Directional Drilling Services Market Size, Share & COVID-19 Impact Analysis, By Type (Conventional and Rotary Steerable Systems (RSS)), By Location (Onshore and Offshore), By Service (Measurement While Drilling (MWD), Logging While Drilling (LWD), Rotary Steerable System, Mud Motors, and Others), and Regional Forecasts, 2020-2027

The global directional drilling services market size was USD 10.38 billion in 2019 and is projected to reach USD 13.87 billion by 2027, exhibiting a CAGR of 9.3% during the forecast period.

Rising demand for various tools and equipment used in the oil and gas industry across the globe, along with increasing discoveries of new bulk potential reservoirs, is expected to spur the demand of the market. Various companies are focused on investments in exploration & production activities to cater to the exponentially rising demand.

Directional drilling services involve methods to efficiently drill a well and maximize the output by laterally producing through the well. The technology offers numerous benefits, including flexibility, minimum site restoration, low soil contamination, low risk for geological abnormalities, and quicker installation with lower costs, which bodes well for the market. The reduction in maintenance and operational rig down time through directional drilling will consequently boost its demand and facilitate directional drilling services market growth. Increasing E&P activities at different locations coupled with advanced techniques adaptability to drill multiple wells from a single location to deliver maximum output with minimum downtime is set to propel the industry and elevate the need for directional drilling services.

COVID-19 has Impacted Production & Exploration Activities in Oil & Gas Industry

The ongoing outbreak of the COVID-19 pandemic has impacted the oil & gas industry significantly across the globe. Various oil & gas companies worldwide have to shut down their manufacturing facilities and services as countries implement lockdown strategies to deal with the pandemic. Amid increasing COVID-19 cases , many industries across the globe, such as automotive, aviation, power, manufacturing, and transportation, are experiencing a negative impact on their business.

The spread of Covid-19 poses a significant threat to the global market owing to lockdown in transportation, industrial and commercial operation, and a halt in upcoming exploration projects. The companies across regions have also suspended  their oil & gas projects. Furthermore, the COVID-19 pandemic has also impacted crude oil prices, well drilling, production activities, and the supply chain of oil and gas dramatically.

LATEST TRENDS

Increasing Investment in Offshore Upstream Sector to Augment Market

The offshore sector in oilfield services is expected to be the fastest-growing segment during the forecast period, owing to increasing investment in subsea oil & gas assets. Various oil field service providers are investing considerably in offshore assets to increase their productivity, reservoir performance, and overall life cycle of the well. Major upstream countries such as the United States, China, Russia, and Norway are primarily focusing on identifying new reservoirs and enhanced recovery from existing wells, which increased the demand for oilfield services, including drilling, completion, and workover services around the world.

Growing Investment in Untapped Oil & Gas Reserves to Accelerate  Market Growth

The expansion of the oil & gas industry has spurred energy demands across the globe. Over the years, oil & gas have been widely used in power generation, manufacturing goods, transportation, and among other end-use industries. However, the significant demand for unconventional fuel such as shale gas, tight gas, and coal bed methane on account of increasing urbanization, globalization, and massive economic development is estimated to drive the market growth. Additionally, many countries are increasing their capital expenditure (CAPEX) to secure upcoming energy demand. Offshore hydrocarbons, oil, and gas are proven to be one of the most efficient and reliable sources of energy that attract many investors and oil & gas companies. Thus, rising interest in recovering untapped oil & gas anticipated driving the market size.

DRIVING FACTORS

Discoveries in Oil & Gas Industry to Boost the Market Growth

Discoveries of reserves and oilfields are propelling the directional drilling services industry. The major discoveries include Alpine high in West Texas, Alaska in the U.S., Golan Heights in Israel, gas discoveries in the Kara Sea off the northwestern part of West Siberia's Yamal Peninsula - Dinkov and Nyarmeyskoye, oil discoveries in the Stabroek block Tilapia, Yellowtail (oil) and Haimara (gas-condensate), an offshore gas discovery with the Lang Lebah-1RDR2 exploration well and among other discoveries. It is projected that oil prices are on a hike in the coming years, which would encourage the oil field operators, gas production, and independent exploration companies to invest in oil & gas discoveries and exploration activities.

Increasing Energy Demand Is Estimated to Propel the Market Size Positively

According to European Energy Industry Investments 2017, power utilities planned to invest USD 295 billion for 2021- 2030 under new policy scenarios in transmission and distribution infrastructure, which would yield more efficiency and reliability in the grid, which drives the energy demand. Moreover, enormous construction activities to build commercial spaces, business parks, and housing societies are set to spike power demand.

RESTRAINING FACTORS

Volatility in Oil Prices along with Growth in Alternative Energy Generation Technologies is Anticipated to Hamper the Market Growth

The oil price is subjected to demand and supply of oil, which fluctuates considerably. The higher price of oil halts the upcoming projects and investments, which pauses the drilling projects. Significant growth in alternative energy generation technology such as solar, wind, and hydro would reduce the dependency on oil & gas, which is likely to affect the oilfield services. Hence, volatility in oil prices, along with growth in alternative energy generation technologies, restraints the market growth in the projected time frame.

SEGMENTATION

By Type Analysis

Low Operation Cost Along with Efficient Drilling Augments the Conventional Segment to Grow

Based on the type, this market is segmented into conventional and rotary steerable systems. The conventional type segment is expected to hold the largest directional drilling services market share over the forecast timeframe. Conventional directional drilling services deploy mud motors, specialized BHA components, whipstocks, specific drill bits, and various other equipment to deviate the wellbore. It has low operation cost, efficient drilling of low angle wells in complicated formations, and easy components cater to the growth of the conventional type segment during the projected period. The rotary steerable system (RSS) type segment of directional drilling services is operational for both onshore and offshore wells. It can drill long horizontal wells with a high inclination angle even in complicated formations. 

By Location Analysis

Increasing Onshore Discoveries Augments the Onshore Segment to Have a Positive Market Outlook

Based on the location, this market is segmented into onshore and offshore. The onshore segment is estimated to have a significant growth in the industry owing to easy drilling methods, low drilling cost, low operating cost, vast resource availability, and various other factors. In recent years, bulk sized conventional and unconventional reservoirs have been discovered in the onshore location, which in turn propels the demand of the market in the forthcoming years. The offshore segment is estimated to grow considerably over the forecast period due to increasing investments in drilling more wells from a single platform to increase the production output.

By Service Analysis

Increasing Efforts to Gain Real-Time Monitoring Is Set to Boost LWD and MWD Segment Outlook

Based on the service, the market is broadly categorized into Measurement While Drilling (MWD), Logging While Drilling (LWD), Rotary Steerable Systems (RSS), mud motors, and others. Measurement While Drilling (MWD) and Logging While Drilling (LWD) are the critical techniques used to collate the dimensions of the wellbore during drilling operations and transfer the collected data to the surface using logging tools. Growing attempts to effectively drill deep formations and achieve real-time monitoring is projected to propel the segment in the forecast period. Rotary Steerable Systems (RSS) delivers a wide range of directional drilling capabilities along with providing significant power to the drilling bit.

REGIONAL INSIGHTS

Geographically, the global market is segmented into five major regions, namely, North America, Europe, Asia Pacific, Latin America, and the Middle East & Africa. North America is estimated to hold a larger market share owing to extensive discoveries in the oil & gas industry and huge potential for exploring oilfields. In April 2019, Shell had discovered a blacktip oilfield in the Gulf of Mexico to produce approximately 900,000 barrels per day (BPD) from its deepwater assets. Additionally, a state-owned company Petroleos Mexicanos (PEMEX) had discovered a deposit in southeastern Mexico that could yield 500 million barrels of crude. It had planned to extract 69,000 BPD from the site by 2020, and reach 110,000 BPD by 2021.

Asia Pacific is expected to hold the second-largest market owing to advancements in drilling technology such as long-reach horizontal well and completion techniques, which includes multi-stage hydraulic fracturing. Also, National Oil Companies (NOC) are investing in offshore E&P activities to increase domestic production, providing impetus to the market. Furthermore, many countries from Asia Pacific are increasing their capital expenditure (CAPEX) to secure future energy demand. Europe is projected to grow due to continual investment in offshore locations. Key countries from Europe are investing considerably in exploring new offshore hydrocarbons reserves to increase domestic production. Norway and the United Kingdom account for considerable market share owing to growing exploration in the Norwegian continental shelf.

Companies in the Middle East & Africa (MEA) are paying keen interest in expanding offshore activities to meet their production goals. Predominantly, Qatar, Saudi Arabia, and the United Arab Emirates are increasing their fleet count. For instance, ANDOC recently announced a major rig fleet expansion to support the company’s upstream growth plans and enable the delivery of its 2030 Smart Growth Strategy. Latin America is focusing on increasing deepwater and ultra-deepwater exploration to produce considerable oil and gas. Brazil is expected to dominate the regional market on account of growing investment in offshore exploration. Hence, growing exploration projects and significant investment in oilfields accelerates the demand for the market during the forecasted period.

KEY INDUSTRY PLAYERS

Key Players Such as Schlumberger, Weatherford, And Halliburton and Are Adopting Advanced Technology for Drilling Services Which Shape’the Industry Outlook

Various regional and international players are consistently working upon developing advanced technologies and featured services for directional drilling applications in the oil & gas industry. Major oil production companies are focused on undergoing different mergers & acquisitions, new product development, partnership, collaboration and joint ventures to strengthen their position in a competitive environment. Companies are also focused on delivering a complete set of services and solutions for efficiently carrying out numerous tasks across all oil & gas development & transportation phases.

LIST OF KEY COMPANIES PROFILED:

• Schlumberger (Texas, US)


• Baker Hughes (Texas, US)


• Halliburton (Texas, US)


• Weatherford (Texas, US)


• National Oilwell Varco (Texas, US)


• Nabors Industries (Hamilton, Bermuda)


• Leam Drilling Systems LLC (Louisiana, United States)


• Jindal Drilling & Industries Limited (Haryana, India)


• Gyrodata (Texas, United States)


• China Oilfield Services Limited (Beijing, China)


• Phoenix Technology Services (Calgary, Canada)


• Scientific Drilling (Texas, US)


• AlMansoori Specialized Engineering (Abu Dhabi, UAE)


• NewTech Services (Moscow, Russia)


• Integra (New Jersey, United States)

KEY INDUSTRY DEVELOPMENTS:

• October 2019- Schlumberger launched an at-bit steerable system for drilling horizontal wells in a single run owing to unique cutting structure and steering mechanisms.


• June 2018- Baker Hughes and C3.ai had announced their joint venture agreement.  an oil and gas expertise and C3.ai’s unique AI software suite to deliver digital transformation technologies, which will drive a new footprint of productivity for the oil and gas industry.


• Jul 2019- Halliburton won a contract from Kuwait Oil Company for an integrated offshore drilling services contract for 6 high-pressure high-temperature exploration wells in the Arab gulf. The company will provide and manage fluids, wireline, drilling, perforating, coring, cementing well testing, coiled tubing, and all offshore logistical services.

REPORT COVERAGE

The directional drilling services market research report provides an elaborative analysis of the global market dynamics and competitive landscape. Various key insights presented in the report are the trend analysis, recent industry developments in the global market, such as mergers & acquisitions, the regulatory scenario in crucial countries, macro, and microeconomic factors, SWOT analysis, and key industry trends, competitive landscape and company profiles.

Report Scope & Segmentation