Production Chemicals Market size is forecast to reach $8.12 billion by 2025, after growing at a CAGR of 5.67% during 2020-2025. Production chemicals are used for improving the renaissance of hydrocarbons. A variety of categories of production chemicals comprise of scale inhibitors, demulsifies, corrosion inhibitors, Surfactants, asphaltene inhibitors, biocides, scavengers, and others. These chemicals are added in creation to attain the optimum presentation and improve the efficiency of the oil recovery due to which production chemicals market is expected to grow during the forecast period.
Production Chemicals Market Segment Analysis – By Type
Demulsifiers segment held a significant share in production chemicals market in 2019. Demulsifiers have propelled the industry forward by making possible the inexpensive and easily controlled production of crude oil. Demulsifiers are used to separate emulsions of oil and water for ease of extraction. Scavenger in oil and gas industry is a chemical substance added to crude oil in order to remove or de-activate impurities in the reaction products, for example, oxygen and hydrogen sulfide, to make sure that they will not cause any unfavorable reactions. They are mostly use to sweeten oil by removing hydrogen sulfide and oxygen from crude oil thereby increasing efficiency of crude oil.
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Production Chemicals Market Segment Analysis – By Oilfield Type
Offshore segment held a significant share in production chemicals market in 2019. Biocides are the production chemicals widely used in the offshore operations. The operating conditions in this location are very harsh and extreme. Thus, it requires a very specific set of chemicals like biocides and corrosion inhibitors for ensuring that the operations are carried out with ease and a low cost. They are used to protect the water muds which contain naturally occurring gum. Their microbial attack inhibition capabilities are expected to drive the demand in offshore as well as onshore operations.
The prevalence of COVID-19 has led to decreased utilization rates of refineries across the globe, resulting in supply shortages for various end-use sectors. The health crisis has, on a different note, has led to a sudden spike in demand for olefins which find usage in the formulation of sanitizers and other cleaning products.
Production Chemicals Market Segment Analysis – By Application
Improved Oil Recovery segment held a significant share in production chemicals market in 2019 growing at a CAGR of 5.71% during the forecast period. Production chemicals are utilized in production facilities and well drilling to improve the withdrawal operations by enhancing efficiency & effectiveness of the oil drilling process & petroleum refining and to attain best performance with effectual oil recovery. These chemicals make easier in the maintenance of smooth working oilfield, which results in decline of operating cost over impediments and stoppages all through the drilling processes. These chemicals hinder the creation of the metal scales and decrease the water amount into the oil well during examination & drilling, which results in growing demand and applications of production chemicals in oil recovery.
Production Chemicals Market Segment Analysis – Geography
RoW dominated the production chemicals market with a share of more than 38%, followed by Asia Pacific and North America. The chemical industry has been an essential piece of the GCC Countries; especially Saudi Arabia chemical industry is one of the oldest and crucial for a long time. RoW chemical industry growth will keep on supporting overall production chemicals market growth due to its big share in overall production capacity. According to Gulf Petrochemicals and Chemicals Association, In 2016, 66% of GCC capacity in the petrochemical segment was owing to Saudi Arabia (67%). Saudi production index in 2016 approached 100 which is practically indistinguishable from the GCC index (240.9).
The United States accounts for the major share in North America, mainly owing to the boom in the shale gas industry, advancements in technologies, and increasing oil exports. The shale gas production has been increasing exceptionally over the recent years, and owing to increasing demand from the major developing economies of Asia-Pacific, the demand for natural gas is expected to rise over the forecast period.
Production Chemicals Market Drivers
Increase in oil production and exploration activities
Increase in exploration and production activities and expansion ultra-deep-water drilling projects is expected to increase the demand of production chemicals in forecast period. Furthermore, rapid expansion of shale oil & gas drilling & production and emergence of eco-friendly production chemicals lead to the increasing demand for production chemicals during the forecast period. Moreover, crude oil manufacturers are focused on the exploration of oil and gas in order to add to the existing production capacities of crude oil. The discovery of new reserves of oil and gas is expected to drive the sales of production chemicals in the coming years.
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Production Chemicals Market Challenges
Fluctuating raw material prices
Fluctuating rates of prices of crude oil in the global market may act as a restrain in the overall growth of the production chemicals market. Adding to that, the surging environmental issues and related government regulations against protecting crude oil and other such natural resources of the world may also cause hindrance to the overall growth of the production chemicals market during the forecast period.
Technology launches, acquisitions and R&D activities are key strategies adopted by players in the production chemicals market. Major players in the production chemicals market are BASF SE, Clariant, Halliburton, Ecolab, Schlumberger Limited., Akzo Nobel N.V., Baker Hughes, Croda International Plc, Dow, The Lubrizol Corporation, Stepan Company, Kemira, NALCO India., Solvay, Huntsman International LLC, Chemcon Speciality Chemicals Ltd., Universal Oil Field Chemical Pvt.Ltd, Imperial Oilfield Chemicals Private Limited, REDA Oilfield, among others.
Geographical Expansion/ Acquisition
In July 2018, Halliburton Company acquired Athlon Solutions, LLC, a leading provider of specialty water and process treatment chemicals, customized engineering solutions, and services. Athlon became part of the Halliburton Multi-Chem business line, a provider of specialty oilfield chemicals for stimulation, midstream, and production customers.
In September 2016, Clariant, confirmed two acquisitions in the oilfield production chemicals business. After closing, the agreed purchases of Kel-Tech Inc. and X-Chem LLC add approx. USD 200 million of sales, as well as personnel, technology and expertise to its existing activities in North America and accelerate the growth of its Business Unit Oil & Mining Services (OMS) as a leading provider of oilfield production chemicals in North America.
Ongoing activities to meet the global energy demand brought more petroleum crude oil wells to production state globally which is expected to drive the production chemicals market.
High demand for petroleum crude oil wells will increase the consumption of production chemicals which in turn drives the production chemicals market.
RoW dominated the production chemicals market as chemical industry has been an essential piece of the GCC Countries, especially Saudi Arabia.
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