By making oil production from the shale plays possible, hydraulic fracturing was responsible for drastic changes in the oil & gas industry after 2013. The average wellhead breakeven cost of oil production from shale plays has dropped significantly since 2013, due to technological advances in hydraulic fracturing and structural changes made by operators, such as focusing their drilling operation in the best acreage. The market is restrained by the environmental impact caused by fracturing fluid, such as water, and few companies have invested in their R&D to develop environment friendly fracturing fluid.
Due to concerns regarding air pollution, globally, countries are encouraging the use of natural gas, which is more environmental friendly than other hydrocarbons, such as coal and oil, due to low carbon emission. Due to this trend, demand for natural gas is expected to grow substantially. In 2015, around 30% of total hydraulic fracturing revenue came from shale gas exploration. Tougher environmental standards around the world and closing price gap between coal and natural gas are expected to drive the shale gas production activity. Technological advancements, such as hydraulic fracturing used in conjunction with horizontal drilling, have reduced the cost of oil & gas production from unconventional resources, like shale play, CBM, and tight reservoirs. Expected growth in shale gas consumption and reduced oil & gas production cost from unconventional resources are the major drivers for hydraulic fracturing. Growing hydraulic fracturing activity is expected to drive the demand for hydraulic fracturing fluid during the forecast period.
Environmental impact of hydraulic fracturing, such as water contamination, methane emission, and noise pollution, as well as the necessity of large amount water for hydraulic fracturing jobs are the major restraints for hydraulic fracturing. The environmental impact is mainly caused by harmful hydraulic fracturing fluid. But the technological advancements have led to use of more environmentally friendly fluids. For example, Gasfrac has successfully used gel made up of propane and hydrocarbon instead of water on more than 700 wells in the United States and Canada, which has eliminated the use of water for hydraulic fracturing. This fluid also has lesser impact on the environment, due to the use of relatively benign chemicals, like magnesium oxide and ferric sulfate.
North America accounts for over 80% of global hydraulic fracturing activity. In 2015, hydraulic fracturing accounted for about half of the crude oil production in the United States. The break-even oil price from shale plays in the United States dropped by more than 50% during 2013-17. Due to low breakeven prices, oil & gas operators are expected to invest heavily in shale oil exploration in the United States, during the forecast period. Canada is the first country after the United States to explore and produce from shale oil reservoirs. As of 2017, shale plays amount to about 8% of Canada’s oil production. Due to large shale reserves, an oil & gas industry that is open to private investors, availability of large quantity of water, and presence of oil transportation infrastructure, Canada has witnessed significant investments in shale oil exploration and production projects. Growing shale oil production activity is expected to drive hydraulic fracturing, and in turn the hydraulic fracturing fluid market.
China has about 31.6 TCF of technically recoverable shale gas reserves. But production from these reserves is expensive, due to the complicated topography of these shale plays and their remote location, which makes drilling in these areas expensive. In order to attract oil & gas operators, China has incentivized the exploration & production activity these fields. These incentives are expected to drive the shale gas exploration and production activity in the country, which in turn is expected to support the market growth in China.
Major Players: Baker Hughes A GE Company, Halliburton Company, Schlumberger Limited, BASF SE, The Dow Chemical Company, Akzo Noble N.V., Ashland, Calfrac Well Services Ltd, Albermarle, TRICAN, Clarient International Ltd, among others.
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