Well Cementing Services Market Overview
The global well cementing services market was valued at $7,293.7 million in 2017 and is projected to reach $8,862.0 million by 2023, witnessing a CAGR of 3.4% during the forecast period. The market growth is mainly driven by the increasing exploration and production (E&P) in unconventional reserves and large number of mature wells.
GLOBAL WELL CEMENTING SERVICES MARKET, BY SERVICE TYPE, $M (2013-2023)
To prevent any fluid movement from reservoir to wellbore and to hold the well casing in place, cementing services are required. Cement protects and supports well casing and also provides zonal isolation and seals when required.
Based on service type, the well cementing services market is segmented into primary, remedial, and others. The primary services category held the largest share in the market, contributing more than 75.0% in 2017. The market is mainly driven by increasing E&P activities in the region, which is boosting the need of well cementing. However, the slump in oil prices in the year 2014 and 2015 had severely affected the market growth during the historical period, however, the market is gradually recovering due to revival in crude oil prices.
On the basis of application, the well cementing services market is segmented into onshore and offshore applications. Offshore was the faster growing category in the market during the historical period, expected to witness a CAGR of 4.2% during the forecast period. The increasing well operations coupled with discoveries of new oil and gas reserves in the offshore areas, including deep water discoveries, are expected to drive the market growth of the category.
For instance, expected developments in the Canadian Atlantic offshore oilfields by the end of 2020 are forecasted to create significant opportunities for future investments in the country, which will fuel the offshore application market in the coming years.
Globally, North America has been the leading well cementing services market, with a revenue contribution of more than 35.0% in 2017; additionally, the market in the region is expected to advance at a CAGR of 3.3% during the forecast period. North America has abundance of unconventional oil and gas, and the U.S. is the only country producing commercially significant volumes of these resources from shale reserves in the current scenario. As far as Mexico is concerned, the country has opened up its shale region for business, and has also allowed foreign private companies an access to onshore blocks of its Burgos basin.
Canada is also actively involved in the fracking activity for the gas exploration since 2008, hence the shale gas boom is expected in the North American region in the coming years, which will boost the growth of well cementing services market. Along with that, factors such as shale gas boom, increasing offshore drilling activities in the Gulf of Mexico, and quest for finding potential untapped oil and gas reserves are also expected to drive the market growth in the region.
Well Cementing Services Market Dynamics
Increasing E&P in unconventional reserves and large number of mature wells are the major growth drivers in the market.
Due to increasing energy demand worldwide, the conventional oil and gas resources are depleting at a fast pace, resulting in shift of focus towards unconventional energy sources. In order to meet the ever-increasing energy demand, major E&P companies are shifting their focus towards the development of unconventional oil and gas reserves including shale oil, shale gas, tight oil, tight gas, and coal bed methane (CBM), which requires well cementing services during E&P activities, resulting in the market growth.
The shift towards the development of unconventional resources led to a shale gas boom, particularly in the U.S. Rising E&P activities for recovering unconventional hydrocarbon sources such as tight gas, shale gas, and CBM are expected to drive the well cementing services market in the coming years. Additionally, continuous growth in non-conventional resources is expected to have a positive impact on the market growth during the forecast period.
The major restraint that the well cementing services market witnessed lately was the dramatic drop in oil prices in the years 2014 and 2015, which led to the implementation of cost-cutting strategies by oil players and reduction in planned capital expenditure. Oil companies started implementing defensive strategies which had a direct negative impact on the oilfield services industry, as it directly relies on oil companies for business. The drop-in oil price led the oil companies to financial distress, which severely affected their operations, thereby negatively impacting the market growth.
Also, the significant reduction in cash flow affected the oil companies’ operations, which ultimately affected the existing as well as new projects, resulting in decrease in these services. Hence, the volatility in oil prices is a major restraint for the market growth.
Well cementing services market competitive landscape
Some of the major players operating in the global well cementing services market are Consolidated Oil Well Services LLC; Nine Energy Service Inc.; Gulf Energy SAOC; Magnum Cementing Services Ltd; Calfrac Well Services Ltd; China Oilfield Services Limited; Baker Hughes, a GE Company; Schlumberger N.V. (Schlumberger Limited); Halliburton Company; and Weatherford International PLC.