Oilfield Services Market Size, Share & COVID-19 Impact Analysis, By Type (Equipment Rental, Field Operation, and Analytical Services), By Service (Geophysical, Drilling, Completion & Workover, Production, and Processing & Separation), By Application (Onshore and Offshore {Shallow Water, Deepwater, Ultra-Deepwater}), and Regional Forecast, 2020-2027

The global oilfield services market size was USD 267.82 billion in 2019 and is projected to reach USD 346.45 billion by 2027, exhibiting a CAGR of 6.6% during the forecast period.

Oilfield service (OFS) plays a crucial role in the upstream service of the oil & gas industry, predominantly in offshore assets. The oilfield equipment and services include all products and services used for the production and exploration process in the upstream sector. The companies engaged in the business offer services related to manufacturing, maintenance, and equipment repair used in oil extraction and transportation. The services considered for successful field operations include locating energy sources, drilling and formation evaluation, energy data management, geological sciences, and many others.

Reducing the cost of oilfield services and increasing the production output are the key factors attributed to the growth of the global market. In addition, the range of customized packages offered by major upstream service companies results in cost savings up to millions for the operators. Increasing shale gas extraction from hydraulic fracturing and other stimulation procedures are also projected to fuel the demand for such services. The rising demand for oil & gas from offshore areas is driving the oilfield service industry during the forecast period.

COVID-19 Impact: Significant Downfall in Oil & Gas Industry

The ongoing outbreak of the COVID-19 pandemic has impacted the oil & gas industry considerably by disrupting global financial and commodity markets, a dramatic downfall in demand which has hampered the operations and supply chain of the oil & gas industry. Various oil & gas companies worldwide had to shut down their exploration projects and services as countries approached lockdown to deal with the pandemic. For instance, the International Energy Agency reported that oil demand is likely to decrease by 29 million barrels per day (BPD) in April 2020 and by 23.1 million BPD in the 2^nd quarter. The Russia-Saudi oil price war owing to COVID-19 has become an obstacle, resulting in slashed production output and financial loss. However, other members of the OPEC countries have established a more flexible business model and better market opportunities for B2B and B2C customers. In addition, this trade war has raised economic conflicts, resulting in a massive price drop and disruption of the supply chain, which hampered the investment scenario, production cuts, and mostly the demand. Hence, it is projected to hamper the long-term impact in the oil & gas industry during the forecasted period.

LATEST TRENDS

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Increasing Investment in Offshore Sector to Boost Market Growth

The oil production from the offshore sector is projected to be the fastest-growing segment during the forecast period, owing to increasing investment in the subsea oil & gas industry and growing energy demand. For instance, as per data published by Statista in 2020, global demand for crude oil (including biofuels) in 2019 amounted to 100.1 million barrels per day and is projected to decrease to 91.7 million barrels per day in 2020. Growing investment in the offshore sector helps to boost market growth. For instance, As per the World Investment Report in 2019, the offshore greenfield investment increased to USD 93.3 billion from USD 61.5 billion in 2018. Hence, the growing investment scenario in the offshore sector is spurring the demand for OFS, in turn, aiding the market.

Growing Number of Offshore Discoveries to Surge Demand

The increasing number of oil & gas discoveries and technological advancements for higher production yield in oilfield reserves can have an excellent impact on market growth. For instance, Alaska in the U.S., Golan Heights in Israel, Alpine high in West Texas, 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.

As per Energy Information Administration (EIA) 2020, In the 2nd quarter of 2020, China and Brazil are leading with each having 3 new oil & gas discoveries, followed by Egypt, Norway, U.S., and Mexico, with each having 2 discoveries. Moreover, 23 oil and gas discoveries were made in Q2 2020 across the globe. Of these, 15 are oil discoveries, and the remaining 8 are gas discoveries. Hence, the growing number of offshore discoveries is promoting the development of the market.

DRIVING FACTORS

Increasing Shale Gas Extraction to Drive Market Growth

Shale gas is another form of natural gas which are trapped within shale formations. These gases, which are trapped in a shale formation, cannot flow into the well due to its low permeability. However, advancements in technology such as directional drilling and hydraulic fracturing technology have helped increase shale gas production from such critical reservoirs. Shale exploration requires a wide range of equipment and services in the oilfield. For instance, China has the largest shale reserves, and a considerable percentage of its production comes from its Sichuan Basin located in the Chongqing area. The country is planning to escalate its production up to 30 bcm/per year by 2020, and 80-100 bcm/per year by 2030, with the help of advanced tools for drilling and techniques adopted by shale gas exploration.

Increasing Production & Exploration Activities in Oil & Gas Industry to Favor Market Growth

Production and exploration activities are set to increase in the coming years owing to rising energy demand and lucrative investment opportunities in the oil & gas industry. For instance, in July 2019, i3 Energy PLC awarded an oilfield service contract to Baker Hughes GE to carry out drilling at Liberator and Serenity assets in the North Sea. Conventional onshore oil is projected to account for a major share in total oil production worldwide. As per the DNV-GL Energy-Transition-Outlook, oil production is projected to increase by 83 million barrels per day (Mbpd) in 2022. Moreover, unconventional onshore oil production is doubling to around 22 Mbpd by 2035, which accounted for nearly 30% of all global crude oil production. Hence, increasing production and exploration activities in the oil & gas industry is projected and expected to drive market growth in the forthcoming years.

RESTRAINING FACTORS

Volatility in Crude Oil Prices to Hinder Market Growth

The oil & gas industry is experiencing inflexibility in crude oil prices, and this is attributed to the variations in demand & supply of crude oil. This fluctuation disrupts the market demand significantly, besides intensifying competition between the U.S., OPEC countries, and non-OPEC countries. The higher price of oil results in delays in the upcoming projects and investments, which suspends the drilling projects resulting in a downfall in the oilfield services. Thus, volatility in crude oil prices is anticipated to hamper the market growth.

SEGMENTATION

By Type Analysis

Equipment Rental Oilfield Services to have Held The Largest Market Growth

Based on type, the market is classified into equipment rental, field operation, and analytical services. The equipment rental segment holds a significant market share and is expected to grow at a slow pace owing to the increasing demand for field optimization and analytical services. The field operation segment is increasing its market share due to a wide number of services deployed on the field for executing the project. The analytical services segment is estimated to grow owing to a wide range of applications in real-time analytics, software solutions, monitoring services, routine quality control, and sample analysis, among other services, which helps to increase the production output from the existing field.

By Service Analysis

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Growing Initiative for Oil Recovery Escalates the Production Segment to Promote Growth

Based on the service segment, the market is segmented into geophysical, drilling, completion & workover, production, and processing & separation segment. The production segment is estimated to hold a larger portion of market share owing to the growing initiative for oil recovery and well testing in the current oil & gas fields. Various types of oilfield services are covered under this segment, namely, artificial lift system, floating production vessels, support vessels, well testing services, subsea equipment, Christmas tree, enhanced oil recovery, digital oilfield, and other production services.

The drilling segment is estimated to hold the second-largest market share owing to an increase in offshore well drilling to explore, extract, store, and process petroleum and natural gas. The segment is further analyzed by much granular level covering services such as offshore drilling, oil country tubular goods (OCTG), directional drilling services, drilling fluids, well casing, well cementing, drill bits, drilling rigs, logging while drilling (LWD), measurement while drilling (MWD), managed pressure drilling (MPD), waste management, and other drilling services.

The completion and workover segment is estimated to grow in the forecast period due to the wide scope of application of hydraulic fracturing services and wireline logging services in the oilfield. Production and exploration of oil & gas resources and provision of solution for stimulation performance evaluation, water shutoff determination, tubing, and multiple casing integrity in oil wells, accelerates the completion and workover segment. Other significant services analyzed under this segment are well intervention, completion fluid, sand control, and mud logging.

Processing and separation services play a crucial role in the OFS industry. These services are estimated to grow significantly in the projected period owing to the wide scope of oil, water, and gas treatment across the industry to improve the recovery and minimize the environmental impact of hydrocarbon production. The key services covered under this segment are water treatment, oil treatment, gas treatment, solid treatment, and other services.

The geophysical segment is projected to grow owing to its efficient technologies and solutions in petroleum field development and oil and gas transportation. Advancement of technology has enabled high-quality illumination of the subsurface for conventional and unconventional reservoirs at much lower costs. Hence, the growing demand for investment in the oil & gas industry propels the demand for the OFS market in the projected period.

By Application Analysis

Increasing Investment in Offshore Locations is Set to Dominate the Market Growth

Based on the application, the market is segmented into onshore and offshore. The offshore segment is expected to be the fastest-growing segment during the forecast period, owing to growing investment in subsea oil & gas assets. Various oil field service providers are investing deeply in offshore assets to increase their well productivity, reservoir performance, and overall life cycle of the well. The onshore location requires more reliable and flexible equipment and services, which boosts the demand for this market.

REGIONAL INSIGHTS

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North America is projected to hold the largest market shares in the global market, which is further followed by the Asia Pacific and Europe, respectively. The trend is anticipated to remain the same during the projected period, with significant activities expected to happen in offshore assets in the Gulf of Mexico and the North Sea, which drives the demand for oilfield services. In January 2017, Schlumberger limited had completed the acquisition of Peak Well System, which is a specialist in the design and development of advanced downhole tools for flow control, well intervention, and well integrity. Globally, the United States accounted for almost 50% of the new well drilled in the year 2017, followed by China and other Asian countries.

Europe is also estimated to hold a larger portion of market share and is projected to increase in the forecasted period. In Norway, the operating cost of an oil well has reduced by 30% from 2014 to 2017, which results in the cost incurred for drilling an exploratory well offshore was half in 2017 compared to 2014. The unit operating cost in the UK Continental Shelf has declined by around 50% in the last two to three years, and it is projected to fall further in the coming years.

Increasing production & exploration activities to cater to the growing energy demand is projected to boost the Asia Pacific market. Countries like China, Thailand, Indonesia, Malaysia, and Myanmar, have witnessed an abrupt increase in production & exploration activities coupled with discoveries of oil & gas reserves. In February 2019, Repsol, a global energy company, had announced the largest gas discovery in Indonesia, which holds an estimation of over 2 trillion cubic feet (TCF) of recoverable resources. Hence, growing investment for exploring new oilfields and discoveries drives the demand for the oilfield service industry.

The market in the Middle East and Africa holds substantial market potential to explore the untapped capacity for hydrocarbon development and non-complex formations to effectively drill the wells, which drive the oilfield services market growth in the coming years. Countries in Middle East & Africa, which include UAE, Saudi Arabia, Kuwait, Bahrain, and among other countries, are the members of the Organization of the Petroleum Exporting Countries (OPEC), hence thereby focused on attaining the production targets set by the organization. Other prominent countries engaged in the market across the region are Oman, Algeria, Qatar, and Nigeria.

KEY INDUSTRY PLAYERS

Technological Advancements in Oilfield Services by Major Companies to Intensify Competition

The market is consolidated owing to the strong portfolio of services and a remarkable distribution network of major companies in developed and emerging countries. Currently, Schlumberger Limited, Halliburton Company, Baker Hughes, and Weatherford hold the major portion of market share in 2019. In March 2017, Baker Hughes had introduced a new adaptive drill bit called the TerrAdapt. This drill bit uses automation to mitigate down-hole dysfunctions and improve drilling operations. This is projected to lead to the healthy growth of the market by 2027. The other key players, such as hydratight, Muntajat, Protiviti Inc., ESG Solutions, Cyntech, Fugro, Hytera, Geokinetics, and other small players, have entered the market for providing innovative oilfield services to various end-users.

LIST OF KEY COMPANIES PROFILED:

• Schlumberger (Texas, United States)


• Halliburton (Texas, United States)


• Baker Hughes (Texas, United States)


• Weir Oil and Gas (Glasgow, United Kingdom)


• Emerson (Missouri, United States)


• National Oilwell Varco (Texas, United States)


• Weatherford (Texas, United States)


• AlMansoori Specialized Engineering (Abu Dhabi, UAE)


• Saudi Aramco (Dhahran, Saudi Arabia)


• Protiviti (California, United States)


• Abu Dhabi Oilfield Services (Abu Dhabi, UAE)


• YAS Oilfield Services (Texas, US)


• Superior Oilfield Services LLC (Abu Dhabi, UAE)


• National Arabian Petroleum Services Company (Dammam, Saudi Arabia)


• Larsen & Toubro (Mumbai, India)


• Oceaneering (Houston, Texas)


• China Oilfield Services Ltd. (Beijing, China)


• Petroleum Dynamics Oil and Gas (East Ahmadi, Kuwait)


• Petroleum Services Co. Kuwait (Kuwait)


• SPECIAL OILFIELD SERVICES CO. L.L.C. (Muscat, Oman)


• Vallourec (Boulogne-Billancourt, France)


• BJ Services (Texas, U.S.)


• STARK International (Doha -Qatar)


• Ruker Inc. (Billerica, Massachusetts)


• Xi'an Huayang Oil & Gas Equipment Co., Ltd. (Xi'an, Shaanxi)


• ADES - Advanced Energy Systems (Egypt)


• Petrodar Operating Company (PDOC) (Khartoum, Sudan)


• Middle East Oilfield Services LLC (Muscat, Oman)


• RAAS Oilfield Services & Supplies WLL (Sitra, Bahrain)


• FOS Energy LLC (Muscat, Oman)


• Oman Oil Industry Supplies & Services Co. LLC (Muscat, Oman)


• CAM Integrated Solutions (Texas, U.S.)


• GE (Massachusetts, U.S.)


• Oil States Industries (Barrow-in-Furness, U.K.)


• Nine Energy Service (Texas, United States)


• C&J Energy Services (Texas, U.S.)


• Rockwell Automation (Wisconsin, U.S.)


• Churchill Drilling Tools- Coretrax (Aberdeen, Scotland)


• SPX FLOW, Inc. (North Carolina, U.S.)


• FMC Technologies (Texas, U.S.)


• Ensco plc (London, U.K.)


• Petrofac (London, U.K.)


• Transocean (Zug, Switzerland)


• Saipem (San Donato Milanese, Italy)


• SGS (Geneva, Switzerland)


• Schneider Electric (Rueil-Malmaison, France)


• ABB (Zurich, Switzerland)


• Penspen (London, U.K.)


• KCA Deutag (United Kingdom)


• Honeywell (North Carolina, U.S.)


• Nexans (Paris, France)


• Coretrax (Aberdeen, Scotland)


• GAC Group (Dubai, UAE)


• Topaz Energy and Marine (Dubai, UAE)


• Proserv (Houston, U.S.)


• Welltec (Allerød, Denmark)


• Sparrows Group (Aberdeen, United Kingdom)


• Huawei (Shenzhen, China)


• Champion Oilfield Service (Colorado, U.S.)

KEY INDUSTRY DEVELOPMENTS:

• August 2020 – DOF Subsea has announced four new contracts with Petrobras, worth USD 110 million. The contract includes three vessels from the DOF fleet to be mobilized to perform flexible pipeline, risers, and subsea equipment inspection in the Campos, Santos, and Espírito Santos basins, and the Marlin field.   


• August 2020 – Solstad Offshore ASA has received several contract extensions in Brazil with Equinor and Total. Equinor Brazil has extended the contracts for the Sea Brasil and Far Scotsman platform supply vessels (PSV) by one year until December 2021 and by six months until May 2022, respectively.


• September 2020 – Subsea 7 had achieved a contract at offshore Trinidad and Tobago. The contract caters to the project management, engineering, procurement, installation, and pull-in of one subsea rigid flowline and flexible riser together with flexible flowlines and the associated subsea infrastructure and umbilical system. The installation activities are scheduled by 2021.

REPORT COVERAGE

An Infographic Representation of Oilfield Service Market

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The market research report provides an elaborative analysis of the global market research, dynamics, and competitive landscape. Various key insights presented in the report are the latest technology, recent industry developments, mergers & acquisitions, the regulatory scenario in crucial countries, macro, and microeconomic factors, SWOT analysis, and key retail oilfield services market trends, competitive landscape, and company profiles of major players.

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