Top 3 Emerging Trends Impacting the Global Wellhead Equipment Market from 2016-2020: Technavio
Technavio’s latest report on the global
wellhead equipment market provides an analysis on the
most important trends expected to impact the market outlook from
2016-2020. Technavio
defines an emerging trend as a factor that has the potential to
significantly impact the market and contribute to its growth or decline.
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Hangers account for the largest share of the wellhead equipment
market in 2015 with 55%, and it is expected to maintain its lead
during the forecast period.
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The global wellhead equipment market is segmented by components with
hangers dominating the market. Tubing hangers are an important component
used in the completion of oil and gas production wells.
They are generally available in a number of sizes and specifications,
depending upon the nature of the completion activities. Casing hangers
provide sealing to the casing head, which prevents blowouts. This is
expected to boost the wellhead market as a whole during the forecast
period.
Plexus, an engineering firm, launched its new POS-GRIP Python
subsea wellhead during Offshore Europe in Aberdeen in September 2015. It
is improving the wellhead equipment technology and providing better
equipment to handle environmental risks.
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The top three emerging trends driving the global wellhead equipment
market according to Technavio energy
research analysts are:
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Investments in oil and gas industry
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Fluctuation in operational rigs
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Increase in deepwater and ultra-deepwater exploration
Investments in oil and gas industry
Investments in the oil
and gas industry decreased in 2015, due to plunge in oil and gas
prices. Overall, investments worth USD 380 billion were delayed globally
in 2015-2016. Global oil and gas investment is expected to fall to its
lowest in 6 years to USD 522 billion in 2016. Total, a leading oil and
gas end product company, announced a reduction in its upstream
expenditure in 2016. The company declared its plans to reduce the CAPEX
from USD 28 billion in 2013 to USD 21 billion in 2016.
REPSOL declared a 40% reduction in its upstream expenditure in
2016 as compared to 2014. In its latest strategic plan, the firm
readjusted its upstream focus on only three regions till 2020- North
America, Latin America, and Southeast Asia.
According to Sayani Roy, a lead analyst at Technavio for research on oil
and gas sector, “Oil prices are expected to remain low for a
while, however, post 2017, its prices and investment cycle will
stabilize. Consequently, the wellhead market is projected to register a
better growth post 2018 after the stabilization of oil prices.”
Fluctuation in operational rigs
The recent downfall in the price of crude oil in the oil and gas
industry results in the decrease in rig counts globally. As the rig
count is decreasing, so has the use of wellhead
equipment in the oil and gas industry. For instance, Baker
Hughes reported a decline in the number of rotary rigs by 30 in the
month of February 2016, with the final number standing at 541. There has
been a decline of 817 rigs over the last year for the company. As there
are huge cuts in the capital budget for exploration and production
companies, it is directly showing its impact on the number of rigs being
operational in the US.
Many rigs are idle now or in shutdowns mode, which results in decrease
in the use of wellhead equipment in the oil and gas industry. If
companies would wait for an increase in oil and gas prices, there will
be chances of around 850 rigs to be idled this year. This will have a
direct impact on the wellhead equipment industry for oil and gas
companies.
Increase in deepwater and ultra-deepwater exploration
Reservoirs are being discovered since long to meet the demand and supply
of petroleum products. For instance, in 2015, Petrobras and Oil
and Natural Gas Corporation (ONGC) have found a new reservoir of light
oil in deep waters off the coast of the northern state of Sergipe,
Brazil. In recent years, the oil and gas industry growth curve has
declined, owing to the decrease in oil prices, which led to the
declining of growth of the oil and gas industry worldwide.
In 2015, an Israeli company discovered a massive oil reserve in the
Golan Heights. It is 10 times larger than the average oilfields that are
found worldwide. Another instance was when BP confirmed a new
discovery of a reservoir in east of Montrose in the central North Sea.
This reservoir is capable of producing more than 5,000 barrels per day
and is worth more than USD 2.13 billion. This increase in discoveries of
reservoirs is driving the wellhead market and driving its growth.
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