U.S. demand for well stimulation materials is forecast to rise 10.2 percent annually to nearly $12 billion in 2016, according to a study offered by Cleveland-based The Freedonia Group. Growth will be driven by continued advances in hydraulic fracturing technology designed to increase the productivity of both new and existing wells. Proppants, gases, and base fluid materials will be among the fastest growing products.
Ongoing growth in horizontal drilling activity and development of shale resources will boost demand for proppants and the fluids used to deliver them into formation fractures. In the early portion of the forecast period, use in oil well drilling will provide most of the impetus for growth, as oil prices are high by historical standards and natural gas prices are not. However, shale gas development activity was strong in 2009, 2010 and 2011, despite low prices.
Growth in shale plays has been supported by companies looking to establish a shale gas presence and the desire of existing producers to develop already acquired leases, as well as by hedges on production made when prices were high. Through the forecast period, shale gas producers will continue to embrace innovations such as multiple-well drilling pad systems and advanced hydraulic fracturing materials in order to improve drilling efficiencies and increase per-well output, all of which will benefit well stimulation material demand.
Well stimulation technologies have had a commercial presence for more than 60 years, but for much of that time these techniques were used fairly selectively. A number of factors have combined to transform well stimulation in the U.S. from a niche technology to one of the most common oilfield activities. Technological advances have improved well stimulation techniques to the point that their use – and cost – is nearly always justified by increased well productivity. Going forward, gains for well stimulation materials will remain strong, despite some deceleration in growth. A decade or two ago, most wells drilled in the U.S. were not fractured. That is no longer the case.
Moreover, much of the recent growth in demand for well stimulation materials has been attributable to the emergence of horizontal drilling and multistage fracturing. Horizontal drilling allows for greater reservoir contact, and therefore faster and fuller well productivity. Multistage fracturing allows for a larger number of fractures to be created at specific locations within a single wellbore. Where fracturing jobs usually included two or three stages, they can now include up to a few dozen stages. Although it is expected that the number of stages per fracturing job will continue to grow, it is anticipated that this growth will be slower than the pace seen in the past several years.