The global wellhead equipment market is expected to grow at a CAGR of more than 4.5% over the period of 2020-2025. Factors such as meeting the increasing oil and gas demand in the coming years for which opportunities lie in offshore deep-sea beds, where oil & gas operators continue to discover new reserves is expected to drive the market studied. Adding to this, increasing rig count, well completion and drilling activities, coupled with increasing crude oil production is anticipated to augment the wellhead equipment market growth. However, the delay in oil and gas projects due to volatile crude oil prices is expected to curtail the growth of global wellhead equipment market during the forecast period.
- The onshore sector has accounted for around 70% of the global crude oil production and is the largest segment as of 2018. The demand for oil and gas is increasing which has led to increased exploration and production (E&P) activities and the increasing popularity of unconventional reserves such as shale and tight oil and gas formations. With the increase in E&P activity increases in onshore sector, wellhead equipment market is expected to get larger.
- The development of deepwater and ultra-deepwater reserves are likely to act as an opportunity in the near future.
- North America is one of the largest markets for the wellhead equipment led by the United States mainly due to increased exploitation of its shale reserve to meet the demand and for economical production.
Key Market Trends
Onshore Segment to Dominate the Market
- The growth in the market is attributed to the growing demand for energy from the developing economies across the globe. This rising demand for energy is expected to increase exploration and production activities. Additionally the unconventional sources are some of the factors, which is expected to increase the demand for wellhead equipment.
- As of 2018, the United States is leading the onshore oil and gas activity with its robust drilling in the shale reserves, resulting in a surge in global oil and gas production. The major reason behind the surge is the declining operational cost in the country’s basin, which has made marginal projects economical in the low oil price regime.
- The activities in other countries, such as Argentina, Colombia, India, and Indonesia, are being driven by either the recent changes in policies and regulations and government’s initiative to increase the domestic production (primarily to meet up for rising consumption), or to address the well decommissioning activities in the industry.
- Such initiatives are expected to result in an increased demand for wellhead equipment, owing to increased onshore exploration and production activities.
- India is planning to reduce crude oil imports by 10% by 2022 from 2018 level. Also, the government has made the entry of foreign companies comparatively easy as per the new licensing policy. This, in turn, is expected to boost the onshore E&P activities in the country, thereby driving the market studied.
- Therefore, owing to increased onshore developments in North America and Asia-Pacific, the onshore segment of wellhead equipment is the largest market.
North America to Dominate the Market
- Drilling activities in North America have been increasing amidst rising oil & gas prices. The North American rig count reached 1118 in the first week of May 2018. The United States accounted for 1032 rigs while Canada and Gulf of Mexico had 86 rigs and 19 rigs operating, respectively.
- This surge in drilling activities has created optimism in the North American oil & gas market and hence, may be considered as a good sign for wellhead equipment providers.
- The total oil production in the United States reached 6837000 bbl per day in April 2018, while the gas production touched 65,829 million cubic ft per day. Moreover, the United States rig count reached 1,032 in the first week of May 2019 from 885 in the first week of May 2018.
- In November 2018, TechnipFMC was awarded a five-year contract from oil major Chevron for the provision of the surface wellhead equipment and service in the United States and Canada. Thus, North America is expected to be the largest in wellhead equipment market during the forecast period.
The wellhead equipment market is moderately consolidated. Some of the key players in this market are Baker Hughes Co., Schlumberger Ltd., Weatherford International Ltd., National Oilwell Varco Inc., Weir Group PLC and Cactus Inc.
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