Market Trends of Europe Christmas Tree Industry
This section covers the major market trends shaping the Europe Christmas Tree Market according to our research experts:
Horizontal Tree to Dominate the Market
- Horizontal Xmas Trees (HXT) are exclusively used in subsea operations, and the valves of horizontal Xmas trees are located on the lateral sides, allowing easy well intervention and tubing recovery.
- On an HXT, access to the annulus (between the production tubing and casing) is incorporated into the tree design and controlled by gate valves instead of plugs, which allows operations with a mono-bore, less-complex riser, or landing string.
- In 2021, crude oil reserves in Europe stood at 11,552 million barrels, representing a decline of 6.8% compared to 2020 levels. Among European countries, Norway recorded the highest proven crude oil reserves (7,525 million barrels), followed by the United Kingdom (2,000 million barrels) and Denmark (428 million barrels).
- Unlike Vertical X-mas Tree (VXT), HXTs typically require a rig to run the Blowout Preventer (BOP) stack and recover completion during replacement operations. Typical costs range from USD 15-60 million, exclusive of mobilization/demobilization costs.
- However, HXT systems offer the lowest initial CAPEX and provide a universal design for operational efficiency in multiple fields. Additionally, these systems are especially suited for subsea systems, which require frequent interventions, reducing the cost and complexity of well interventions.
- HXTs offer several advantages in subsea environments, due to which they are preferred to VXTs for deep-sea applications. HXTs have a significantly larger bore of up to 7', which allows larger outer diameter (OD) tubular to be run into the wellbore without removing the tree.
- Owing to the above points, the advantages of horizontal Xmas trees over vertical Xmas trees are expected to drive the segment in the coming years.
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Norway to Dominate the Market
- As of 2021, Norway is the world's third-largest exporter of natural gas, behind Russia and Qatar. The country has supplied 20-25% of the EU and United Kingdom's gas demand. Nearly all oil and gas produced on the Norwegian shelf are exported and combined, due to which oil and gas exceed half of the total value of Norwegian exports of goods. This makes oil and gas the most important export commodities in the Norwegian economy.
- In 2021, Norway's natural gas production amounted to 116,700 million standard cubic meters, up by 0.4% compared to the previous year.
- A total of 18 new oil discoveries were made in 2021, out of which 12 were in the North Sea, three in the Norwegian Sea, and three in the Barents Sea. The discoveries have a preliminary total estimate of 85 million standard cubic meters of recoverable oil equivalents. The most significant discoveries are 6507/4-2 S (Dvalin Nord) in the Norwegian Sea, 31/2-22 S (Blasto), 25/8-20 S, and 25/8-20 B (Prince/King) in the North Sea. These discoveries are likely to promulgate the growth of the market since all the discoveries were made offshore, which require subsea production systems such as subsea trees.
- The oil and gas sector is responsible for about one-fifth of the country's productive capital investments. As per the Norwegian Oil and Gas Association, significant investments were made in exploration, field development, transport infrastructure, and onshore facilities in 2020. Also, in 2021, the investments, excluding exploration, totaled around NOK 147 billion.
- Four new fields came onstream in 2021: Martin Linge, Duva, Solveig in the North Sea, and Ærfugl Nord in the Norwegian Sea. In October 2021, production from Yme started again after a field redevelopment. As of December 2021, six field developments were ongoing: four in the North Sea, one in the Norwegian Sea, and one in the Barents Sea.
- Therefore, the growing demand for natural gas and increasing investments in the oil and gas industry are expected to drive the segment in the coming years.
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