This growth is driven by increased activity and technology use.
by The Freedonia Group, Inc.
December 3, 2013

This article was updated with new information provided by The Freedonia Group on Aug. 21, 2014.

Demand for oilfield chemicals in the U.S. is forecast to increase 2.1 percent annually through 2017 to $10.5 billion. Strong growth is driven by increasing drilling activity, production and the use of technologies such as hydraulic fracturing and enhanced oil recovery (EOR). New technologies have transformed the market for oilfield chemicals during the past decade. Techniques—including pad drilling, horizontal drilling and multistage hydraulic fracturing—allow for shale gas and tight oil play development. The increase of activity in unconventional resources has led to improvement in the country’s oil and gas outlook and an increased need for oilfield chemicals. Moving forward, the industry will contend with evolving technology, the potential for ongoing chemical product shortages, and a challenging environmental and regulatory environment. Chemical suppliers must provide high-performance products with an increased environmental friendliness.

U.S. oilfield chemicals demand in 2017U.S. oilfield chemicals demand in 2017, up to $10.5 billion

Hydraulic fracturing is widely used and important. Increases in fracturing activity are expected to continue. Guar gum, used in fracturing, has presented unique challenges to the industry after a severe price shock in 2012. Helping offset reliance on this chemical will be the rising use of slickwater fracturing—which does not use guar—and efforts to find alternative polymers. Other chemicals that have benefited include friction reducers, surfactants, gases and other products. Drilling activity is expected to remain elevated, driving the demand for drilling and completion chemicals. Demand will be strong for chemicals that increase drilling efficiency and reduce rig time, improve well productivity through the reduction of formation damage, and better the environmental profile and disposal requirements of formulated products, such as drilling fluids. Many unconventional formations have required the performance of oil-based drilling fluids. However, as water-based drilling fluids continue to improve, their use will increase even for difficult drilling conditions in which oil-based muds are the preferred choice. This will benefit the demand for shale inhibitors and lubricants used in water-based fluids. The demand for oil-based muds will also remain healthy. Offshore drilling will support strong demand for synthetic drilling fluids and high-density completion brines. Other oilfield chemical applications—such as cementing, production and EOR—will grow. The production of oil and gas in the U.S. is expected to continue to rise, while the maturity of most U.S. oilfields will result in rising water cuts in the production stream. Increased production and produced water will escalate the use of biocides, demulsifiers, and corrosion and scale inhibitors. Productivity declines in mature fields, required EOR to sustain production levels. Industrially generated waste carbon dioxide for EOR will be of particular interest for its potential as a method of permanent storage of this greenhouse gas.