Drilling fluids, also referred to as drilling muds, are usually a mixture of weighing material, clay, and a few chemicals. Industry drivers including rapid growth in population and increasing energy demand, increased drilling activities across the globe, and increased exploration of shale gas, tight oil, and other unconventional resources are driving substantial growth in the global drilling and completion fluids market.

Definition / Scope

• Drilling fluids, also referred to as drilling muds, are usually a mixture of weighing material, clay, and a few chemicals.
• This research study provides a global scenario of the drilling fluids market. In this research study, the drilling fluids market is segmented on the basis of product type, application, and geographies.
• The global drilling fluids market, based on the product type, has been segmented into water based fluids (WBFs), oil based fluids (OBFs), synthetic based fluids (SBFs), and others. The drilling fluids application considered in this research study are onshore and offshore. On the basis of geographies, the drilling fluids market has been segmented into North America, Europe, Asia Pacific, and Rest of the World (RoW).

Market Overview

• Bolstering energy demand coupled with rising population is driving increased interest in the activities to drill at higher depths and enter deep and ultra deep waters. Drilling and completion fluids form an essential element of any exploration and production activity. They serve many functions, some of which includes – sealing permeable formations observed while drilling, removing cuttings from wellbore, controlling forming pressures, and transmitting hydraulic energy to drilling bit and downhole tool.
• Rise in drilling activities across the globe is the primary reason for their increased adoption in exploration and drilling activities, globally. Moreover, recent advances in technology and exploration activities for coal bed methane gas and shale gas are expected to foster additional growth in the drilling and completion fluids market.

Market Risks

• Stringent environmental regulations on drilling activities may inhibit growth in the global drilling and completion fluids market. Increasing population and growing demand for energy are increasing the need to drill at deepwaters and ultra-deepwaters.
• Presently, offshore oilfield explorations are occurring in ever-growing depths of in and over 5,000 feet. The drilling rigs of industry majors such as BP p.l.c., Noble Energy, Inc., and Petrobras are actively engaged in drilling at depths even higher than 5,000 feet.
• Expanding oilfield exploration at these depths sometimes brings unseen challenges and unknown risks. One of them is the chance of a major oil spill. Once a major oil spill has occurred at the depth, it is almost uncontainable. Furthermore, oilfield exploration and drilling activities releases various environmental dangerous air pollutants.
• The governments across the globe have already laid or in-the-process of setting out rules to capture the various air pollutants that are emitted during the stages of oilfield explorations and drilling.
• The federal government has set new targets to cut methane emissions by 40% in 2012 to 45% by 2025. The U.S. Environmental Protection Agency (EPA) is entrusted with safeguarding the natural environment and protecting human health.
• The U.S. EPA has already issued cost-effective regulations that will reduce harmful air pollutants released during oil and gas activities. Stringent regulations from the national governments are likely to negatively impact the drilling activities.

Top Market Opportunities

• Emergence of advanced drilling fluid chemicals is creating ample of opportunities of growth in the global drilling and completion fluids market. Nanotechnology has been researched since several years and being used as an additive in drilling fluid.
• In the drilling fluids, the particle size of nanoparticles can vary between 5 and 100 nanometers (nm). These nanoparticles can be used to reduce wear and friction and improve the rheology of the fluids. Moreover, they also minimize the fluid rock interaction when used for drilling and completion fluids.
• Nanoparticles used in drilling fluids are being researched as a solution to ultra-deep water drilling. Nanoparticles could also be used to enhance cement, protect against corrosion, stabilize shale, and enhance the mud-cake.
• The innovations and technological developments in fluid additives create a huge opportunity for industry players. Increased emphasis on creation of sustainable and environmentally benign drilling and completion fluids is expected to provide ample of growth opportunity for drilling and completion fluids market.

Market Drivers

• A confluence of various factors – including rapid growth in population and increasing energy demand, increased drilling activities across the globe, and increased exploration of shale gas, tight oil, and other unconventional resources are driving substantial growth in the global drilling and completion fluids market.
• However, stringent environmental norms on drilling activities may hamper growth in the global drilling and completion fluids market. Ample opportunities for growth exist in the market with the emergence of advanced drilling fluids chemicals.
• Increasing living standard of people coupled with population growth across the globe are the primary reasons of rapid rise in the global energy demand. According to the United Nation (UN) estimates, the world population is expected to increase 6.7 billion in 2011 to 8.7 billion by 2035. This substantially increases demand for energy in this period.
• Increased urbanization also increases the demand for energy. Increasing population coupled with increasing demand for energy is creating additional pressure to drill at deep waters and ultra-deep waters. This substantially increases the demand for drilling and completion fluids in the future.
• The drilling and completion fluids market growth is dependent on the drilling activities carried out worldwide. An increase in drilling activities would increase growth in the global drilling and completion fluids market.
• Advancement in seismic and drilling technologies coupled with depletion of onshore and shallow water is the primary reason for the rise in offshore drilling activities across the globe. Moreover, the recent oilfield discoveries in remote areas coupled with technological advancement and development are also expected to act as catalyst to the rise in drilling activities across the globe.
• The U.S. had total number of 1929 hydrocarbons rig drilled in the country by Oct, 2014. This represents an increase of drilling activity by 10% as against last reported rig count in Oct, 2013. An increasing rig counts reflects more oil and gas drilling activities. Increasing drilling activities also leads to an increasing utilization of drilling and completion fluids.
• Increased explorations of shale gas, tight oil, and other unconventional resources also have resulted in increased demand for drilling and completion fluids market. Over the past decade, North American countries, particularly the U.S. and Canada, have experienced substantial growth in the unconventional fossil fuels such as shale gas and tight oil.
• This new supply of energy has led to reduction in energy imports and falling of gas prices. The increased domestic production of oil and gas has helped the U.S. reduce its dependence on oil and gas imports.
• According to current estimates from the U.S. Energy Information Administration (EIA), the country’s oil imports have decreased to 7.5 million barrels per day in 2012. The reported oil imports in 2005 were 12.6 million barrels per day. The imports dropped further in 2013 to the levels of 32% of overall consumption.
• The shale gas boom across the globe is a result of increased drilling activity. The increased drilling activity is anticipated to bolster growth in the drilling and completion fluids market.

Market Outlook

• Recent advances in technology and exploration activities for coal bed methane gas and shale gas are expected to foster additional growth in the drilling and completion fluids market.
• OBFs and SBFs are expensive, i.e. they have higher cost per unit than WBFs. WBFs are the most widely used drilling and completion fluids across the globe and are expected to continue to dominate in the near future as well. WBFs are suitable for both the offshore and onshore applications, and are eco-friendly and cost effective.
• North America driven by increased exploration and production activities is anticipated to lead the global drilling and completion fluids market in the near future. Rise in number of shale gas reserves coupled with growing offshore activities in Gulf of Mexico is expected to foster additional growth in the region’s drilling and completion fluids market.
• With development of sustainable, environmentally friendly drilling and completion fluids, the global drilling and completion fluids market is anticipated to register high growth in the near future.
• According to current estimates, the global drilling and completion fluids market was valued at USD 10.70 million in 2013 and is projected to reach USD 17.89 billion, growing at a CAGR of 7.7% between 2014 and 2020.

Distribution Chain Analysis

• The selection of type of drilling fluid to be used for a well is largely dependent on their cost, technical performance, and environmental impact. Key suppliers of drilling and completion fluids include Baker Hughes Incorporated, M-I SWACO, and Halliburton. Some of the other industry majors in the market are Canadian Energy Services, Scomi Group, and AkzoNobel N.V.
• The global drilling and completion fluids market is concentrated in nature with large players having at least regional presence occupying larger market share
• The market players involved in the drilling and completion fluids market adopt multiple strategies to gain competitive advantage over the other players in the market. The strategies adopted by market players include mergers and acquisitions (M&A), entering into joint ventures, contracts, agreements as well as partnerships. These strategies help them to succeed in the drilling and completion fluids market.
• Moreover, competitors at regional level are also engaged into strong research and development to develop innovative products and technologies to cater to changing market dynamics. By adopting these strategies, companies are able to create a large partner base as well as large customers.

References

1. Future Challenges of Drilling Fluids and Their Rheological Measurements. Subhash N. Shah, Narayan H. Shanker, and Chinenye C. Ogugbue. 2010, American Association of Drilling Engineers.
2. Emulsion Based Drilling Fluids: An Overview. Praveen Kumar Jha, Vikas Mahto, V. K. Saxena. s.l. : International Journal of ChemTech Research, 2014, Vol. 6. 4.
3. Investigation of Nanoparticles for Enhanced Filtration Properties of Drilling Fluid. Riveland, Frode Aarstad. s.l. : Petroleum Geoscience and Engineering, June 2013.
4. Nanotechnology for Oilfield Applications – Hype or Reality? Jim Freidheim, Steve Young, Guido De Stefano, John Lee and Quan Guo. s.l. : Society of Petroleum Engineers, 2012.
5. BP p.l.c. BP Energy Outlook. s.l. : BPStats, January 2014.
6. Opportunities and challenges for global deepwater players . Rodolfo Guzman, Paola Carvajal, Ben Thuriaux-Alemán.
7. Unconventional gas and oil in North America. Erbach, Gregor. s.l. : European Parliamentary Research Service, June 2014.