U.S. demand is expected to reach $15.2 billion by 2018.
by Lee Steinbock (The Freedonia Group)
October 3, 2014

Demand for well stimulation materials in the U.S. is forecast to climb more than 10 percent annually, reaching $15.2 billion by 2018. Historically high oil prices and rebounding natural gas prices are expected to be the main factors promoting continual growth in well completion activity. In addition, the use of newer technologies—such as horizontal drilling and high-volume, multistage hydraulic fracturing—will increase the amount of materials used per well. The development of unconventional resources is expected to continue unabated, resulting in further stimulus to product demand. Proppants will remain the highest volume material used in well stimulation. However, demand for chemicals will be boosted by an emphasis on higher-value, more environmentally friendly formulations. Potential restraining factors include growing environmental concerns about the high volumes of fluids used in stimulation and the maturation of key unconventional plays. Additionally, although the number of fracturing stages is expected to grow, this will be less of a factor in future material demand. The two main product sectors in the well stimulation industry—proppants and chemicals—each have a distinct group of suppliers and face unique demand variables. Proppants account for more than half the market in monetary terms. Although raw sand dominates volume sales, value-added coated sand and ceramic proppants each account for a greater share of monetary demand.

U.S. well stimulation material demand

Resin-coated sand proppants are expected to register the fastest growth as proppant loads continue to increase and operators develop formations with higher closure pressures. Gelling agents account for the highest dollar sales of stimulation chemicals and are expected to continue to do so over the forecast period. However, because of a price correction for guar gum, sales of gelling agents are projected to be lower in 2018 than they were in 2013. The expansion of hydraulic fracturing has not been without controversy. Concerns about the effects of fracturing on local water supplies have led to calls for restrictions on the process. As a result, well stimulation material suppliers have focused on developing green chemicals that have a reduced impact on the environment. The use of slickwater fracturing fluids, which have become more prevalent during the past decade, has helped reduce chemical loads and lowered costs. However, as proppant loads have grown, pure slickwater fracturing techniques have become less effective. In response, companies use hybrid fracturing treatments. Hybrid formulations can reduce water use and cause less formation damage than polymer gelling agents alone. Moving forward, hybrid systems are expected to see the fastest growth, although the industry continues to look for new formulations that reduce water usage while increasing well productivity.