Gas Treatment Market

The global gas treatment market is projected to witness healthy growth during the forecast period, 2019–2025. The prominent factor favoring the growth of the global market is the strong growth of the oil & gas industry across the globe coupled with the high demand for gas treatment chemicals in this industry for treating natural gas. Natural gas treatment covers a broad range of applications such as gas associated with historical oil production, gas found in coal seams, gas found without oil, and gas recovered from shale formations. To maximize the production rate and enhance efficiency, gas treatment is essential and with the rising natural gas production, the demand for gas treatment chemicals is expected to increase in the years to follow. Besides, the rapidly growing shale gas exploration in the US is expected to be the other key factor fueling market growth. In addition, the growing concerns over mercury pollution and stringent regulations associated with the mercury emissions is further expected to support the growth of the global gas treatment market during the assessment period. However, the increasing preference for renewable energy coupled with the fluctuating natural gas prices are expected to hamper the growth of the global gas treatment market during the forecast period. Nevertheless, the positive outlook of shale gas exploration in Asia-Pacific and the Middle East is expected to create lucrative opportunities for the manufacturers of gas treatment chemicals in the near future.

Gas treatment solvents and amines are majorly used in the oil & gas industry to remove acid gases such as carbon dioxide (CO2) and hydrogen sulfide (H2S). Amines such as monoethanolamine (MEA), diethanolamine (DEA), and methyldiethanolamine (MDEA), and specialty amines are used to selectively remove H2S from natural gas, with a portion of CO2 remaining in the treated gas. Natural gas treatment covers a broad range of applications such as gas associated with historical oil production, gas found in coal seams, gas found without oil, and gas recovered from shale formations. To maximize the production rate and enhance efficiency, the need for gas treatment is expected to increase significantly in the years to follow. Thus, the growth of the oil & gas industry is expected to be the key factor in increasing the use of gas treatment chemicals.

The growth of the oil and gas industry is mainly driven by an increase in the demand for energy mainly in developing countries such as India, ASEAN countries, South Africa, and China on account of rapidly increasing industrialization. Furthermore, with the increasing demand for energy in China as a result of growing population, economic growth, and rapid industrialization, the E&P companies are making high investments to increase oil production. The throughput of the oil refineries in China increased by about 27% to 11,656 thousand barrels per day in 2017 in the last five years, which is likely to ramp up in the near future. Moreover, the throughput of the oil refineries in India increased from 4,085 thousand barrels per day in 2012 to 3,939 thousand barrels per day in 2017. The recent increase in natural gas production in Brazil, Mexico, and Colombia, along with recovering gas production in Argentina, particularly from unconventional gas reserves, have increased the investments in the oil & gas industry, which is set to drive the demand for gas treatment chemicals and adsorbents.

The crude oil prices declined in 2014 and affected the growth of the oil and gas industry due to various factors such as growth in the production in the US; global slowdown in demand, particularly in Europe and China; strengthening US dollar; and continuous production by the Organization of the Petroleum Exporting Countries (OPEC) to support global oil prices. However, with the recovery in crude oil prices owing to the decline in the production of crude oil by OPEC and rising global demand, the oil and gas industry has witnessed significant growth in recent years. According to the OPEC, oil and gas collectively are expected to continue to cater to more than half of the global energy demand by 2040. The global production of unconventional oil increased from 1 million cubic meters to around 3 million cubic meters in 2017, and natural gas increased from 4.3 billion cubic meters in 2014 to nearly 11 billion cubic meters in 2017. Furthermore, the growth of the end-use industries, including automotive, aerospace, and petrochemical, is likely to support the growth of the oil and gas industry despite shifting focus toward renewable energy sources.

The increase in energy consumption consequently increased the production of all the types of fuel, particularly natural gas, which grew at a significant rate for over 30 years. The US recorded the largest ever annual increase in both oil and natural gas production in 2018, mainly due to onshore shale production. The natural gas production in the US in 2018 was pegged at 30,588,702 million cubic feet as compared to 27,306,308 million cubic feet in 2017, a rise by 12%.

Thus, the significant growth of the oil & gas industry is expected to fuel the growth of the global gas treatment market during the forecast period.

With the rapid industrialization and urbanization in Asia, the demand for energy is constantly growing. China and India are the largest industrial economies in Asia. The demand for natural gas in China is expected to ramp up due to energy structure adjustment and environment protection policy. Moreover, the demand for natural gas in China is likely to further grow as a result of increasing population, growing economy, and climate change mitigation strategies, which has led to the gradual replacement of coal by cleaner sources of energy. Furthermore, China in its thirteenth five-year plan (2016–2020) has encouraged the gradual replacement of coal with natural gas in power generation. China meets most of its natural gas demand by importing from Russia. In 2018, the share of natural gas in China’s energy mix was about 7%, the Chinese Government has targeted to increase the share by 15% by the end of 2030. To meet the growing demand for natural gas and reducing dependencies on natural gas imports, China has been significantly investing in the development of unconventional reserves. Shale gas extraction plays a significant role in meeting energy targets. According to the US EIA estimates, China has a technically recoverable shale gas reserve of about 31.6 trillion cubic meters. The leading petroleum companies in China, such as Sinopec, PetroChina, and CNPC, have invested significantly in the exploration and development of shale gas resources. Further, the Chinese government has targeted to increase the domestic shale gas production to about 30 billion cubic meters in 2020 and 80–100 billion cubic meters by 2030.

The increasing oil & gas production and extraction activities in developing countries of Asia-Pacific and the Middle East & Africa such as India, China, Thailand, Malaysia, Indonesia, Kuwait, Saudi Arabia, and Iran on account of the rising demand for petroleum products, fuel, and energy in numerous applications is likely to drive the growth of the oil and gas industry and thus, the demand for gas treatment chemicals. For instance, in 2017, the Indonesian Husky-CNOOC Madura Limited, a subsidiary of CNOOC Limited, started operations in the BD field for gas production. The company aims at producing 100 million standard cubic feet of gas per day (MMSCFD) and 7,000 barrels of condensate per day from the BD field. CNOOC Limited started production at the Weizhou 12-2 oil field Phase II project in the Beibu Gulf in the South China Sea, which produces 6,400 oil barrels per day and is likely to expand production capacity to 11,800 barrels per day by the end of 2019. Moreover, the international players operating in the oilfield services industry, e.g., Baker Hughes, are also emphasizing on starting new projects in Asia-Pacific. In the Middle East, the oil, gas and petrochemical projects worth USD 211 billion are under execution and projects worth USD 242 billion are in the various stages of pre-execution in countries including Saudi Arabia, Kuwait, Iran, UAE, Iraq, Algeria, Egypt, and Oman. Among the total projects under execution in the region, Saudi Arabia has around 80 active oil & gas contracts under execution, including nine projects worth USD 1 billion and the two largest projects, which are USD 16 billion Jizan refinery project and USD 6.5 billion Fadhili gas plant. Some of the other major projects under execution are USD 24 billion Clean Fuels Project, under Kuwait Integrated Petrochemical Industries Company and USD 20 billion New Refinery Project, under Kuwait National Petroleum Company.

With the increasing shale gas production and the heavy investments in the oil & gas sector, the adoption of gas treatment technology in the H2S and CO2 removal at the exploration sites as well in the refineries is expected to increase significantly in the coming years and create immense growth opportunities for the players operating in the market during the forecast period.

The growing use of renewable energy sources such as solar, wind, geothermal, biomass, and hydropower energy as an alternative to traditional fossil fuels such as oil and coal is expected to hamper the growth of the global gas treatment market. The increasing environmental regulations to reduce carbon emissions and sustainable development are driving the demand for renewable energy sources primarily in the developed markets. The renewable energy consumption in 2018 increased by about 15% from 490.2 million tons of oil equivalent in 2017 to 561.4 million tons of oil equivalent. In 2017, in the US, around 17% of the total electricity was generated from renewable energy. The consumption of biofuels and other nonhydroelectric renewable energy sources doubled from 2000 to 2017 owing to environmental regulations and incentives provided by the government to use renewable energy. Additionally, emission reduction targets set by the EU have increased the demand for renewable energy sources in Europe. For instance, the EU intends to reduce greenhouse gas emissions by 40% and increase the percentage of renewable energy sources to 27 in its total energy mix. Furthermore, increased investment in solar and hydropower plants in the developing nations is also likely to hamper the global market growth. For instance, the Asian Infrastructure Investment Bank (AIIB) has established various renewable energy projects such as a solar power plant in Egypt and a coal replacement project in China as part of its lean, clean, and green motto under the Paris Agreement. Besides, the use of hydropower sources is increasing to meet the rising demand for green energy sources in both developing and developed countries.

In addition, the fluctuations in the prices of crude oil & natural gas are expected to hamper the demand for natural gas. According to TRADING ECONOMICS, there have been large variations in natural gas prices from USD 8.86 per MMBTU to as low as USD 2.62 per MMBTU in 2015. The natural gas prices did show an upward trend in 2016–2018, reaching a value of USD 3.15 per MMBTU in 2018 from USD 2.52 per MMBTU in 2016.

Thus, the growing environmental concern and increasing preference for renewable energy coupled with the fluctuating natural gas prices are expected to hamper the growth of the global gas treatment market during the forecast period.

Natural gas, which consists mainly of methane (CH4) and light hydrocarbons, may also contain high traces of acid gases, such as hydrogen sulfide (H2S) and carbon dioxide (CO2). In addition to these gases, natural gas may comprise other sulfur contaminants, such as carbonyl sulfide (COS), mercaptans, and carbon disulfide (CS2). One of the key challenges in the natural gas treating plants is to remove a high concentration of CO2 and H2S from the sour gases produced from the remote or offshore stranded gas fields. Several methods are available for the removal of acid gases, where the amine absorption process leads the table. The membrane-based system helps in efficient removal of high fractions of acid gases from these fields. The use of membrane technology for bulk removal of acid gases, as well as some mercaptans from raw natural gas, is a popular choice in case of high acid gas concentration.

One efficient method for the bulk removal of acid gases is the separation of acid gases using highly selective, permeable polymeric membranes. Membrane systems have been majorly used for bulk removal of CO2 from natural gas, whereas, the removal of H2S is an emerging application. Membrane systems adapt to various feed gas flowrates, CO2 contents, and product gas specifications. Moreover, they are relatively easy to set up and operate, with minimum weight and compactness for space efficiency. Membranes are also efficient in removing bulk H2S, as long as the removal requirements are not rigorous. Likewise, the other technology deployed for the treatment of natural gas with high CO2 content is cryogenic technology, which can be used solely or in combination with the membrane technology.

Thus, the availability of alternate gas treatment technologies, membrane and cryogenic is expected to be a key challenge for the market players during the review period.