Colloquy: Scanning the drilling fluids market

April 1, 2014

The drilling fluids market is driven by increasing worldwide drilling activities, focused on deepwater. Onshore, operators are increasing their use of horizontal drilling in developing shale gas, CBM, and other unconventional resources. Nanotechnology is an emerging tool in fluid development.

Several drilling fluid market reports have been issued recently. They all review factors expected to drive (or restrain) the global and regional drilling fluids markets.

TechNavio released its “Global Drilling Fluids Market 2014-2018” in February. The report forecasts that the global market will grow at 8%/year. One of the key factors contributing to market growth, they say, is increasing natural gas exploration. A major challenge to market growth is the capital-intensive nature of drilling projects.

The Freedonia Group in Cleveland, Ohio, issued a report on oilfield chemicals in November, which analyzes the US$9.5 billion US oilfield chemical industry. “US demand for oilfield chemicals is forecast to increase 2.1% annually through 2017 to $10.5 billion,” the report says. “Enhanced oil recovery (EOR) products and drilling fluid products will grow the fastest. Gains in value terms will be strong for commodity and specialty chemicals as well as gases, while demand for polymers will decline.”

Dublin, Ireland-based, Transparency Market Research issued the “Drilling Fluids for Oil and Gas Market – Global Industry Analysis, Size Share, Growth, Trends and Forecast to 2018” report last July. It valued the global drilling fluid market at $7.20 billion in 2011 and expects it to reach $12.31 billion by 2018, growing 8% annually from 2012 to 2018. Increasing drilling activities, coupled with a shift towards developing deepwater reserves, is expected to drive the global market for drilling fluids. The future is in nanotechnology, the authors say, which will be used to develop future drilling fluids.

Market players

Founded in 1940, M-I Swaco became part of Schlumberger in August 2010. It now has more than 13,000 employees and offices in more than 75 countries.

Schlumberger’s Patrick Schorn, President, Operations and Integration, told an investor conference in December 2013 that the latest Spears survey listed M-I Swaco as the market leader for drilling fluids. Schorn also said the company foresees “growth in 2014, driven by exploration and appraisal drilling activity.”

The company expects the demand for service-intensive deepwater drilling to rise.

M-I Swaco’s 4Q 2010 revenue increased 4%, reaching $1.18 billion.

Houston’s Newpark Drilling Fluids provides drilling fluids, project engineering, and system design. Newpark opened new world headquarters and a state-of-the-art laboratory facility in Katy, Texas, last June. According to Newpark’s presentation last month, the company had $1.042 billion in 2013 revenue, 89% attributed to its Fluid Systems business and 11% to Mats and integrated services. Most (68%) of its business is in the US, followed by Asia-Pacific (14%), and Latin America (10%).

Weatherford International has a relatively new COO, a new CFO, and a new VP of operations. It has said that it may divest drilling fluids later this year. Weatherford has identified four key areas (generating about $11 billion in revenue) as core competencies: formation evaluation, well construction, completion, and production. OE