US market for well-stimulation materials to reach $1.4 billion by 2008

By OGJ editors

HOUSTON, Nov. 2 -- The market for US oil and natural gas well stimulation materials is expected to grow 7.7% through 2008 and reach $1.4 billion/year, according to a study by Freedonia Group Inc., Cleveland, Ohio.

The analyst said that an increasing need to stimulate production from mature oil and natural gas fields is driving demand for hydraulic fracturing fluids, proppants, and gelling and foaming agents.

"In addition, more complex wells and a continued move towards exploitation of reserves in harsher offshore and deepwater environments at deeper drilling depths will boost demand for higher performance ceramic proppants, organo-metallic crosslinking agents, and other specialty materials," Freedonia said.

Robust oil and gas prices also are expected to continue to encourage exploration and drilling activity, which will spur demand for well stimulation, Freedonia said.

Environmental concerns
"Well stimulation is not immune to the potential effects of environmental concerns that are impacting the nation's ability to tap new oil and gas deposits," the analyst noted. "Drilling and development moratoria and strong opposition to drilling in environmentally sensitive areas—such as the Arctic National Wildlife Refuge and the southern portion of the California coast—will continue to limit new well completions."

Concern about ground water and surface ecology is changing the methods and materials used in hydraulic fracturing of coalbed methane wells in Wyoming's Powder River basin, the analyst said.

Five members of Congress have written the US Environmental Protection Agency seeking investigation of the regulation of hydraulic fracturing (OGJ Online, Oct. 18, 2004).

Highest gainer
The single largest materials category, proppants, will see the strongest gains, growing 9.5%/year to reach $550 million in 2008, according to the study. Demand is driven largely by the increasing use of more expensive proppants in place of sand for deeper wells with harsher conditions.

Of the base fluid materials, foaming agents will grow faster than most other materials due to their ability to reduce the total amount of hydraulic fracturing fluids required for each fracturing job.

Although the markets are relatively small, higher value products—including organo-metallic crosslinking agents—also represent strong growth opportunities, Freedonia said.


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