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The global downhole tools market size stood at USD 4.06 billion in 2019 is projected to reach USD 5.30 billion by 2027, exhibiting a CAGR of 8.6% during the forecast period.
Coronavirus or nCovid-19, wounded economic activities across the globe. The spread of the virus is to a large extent, which forced the authorities to impose complete lockdown and ban on non-essential services. Major businesses across the world virtually on a standstill; a factor that is proving to be a major setback for the global economy. The hydrocarbon industry is going through gravest challenges in its history due to plummeting oil prices and uncertainties looming over the market. Industrialists are revising their policies to sustain in this fiercely challenging environment.
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Rising Uptake for Optimization of Exploration and Production Activities
Operators and oilfield service companies are spending a significant amount on drilling hydrocarbon wells. Extraction of oil and gas encompasses different operations such as drilling, well completion, well intervention, well production, and others. Several companies are emphasizing on enhancing E&P activities through cutting edge technologies. Therefore, the growing adoption of advanced technologies to yield oil and gas efficiently is likely to propel the downhole tools market.
Development of Unconventional Hydrocarbon to Provide Impetus to Market Growth
The massive demand for oil and gas across the world provides lucrative opportunities for the growth of the unconventional hydrocarbon, such as shale gas, tight gas, and others. It not only provides future energy security but also assists in meeting the growing demand for hydrocarbon. The shale gas revolution in the United States has changed the dynamics of unconventional hydrocarbon in the international market. Increasing investment in discovering unconventional hydrocarbon is set to boost the market.
Extensive Drilling Activities to Brighten the Market Prospects
The increasing drilling operations around the world is primarily attributable to the rising demand for oil and gas. Developed and emerging economies are extensively investing in exploration and production activities to suffice the hydrocarbon requisition. The population explosion and incessant urbanization propelled the oil and gas demand. Therefore, tremendous demand for drilling activities will positively propel the downhole tools market growth.
Spurring Economic Activities to Prove Beneficial for the Market
Though the world is facing severe consequences of coronavirus pandemic, essential economic activities and trade are still happening around the world. A surge in trade activities will provide lucrative opportunities for local industries. Therefore, increasing manufacturing activities are set to barge the hydrocarbon industry. Furthermore, rising per capita energy consumption in developed and emerging countries plays a crucial role in bolstering the growth of the market.
Subdued Economic Activities and Uncertainty in the Market WillHalt Growth
The oil and gas industry is bearing the severest brunt due to pandemic outbreak in different parts of the world. Coronavirus not only punctured the global economy but it is also threatening human lives. Many countries implemented strict lockdown to contain the spread of the virus, which dampens the industrial operations and suspension of non-essential activities. Thus, stymied demand for oil & gas and a sharp fall in crude oil prices in the international market thwarted the growth of the industry. Furthermore, the uncertainty surrounding the crisis is discouraging investors from investing in new oil and gas projects. Hence, the volatile market, plummeting crude oil prices, and cost-cutting likely to retard the growth of the market.
Drilling Tools Slated to Dominate the Market due to Growing Drilling Activities
The oil well drilling is a complex operation and engages a number of personnel, services, and an array of machinery. The bottom hole assembly (BHA) encompasses drilling tools such as drill bit, drilling mud motors, stabilizers, drilling jars, drilling pipes, reamers, and others. The assembly not only assists in efficiently drilling a well but also ensures the safety of personnel working on site. Similarly, various other types of downhole tools are required during exploration and production (E&P) of hydrocarbons. Pressure gauges and flow control devices are necessary to monitor the pressure and flow of the oil and gas.
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Spike in Exploration and Production Operations to Underpin Well Drilling Segment
Drilling wells in petroleum fields is a highly complex task, and managing a drilling rig fleet is an even more intricate issue with various financial motivations. Probably the most challenging issue is to effectively determine the path of rig movements between the target drilling locations. A significant amount is spent on good drilling to yield oil and gas. Subsequently, well intervention is vastly used to achieve the most optimum production levels. The scope of the well intervention ranges from replacing failed downhole tools to changing flow dynamics and equipment change out to maintain production levels. Concurrently, well completion ensures to provide conduits for well stimulations treatment and isolate the producing reservoir from other zones. Formation and evaluation tools ensure the ability to produce hydrocarbon efficiently from the borehole.
Incessant Investment in Land-based Drilling to Excite Onshore Market
Onshore drilling is very prominent around the world. Around 67,000 wells were drilled onshore and another 2,300 offshore in the year 2018. The spike in onshore drilling is mainly due to continuous investment by giant companies to discover the hydrocarbon reserves. In addition to this, the development of unconventional hydrocarbons in the United States, where 15,000 horizontal wells drilled for shale reserves which is likely to bolter the demand for onshore drilling. However, the offshore segment possesses high potential to produce a substantial amount of hydrocarbon. The technological advancement and growing interest in deepwater and ultra-deepwater drilling set to barge the offshore segment.
North America Downhole Tools Market Size, 2019 (USD Billion)
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The global market for downhole tools is classified into five regions viz. North America, Latin America, Europe, Asia Pacific, and Middle East & Africa. North America demonstrates significant growth on account of the development of unconventional hydrocarbon and rising drilling activities in the United States. In addition to this, the exponential investment in the last couple of years to discover shale gas likely to bolster the market. However, the spread of coronavirus in the United States is causing a complete shutdown of economic activities. The U.S. is the epicenter of the virus, which forcing authorities to impose lockdown. On the other hand, the virus has engulfed the European countries causing stymied demand for oil and gas. Italy, UK, Germany, Spain, Russia, and others are facing severe challenges due to the spread of the virus. Governments across these regions and the European Union are announcing relief packages to provide traction the economic wheel. Post lockdown, the oil and gas industry will gain stability.
Similarly, Asian countries are affected by the spread of the novel coronavirus. Emerging economies such as China and India are facing the brunt of the virus due to the rising number of infected cases. The Indian government imposed lockdown across the country to contain the spread of the virus, which pricked the economic activity. However, Asia Pacific is one of the largest consumers of energy, which describes its place in the global market. The market will rebound post lockdown that will boost the growth of the oil and gas industry. Gulf countries are going through a tough phase owing to plummeting demand for oil and gas and a sharp fall in crude oil prices due to COVID-19. Some African countries are facing severe public health challenges to contain the spread of the virus. Most of the funds are diverted to health services and hydrocarbon industry deferring new projects which likely to impede the growth. In Latin America, the oil-producing nations such as Brazil, Mexico, Argentina, and Venezuela, among others, are also facing the brunt of the coronavirus. Overall, the pandemic outbreak changed the market dynamics that will subsequently affect all the industries.
Rising Focus on Optimizing Production Will Create Exciting Future Prospects
Several types of equipment and tools are used in the exploration and production (E&P) of hydrocarbon. These tools play an essential role in the extraction of oil and gas starting from the drilling to the production of crude oil. Many downhole tools manufacturers offer innovative technologies to ease the operation and lower the production cost. In recent times, automation is being vastly used to reduce human interference to increase productivity. Thus, companies are investing in digital and advanced technologies to overcome the challenges faced during the E&P. In addition to this, the presence of the number of companies in the market and increasing trend for production optimization through automation likely to create healthy completion among major manufacturers.
The future of the hydrocarbon industry looms in dark clouds of the uncertainties in the market on account of global economic slowdown and pandemic outbreak. Operators and oilfield service companies are facing serious challenges to sustain in fiercely changing market dynamics. The sharp fall in prices of crude oil and uncertainties in the market over economic rebound led to furor amongst investors. Though the oil and gas is an important commodity for driving economy, the current scenario wiped out all the statistic and financials of the company. The renowned international organization such as the International Energy Agency (IEA), International Monetary Fund (IMF), and World Economic Forum predicted a fall in the global economic outlook. However, this phase shall pass, and the hydrocarbon industry once again shines in the upcoming years.
The downhole tools market report offers an elaborative analysis of numerous factors affecting the global industry. These include opportunities, growth drivers, threats, key developments, and restraints. In addition to this, it further helps in analyzing, segmenting, and defining the market based on different segments such as casing type and application. It strategically analyzes several strategies such as product innovations, mergers, alliances, joint ventures, and acquisitions adopted by players in the industry. Furthermore, the report provides a comprehensive analysis of the impact of coronavirus pandemic on the hydrocarbon industry. The brief on policies to contain the virus and government stimulus package to aid the market will provide future analysis for the growth of the industry.
An Infographic Representation of Downhole Tools Market
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Besides this, the reportsn provides a comprehensive analysis of market dynamics, emerging trends, and the competitive landscape of this market. Key insights offered in the report are the adoption trends of residential industry analysis by individual segments, recent industry developments such as partnerships, mergers & acquisitions, consolidated SWOT analysis of key players, Porter’s five forces analysis, and key industry trends.
Value (USD Billion)
By Tool Type
As per our (Fortune Business Insights) study, this global downhole tools market is forecasted to reach USD 5.30 billion by 2027 with a CAGR of 8.6% (2020 -2027)
In 2019, the global market was USD 4.06 billion and anticipated to reach USD 5.30 billion by 2027 growing at a steady CAGR of 8.6% during the forecast period (2020 -2027)
Well drilling is projected to dominate the market.
The market in North America was valued at USD 1.47 billion in 2019.
Rising drilling activities and exploration of unconventional hydrocarbon is the key factor driving the market.
National Oilwell Varco, Schoeller-Bleckmann Sales, Weatherford, Core Laboratories, and Baker Hughes are the top players in the market.
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