in unconventional reserve, which involves directional or horizontal drilling to increase contact with the pay zone, as well as increase the production significantly are expected to drive the directional drilling services market during the forecast period. Moreover, global crude oil demand is expected to grow by 1.2 mb/d in the next four years, further increasing pressure among the top oil and gas operating companies to increase their production is promulgating the market. However, the volatile crude oil prices and low investments in regions excluding North America is likely to hinder the growth of the market being studied.
- Offshore segment is expected to witness significant growth during the forecast period, owing the cost of operation in the offshore locations declining significantly over the past few years. This factor is encouraging the industry to step up its expenditure gradually in the future and drive the directional drilling services market.
- Factors, such as technological improvements and increasing viability of deepwater and ultra-deepwater projects, several new markets, such as Gabon, Senegal, Guyana, Trinidad & Tobago, Egypt, and the Mexican side of the Gulf of Mexico are actively promoting the development of deepwater and ultra-deepwater reserves. This, in turn, is expected to create significant opportunities for the operating countries in the near future.
- North America is expected to continue its dominance for directional drilling services market across the globe with the majority of the demand coming from the United States and Canada due to increasing horizontal and directional drilling activities.
Key Market Trends
Offshore Segment to Register Higher Growth
- The offshore oil and gas industry accounts for about 30% of the global crude oil production. The Middle East, North Sea, Brazil, the Gulf of Mexico, and the Caspian Sea are the major offshore oil and gas producing regions.
- The deepwater oil production is majorly concentrated in four countries, Angola, Brazil, Nigeria, and the United States. The Libra field in Brazil, the largest pre-salt discovery so far, began producing in late 2017 and the field development is expected to continue until the 2020s.
- The combined production from tight oil, oil sands, and deepwater is estimated to reach 21 mb/d by 2040 and is expected to account for almost a quarter of the global crude oil production. The changing economics and the exhaustion of some shallow offshore resources have compelled the producers to shift toward deepwater and ultra-deepwater resources.
- The decline in offshore rig count slowed down in 2018. The offshore activity is expected to garner momentum over the next two to three years. Moreover, more than 90 offshore projects are in the queue to receive a green signal. These factors are expected to drive the demand for directional drilling services in the offshore sector.
North America to lead the Market
- Mainly owing to the demand from the United States and Canada, North America leads the directional drilling services market and is expected to be the largest market as of 2019.
- The United States has one of the largest technically-recoverable shale gas reserves, and the second-largest tight oil reserves in the world. The technological development in the hydraulic fracturing and low breakeven prices have supported the oil and gas directional drilling activity in the region.
- In the United States, the directional drilling services market is primarily driven by new offshore projects and redevelopment of matured fields. Due to the recovering drilling activity, the gas output is expected to reach an average of 47 billion cubic foot per day by 2020. The production from Marcellus/Utica shale and new oil wells is expected to account for most of the growth in gas production.
- The biggest increase in activity is expected from Canada's main crude oil and gas producing region, Alberta. Consequently, the directional drilling services market is estimated to grow at a moderate pace in Canada.
- Therefore, rapid growth in the drilling activities and the increase in many horizontal wells in the region are expected to drive the directional drilling services market during the forecast period.
The directional drilling services market is moderately fragmented. Some of the major companies include Schlumberger Ltd, Weatherford International PLC, Halliburton Company, and Baker Hughes Company.
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