Hydrate Inhibitors Market

The global hydrate inhibitors market is projected to witness healthy growth during the forecast period, 2019–2025. The increasing demand for low-dosage hydrate inhibitors owing to its performance characteristics is projected to fuel the growth of the global hydrate inhibitors market during the review period. The increasing advancements in gas hydrate drillings in recent days owing to the depletion of conventional oil & gas reserves across the world are also contributing to the growth of the global hydrate inhibitor market. Furthermore, the increasing investments in oil & gas exploration in the developing economies are expected to create lucrative opportunities for the players operating in the global hydrate inhibitors market during the forecast period. However, the high dosage requirement of thermodynamic inhibitors and availability of depressurization method for controlling hydrate formation are challenging the market growth of the hydrate inhibitor market. Also, the environmental issues associated with the use of anti-agglomerate (AA) LDHI is the restraining factor to the growth of the product market during the forecast period. Moreover, due to shifting trend toward the use and production of renewable sources of energy and renewable products, the global hydrate inhibitor market is expected to witness growth impetus during the forecast period.

The oil & gas industry is one of the major contributors to the growth of the global economy. Large oil and gas complexes have been built across the globe equipped with a large number of technologies for processes such as drilling, engineering, exploitation of oil and gas production, water, oil and gas fluids processing, and transportation. However, the combination of constituents of crude oil and natural gas can lead to calamitous consequences. For instance, combination of many additives of crude oil or natural gas with water leads to formation of hydrate, which can result in outbreaks or major accidents. Therefore, the prevention of hydrate precipitation at minimum operating costs is of paramount importance for the safety of the oil & gas fields.

Hydrate inhibitors are used to prevent the formation of gas hydrates at lower temperature and high-pressure conditions. There are two types of hydrate inhibitors, namely thermodynamic hydrate inhibitors and low dosage hydrate inhibitors (LDHIs). Low dosage hydrate inhibitors control the formation of hydrates and thus help to manage flow in pipelines in an extremely low volume, unlike that are required for thermodynamic inhibition. Besides its advantage of effectivity in low volumes, LDHIs are also cost-effective, i.e., they require less transportation, storage, and maintenance costs, and are effective during extended shut-ins. Low dosage hydrate inhibitors are of two types, kinetic hydrate inhibitors (KHIs) and anti-agglomerate (AA) inhibitors. They are mainly utilized in onshore and offshore operations in the oil & gas industry.

Furthermore, keeping in mind the toxic nature of the most popular inhibitor used across the globe, methanol, on the environment and human health, the amount of methanol used in the oil & gas industry is needed to be reduced. The LDHIs have proved to be a viable option in the industry in recent days, which is expected to boost their demand and drive the growth of the global market.

The increasing oil & gas production and extraction activities in the developing countries of Asia-Pacific, the Middle East & Africa, and Latin America such as India, China, Thailand, Malaysia, Indonesia, Kuwait, Saudi Arabia, Iran, Mexico, and Brazil on account of the rising demand for petroleum products, fuel, and energy in numerous applications is likely to drive the growth of the oil & gas industry and thus, the demand for hydrate inhibitors.

In Asia-Pacific, the rapid industrial growth, particularly in countries such as China, India, Indonesia, South Korea, and Japan, is creating high demand for petroleum products, fuel, and energy, which consequently is increasing investments in oil & gas exploration and production activities. For instance, the expanding automotive and transportation industry on account of the rising per capita disposable income and increasing international trade in Asia-Pacific has predominantly increased the demand for fuel, which is likely to result in increased investment in oil exploration activities and thus, drive the demand for hydrate inhibitors. Furthermore, continued development of unconventional sources of oil and gas to reduce the dependence on imports is expected to propel the product demand. According to the Energy Information Administration (EIA), India is host to large gas reserves off its east coast. Also, China's exploitable shale gas reserves are estimated at 21.8 trillion cubic meters, with proven reserves at 544.1 billion cubic meters. Some of the investments in the oil & gas exploration and production observed in the region are mentioned below. For instance, in 2017, the Indonesian Husky-CNOOC Madura Limited, a subsidiary of CNOOC Limited, started operation 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. Further, on 28 November 2017, 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 the production capacity to 11,800 barrels per day by the end of 2019. Also, on 18 August 2019, Oil and Natural Gas Corp (ONGC) has set a target to double its oil and gas output from its domestic and overseas fields and expand its refining capacity three-fold through the adoption of new “ONGC Energy Strategy 2040”. This is expected to boost the market for hydrate inhibitors in the coming years. 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 addition to this, increasing government initiatives in hydrate inhibitor is also expected to aid in growth of the product market. For instance, according to India Brand Equity Foundation (IBEF), the Oil Industry Development Board (OIDB) sanctioned USD 37.04 million for the National Gas Hydrate Programme (NGHP) in 2016. These activities are shared between OIDB, Oil and Natural Gas Corporation (ONGC), Oil India Limited (OIL) and Indian Oil Corporation (IOCL) for the development of hydrate inhibitors in offshore operations.

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. Furthermore, the revival of abandoned oil wells in the Persian Gulf is also expected to drive offshore oil and gas production at a significant rate over the forecast period.

The substantial economic growth in Brazil and Mexico and the demand for electricity has led to increased offshore oil & gas exploration and production. The demand for petroleum products is predicted to grow significantly in the coming years which, in turn, has raised the need for oil production. The presence of large oil reserves, affordable platforms, and reliable regulatory climate in the Gulf of Mexico have also led to increased exploration activities. For instance, on 6 August 2019, BP announced to build two new subsea production units in the Gulf of Mexico about two miles (3.2 km) south of its existing giant Thunder Horse platform, with two wells added in the near term and eight total wells planned. The new production units are expected to produce 400,000 barrels of oil equivalent per day by the mid-2020s.

Thus, technological advancements and increasing oilfield drilling activities are projected to create significant growth opportunities for the players operating in the global hydrate inhibitors market.

Anti-agglomerated (AA) LDHIs prevent hydrate agglomeration and blockage, prevent the formation of small hydrate particles, are suitable for transient flow regimes, and have the advantage of the highest degree of subcooling. However, they need a condensate phase and may need downstream treatment. The AA LDHI chemistries have negatively impacted downstream separation processes, which resulted in increasing production. This can create difficulties in maintaining compliance with the produced-water quality standard for discharge into the environment. The National Pollutant Discharge Elimination System (NPDES) puts forth standards for water disposal into the environment. Also, quaternary ammonium salts (QAS) are claimed to be the most effective AAs at high subcooling exhibit high toxicity and low biodegradability.

Thus, the environmental issues associated with the use of anti-agglomerated (AA) LDHIs are expected to restrain the growth of the product market during the forecast period.

The thermodynamic inhibitors are effective hydrate inhibitors available in the market, but require high concentration depending upon the severity of the condition. As the degree of subcooling increases, so does the quantity of thermodynamic inhibitors dosage requirement. Most of the new exploration projects in deepwater environments are challenged with a high degree of subcooling. To control hydrates in these operations would mandate a large volume of thermodynamic inhibitors to be shipped offshore, which complicates logistics, adds transportation cost, and raises safety concerns. Besides this, in some cases, it is impossible to pump such a high volume of inhibitors because of constraints in the pressure rating and delivery capacity.

This is limiting the usage of thermodynamic inhibitors in the oil & gas industry and is a major challenge for the market players.