The increase in the number of drilling activities and crude oil rigs has magnified developments in drill pipe market over the years. The governments across the globe are heavily investing in upstream sectors which has consequently supported the demand for the product. A rise in primary energy consumption along with stabilizing crude oil prices will bolster the business landscape.
As per EIA’s Annual Energy Outlook 2018, the consumption of natural gas in the U.S. across the industrial sector is expected to increase by 39% from 25.9 Bcf/d in 2017 to 36.1 Bcf/d by the end of 2050. Considering the increasing demand for crude oil in tandem with the growing investments made towards oil and gas exploration activities worldwide, drill pipe market has witnessed considerable returns over the past decade.
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Some of the prominent drill pipe companies include Oil Country Tubular Limited, Premier Drill Products, E&M Supply Group, Holy Pipe Corporation, and Texas Steel Conversion, among various others.
The wide adoption of premium drill pipes
Premium drill pipes have registered robust gains over the years owing to the aptness of these pipes to facilitate the exploration of water reservoirs, coupled with the potential of drill pipes to function efficiently across difficult regional terrains. However, API grade pipes have gained preference as compared to premium grade across onshore applications due to cost-effectiveness.
Robust oil exploration activities in Saudi Arabia
Saudi Arabia drill pipe industry has emerged as a profitable revenue terrain over the past several years and was expected to grow by 10% by the end of 2024. The government of Saudi Arabia has established crude oil production targets along with increasing rig count. In the year 2018, Saudi Aramco inked an agreement with the National Oilwell Varco headquartered in the U.S. to manufacture onshore rigs and other drilling tools.
Increase in shale gas production in the U.S.
Capital expenditure from independent players along with a rise in the exploration of unconventional wells has driven the U.S. drill pipe industry. According to U.S. EIA, 44 onshore entities increased their capital expenditure by nearly 72% between 2015 and 2016 across the nation. Additionally, the availability of recoverable shale oil and gas reserves has supported the adoption of the product.
High demand for offshore drill pipes
The offshore drill pipe market has registered considerable gains over the years. Technological advancements that effectively explore water reserves across various geographical terrains at an optimum cost has supported growth in the business. Favorable policies established with an aim to enhance the domestic production from untapped reserves has supported the deployment of the components.
Drilling for the production of crude oil
The implementation of various advanced techniques for the production of crude oil including horizontal drilling and hydraulic drilling has supported the demand for drill pipes. Moreover, the exploration and production of unconventional resources will support the business growth. As per the Energy Information Administration, tight oil is expected to be a prime source of the U.S. oil production responsible for nearly 70% of the total output by the end of 2040.
Swedish mining company Epiroc recently launched new DH 350, a novel line of oil and gas drilling rigs that provide benefits of Tier-1 class drilling rigs. Single-piece substrates is integrated with hydraulics to offer a lesser number of connections required for a full rig up.
Coronavirus impact on the drill pipe industry
Coronavirus outbreak has impacted the growth of various sectors of the economy, subsequently impacting drill pipe market during this pandemic. With a restriction on the movement of people imposed by the governments across the globe and a limitation on the number of workers, there has been a rapid fall in oil and drilling activities across the globe.
With most oil companies witnessing a fall in demand due to a standstill in operations in other major industries like automobiles, these companies are compelled to resort to layoffs due to huge revenue losses. However, drill pipe demand is expected to witness growth as there is improvement in the economic conditions with time.
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