The global drill pipe market size was USD 935.0 million in 2015. Significant oilfield expansions particularly in the North America and the Middle East along with improving drilling techniques with enhanced productivity have been the key factors steering industry growth over the past few years. The crude oil price slump since mid-2014 have led to substantial decline or discontinuation of drilling activities majorly in the U.S., Saudi Arabia, UK, and Canada. This has earnestly affected the overall operating profitability of most of the E&P companies operating globally. The above factors have dramatically hindered the drill pipes industry growth over the past two years.
Independent contractors are expected to ramp-up operations in the U.S. and Canada by the last quarter of 2016 hoping the WTI crude oil prices to stabilize by then. The anticipated recovery of onshore activities along with E&P companies striving to meet the current energy demand are also estimated steer growth.
High production costs are estimated to hamper the overall market over the forecast period. Regulatory agencies such as Fund for Wild Nature (FWN) have issued numerous directives concerning petroleum production. This is expected to retard the overall industry, thereby hindering the market growth over the forecast period. Growing atmospheric distress concerning hazardous fumes emission due to exploration is also expected to hinder the market development.
The equipment rental services sector has also witnessed a steep decline in the new contracts over the past two years. This is expected to rebound by the end of 2016 with recovery in oilfield activities and anticipated stabilized petroleum prices by then. Discovery of new hydrocarbon reserves especially in the South China Sea, Pakistan, Israel, Australia, Senegal, and Egypt in past few years are anticipated to provide lucrative opportunities to industry participants in the near future.
Increasing R&D spending by key vendors to optimize the production of drill pipes and improve the overall material strength to meet the API specifications is projected to support future demand.