Onshore Drilling Fluid Market - Forecast(2024 - 2030)

Onshore Drilling Fluid Market Overview

Onshore Drilling Fluid market size is forecast to reach US$5.9 billion by 2027, after growing at a CAGR of 4.7% during 2022-2027. Onshore Drilling fluid is a combination of clay and other elements along with water or oil and is dispersed about the drill bit in oil-well drilling. The key component of these fluids is Sodium hydroxide and bentonite. These Drilling fluids perform a vibrant role in gas and oil exploration operations. In petroleum engineering, drilling fluid is known as drilling mud and is a viscous, heavy fluid mix employed in gas and oil drilling procedures to transmit rock cuttings to the surface. Rheology modifiers is an additive for oil and synthetic base muds that provide high viscosity at low shear rates, which is useful when drilling high-angle and horizontal wells and can be critical for cuttings carrying and prevent sag settling of weighting material. The shale inhibitors adsorb on clay minerals' surface, which reduces the overall charge on clay minerals and makes their surface hydrophobic in nature. Deflocculants are thinning agents used to reduce viscosity or prevent flocculation. Pneumatic fluid systems use a fluid to transmit and control pressure, which can be turned into a force to accomplish useful work. Further, Onshore drilling fluids accomplish plentiful functions including lubricating drill bit teeth, and plummeting drill pipe stuck glitches throughout drilling operations.

COVID-19 Impact

In 2020, the onshore drilling fluid market was growing at a steady rate since the negative global impacts of the coronavirus are already there, significantly affecting the Onshore Drilling Fluids market. However, the market is expected to rapidly grow in the post-COVID-19 period. Due to the current scenario, various fluids, oil & gas companies worldwide have to shut down their manufacturing facilities and services as countries implement a lockdown strategy to deal with the pandemic. For example, according to the International Energy Agency out of a global total of 28 floating productions, storage, and offloading oil and gas production vessels under construction in the first quarter of 2020, 2022 were being built at shipyards in China, Korea, and Singapore countries industrial activity was severely affected. Similarly, the Lombardy region of Italy is a major production hub for advanced engineering equipment for the oil and gas industry and was one of the first regions of the rest of Europe to be locked down. Also, due to supply chain disruptions such as raw material delays or non-arrival, disrupted financial flows, and rising absenteeism among production line staff, OEMs have been forced to function at zero or partial capacity, resulting in lower demand and consumption for oil and gas-based Onshore Drilling Market in 2020.

Report Coverage

The report: “Onshore Drilling Fluid Market – Forecast (2022-2027)”, by IndustryARC, covers an in-depth analysis of the following segments of the Onshore Drilling Fluid Market.

By Product Type: Oil-based Drilling Fluid, Synthetic-based Drilling Fluid, and Water-based Drilling Fluid
By Basin: Permian, Eagle Ford, Niobrara, Bakken, Appalachia, and Others
By Additive Type: Corrosion Inhibitors, Dispersants, Emulsifiers, Wetting Agents, Viscosifiers Defoamers, Lubricants, Shale Inhibitors, Surfactants, Thinners and Dispersants, and Others
By Geography: North America (USA, Canada, and Mexico), Europe (UK, Germany, France, Italy, Netherlands, Spain, Russia, Belgium, and Rest of Europe), Asia-Pacific (China, Japan, India, South Korea, Australia, and New Zealand, Indonesia, Taiwan, Malaysia, and Rest of APAC), South America (Brazil, Argentina, Colombia, Chile, and Rest of South America), Rest of the World (the Middle East, and Africa)

Key Takeaways

• North America dominates the Onshore Drilling Fluid market, owing to the abundance of shale reserves in North America has led to a considerable increase in drilling activity. The rising shale gas activities are a vital factor driving the growth of the onshore drilling fluids market.
• The increasing discovery of oil reserves is the main factor escalating the market growth, also increasing demand for oil worldwide and rising investment in oil exploration activities are the major factors among others driving the onshore drilling fluids market.
• Moreover, the rising focus on deep and ultra-deep-onshore drilling and on developing advanced drilling fluid chemicals will further create new opportunities for the onshore drilling fluids market in the forecast period of 2022- 2027.
• Environmental impact of drilling fluids and strict environmental regulations are the major factors among others acting as restraints, while the rising cost of onshore and ultra-deepwater drilling further challenge the growth of the onshore drilling fluids market in the forecast period mentioned above.

Figure: North America Onshore Drilling Fluid Market Revenue, 2021-2027

Onshore Drilling Fluid Market Segment Analysis – By Product Type

The Water-based Drilling Fluid segment held the largest share of 40% in the Onshore Drilling Fluid market in 2021. It has accounted for over 50% of the total revenue in the year 2020 followed by Oil-based and synthetic-based Drilling Fluid. It's base consists of freshwater, brine, saturated, or formate brine. The selection of media depends on good conditions such as terrain, soil permeability, formation, proximity to the aquifer, and drive mechanisms. Growing concern toward the environmental impact of waste generated in oil & gas operations is anticipated to raise the demand for Water-based Drilling Fluid over the forecast period. Rising product demand may be attributed to the low toxicity of these products. Oil-based Fluid (OBF) lies on a moderate penetration-low growth rate side. This particular segment is anticipated to witness stagnant growth on account of adverse environmental impact associated with waste discharge. Synthetic-based fluids (SBF) are anticipated to witness moderate growth over the forecast period on account of their ability to provide excellent borehole control, thermal stability, lubricity, and penetration rates, which are beneficial in reducing the overall cost. 

Onshore Drilling Fluid Market Segment Analysis – By Basin

Eagle Ford segment held the largest share of 36% in the Onshore Drilling Fluid market in 2021. Permian basin is anticipated to emerge as the fastest-growing regional market in the U.S. The Eagle Ford Shale contains 5.2 billion barrels of proven oil reserves and 23.7 trillion cubic feet of natural gas reserves, according to the U.S. Energy Information Administration (EIA). The major players involved in the Eagle Ford include EOG Resources and others. Many companies are planning to invest in Niobrara operations owing to the lower involvement of companies in the surface of the Niobrara and hydrocarbon-rich shales in the Rockies. For example, ConocoPhillips announced that the company is expected to target a rig to operate in the Niobrara in 2017, and have successfully started the operation in the first half of 2020. Several companies are working to expose the resources trapped in Niobrara and five major companies stand out as those poised to dominate the Basin. In 2018, Anadarko Petroleum, one of the five key competitors, has targeted the DJ Basin (Wattenberg Field) and accounted for the production of 356,000 BOE/d and 350,000 of net acres’ surface of Niobrara. The other leading Niobrara shale producers include Noble Energy, Devon Energy, EOG Resources, and Whiting Petroleum. As a result, the demand for Onshore Drilling Fluid can be seen in almost every big core basin, which contributes to increased business growth.

Onshore Drilling Fluid Market Segment Analysis – By Additive Type

The corrosion Inhibitors segment held the largest share in the Onshore Drilling Fluid Market in 2021 and is growing at a CAGR of 4.3% during 2022-2027. These Onshore additives serve various functions include removing cuttings from wellbore, controlling formation pressures, lubricating and cooling the drill bit, sealing permeable formations while boring, and maintaining wellbore stability. Product compositions vary based on wellbore demands, rig capabilities, and environmental concerns. Engineers design boring mud systems to control subsurface pressures, minimize formation damage, control borehole erosion, and optimize boring parameters including penetration rate and hole cleaning. As a large number of modern wellbores highly deviate, boring mud systems manage stability problems and hole cleaning specific to these wells. Shale stabilizers and alkalinity & pH control agents are the major components in the WBM. Adverse environmental effects of OBF coupled with strict government regulations toward the wastage created in the process are anticipated to hinder the market growth. The development of advanced boring fluid chemicals, particularly for wells where horizontal boring is anticipated to create immense opportunities for the onshore drilling fluids market.

Onshore Drilling Fluid Market Segment Analysis – By Geography

The North American region held the largest share of 43% in the Onshore Drilling market in 2021, owing to increasing discoveries of oil reserves. It is also projected to be the largest market for drilling & completion fluids during the forecast period. The abundance of shale reserves in North America has led to a considerable increase in drilling activity. The North American region has a large number of offshore reserves, which are currently being explored. The North American drilling and completion fluids market is driven by the growth in drilling activities for oil and gas reserves. The offshore exploration activities in the Gulf of Mexico are on the rise, which has prompted the expansion of companies in the region. The government has imposed stringent regulations for the prevention of the degradation of the environment. Hence, North America dominates the onshore drilling fluids market due to an increase in finding untapped oil and gas reserves, and the shale boom, and rising offshore drilling activities in the Gulf of Mexico. Asia-Pacific is the expected region in terms of growth in the onshore drilling fluids market due to rising developments in offshore activities such as contract signature and increasing oil production. Thus, with the flourishing onshore drilling industry, there will be an upsurge in the demand for its products, which is anticipated to drive the Onshore Drilling Fluid market in the North American region.

Onshore Drilling Fluid Market – Drivers

Increasing drilling activities

The increasing demand for crude oil has resulted in a rise in drilling activities. North America has the highest oil & gas production, followed by Europe, due to the continuous rise in onshore activities in Russia and offshore activities in the North Sea. The increase in drilling activities directly impacts the growth of drilling and completion fluids. Different types of drilling fluids are required depending on the geographic conditions, economic viabilities, and others. Technological advancements coupled with high demand are increasingly putting pressure to increase the depth of wells. This drilling is carried out under high temperature and high-pressure conditions. Horizontal and deeper wells face a range of drilling, stability, pressure, and other issues, which require a greater volume of drilling fluids and a more sophisticated drilling fluid system. An effective drilling fluid system facilitates reduced time to drill, helps to increase wellbore stability, and maximizes recovery from the reservoir, thus positively impacting the economic return of the well. Thus, an increase in onshore and offshore drilling activities of wells is expected to propel in the coming years. 

Increasing demand for Shale Gas to fuel market growth

Various factors driving the growth of the global shale gas market are the rising demand for gas-fired power generation technology and the increasing focus on reducing carbon emissions. Many countries worldwide, including Canada, India, and Germany, Focus on developing shale gas exploration resources. As per International Energy Agency (IEA), the share of gas in the global energy mix could rise from the present levels of 23% to 255 in 2035, overtaking coal (24%) to become the second-largest primary energy source after oil (27%). In the U.S., shale gas-fired power generation is increasing owing to its several benefits. In the U.S., gas-fired generation in the U.S. The factor is likely to drive the shale gas market, which will in turn be expected to drive the global drilling fluid market.

Onshore Drilling Fluid Market – Challenges

Impact of drilling fluids on the environment

Drilling operations require drilling fluids that contain additive chemicals injected through the drill string. These fluids, when mixed with stone cuttings, form residues, which when discharged result in detrimental effects on the surrounding ecosystem. The contaminants from this residue get mixed with groundwater and make the groundwater toxic. This causes serious water and soil pollution and disturbs the natural habitat of various organisms. Biodegradable chemicals are costly thus resulting in limited adoption. Various governments around the world have imposed severe regulations on the usage and discharge of drilling fluids to control pollution. 

Rise in cost of deepwater and ultra-deepwater drilling

Drilling in deepwater and ultra-deepwater is possible with the advancements in technology and floating production. Technological advancements have made new areas accessible, but deepwater projects require more investment and time compared to shallow waters or onshore developments. As a result, most nations with offshore assets operate in shallow water. Onshore Drilling Fluid companies spend a substantial amount of capital on R&D to meet the challenges of drilling fluids. Deep drilling requires large and expensive rigs and low penetration rates. 

Onshore Drilling Fluid Market Landscape

Technology launches, acquisitions, and R&D activities are key strategies adopted by players in the Onshore Drilling Fluid market. Onshore Drilling Fluid market top companies are:

1. Aes Drilling Fluid LIc
2. Baker Hughes A Ge Co
3. Ce Energy Solution Corp
4. Francis Drilling Fluid Ltd
5. Geo Drilling Fluid Inc
6. Horizon Mud Company Inc
7. Imdex Limited
8. Mcada Drilling Fluid
9. National-Oilwell Varco Inc
10. Medserv Plc 

 Acquisitions/Technology Launches

In September 2019, CE+T Energy solutions acquire Ideal power’s power conversion Business Unit and Technology. The acquisition benefits include   Reduce energy cost and total cost of ownership, Ensure systems reliability and resilience,  Improve power quality and others.

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