Market Trends of Christmas Tree Industry
This section covers the major market trends shaping the Christmas Tree Market according to our research experts:
The Onshore Sector is Expected to Dominate the Market
- On average, the onshore oil and gas sector accounts for around 70% of the global crude oil production, led by the Middle Eastern and North American regions. The onshore sector benefited more from the rise in crude oil prices than the offshore sector. As of 2021, the onshore rig count was around 1219 units (including North America).
- The United States is leading the current onshore oil and gas activity with its robust drilling activities 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, making marginal projects economical in low oil price regimes.
- The activities in other countries, such as Brazil, Colombia, India, and Indonesia, are driven by the changes in policies and regulations and the government's initiative to increase domestic production with increased investment.
- For instance, in November 2021, Petrobras in Brazil planned to invest nearly USD 68 billion under the Five-Year Plan (2022-2026). The investment is expected to increase crude oil production to 2.6 million barrels per day by 2026.
- Moreover, in 2021, the oil and gas industry witnessed a 10% higher investment than in 2020. During the same year (2021), the total upstream investment was around USD 380 billion. Such investments are likley to increase in the next few years, which is expected to support the growth of the segment during the forecast period.
- Hence, with increased investment, and higher offshore drilling costs, the onshore oil & gas sector is expected to dominate the Christmas tree market during the forecast period.
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North America is Expected to Witness Significant Growth
- The North American region is expected to witness significant growth over the forecast period, owing to the increasing exploration and production activities in countries like the United States and Mexico.
- The United States has one of the largest technically recoverable shale gas reserves and the second-largest tight oil reserves in the world. The technological developments in hydraulic fracturing and low breakeven prices have supported the upstream oil & gas activity in the onshore region, resulting in high demand for oilfield equipment, such as Christmas trees.
- However, the Canadian oil and gas industry faces many challenges from the United States. Tax reforms and the loosening of regulatory frameworks by the US government are prompting more companies to head south, especially with the blocking of the Keystone pipeline.
- Such factors are expected to result in increased investments during the forecast period, aiding the demand for Christmas trees in the Canadian market. As of February 2022, the government was known to be working on many regulations, policies, legislative issues, and a substantial number of important topics related to oil and gas production, which will affect the nation's competitiveness and the commitment of Canada with regard to decreasing its carbon emissions.
- Hence, North America is expected to witness significant growth during the forecast period due to the policy push by the government and the growth of shale gas after the pandemic.
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