OCTG Market

The global oil country tubular goods (OCTG) market is expected to grow substantially during the forecast period primarily due to the increasing exploration & production activities in the oil & gas industry, globally.

The global demand for oil and gas has been growing at a steady rate in the past two decades and it can be attributed to the increasing global demand for uninterrupted electricity supply. According to the BP Statistical Review of World Energy 2019, the global oil production grew from 92,502 thousand barrel per day (TBPD) in 2017 to 94,718 TBPD in 2018, and the global natural gas production grew from 3,677.7 billion cubic meter (BCM) in 2017 to 3,867.9 BCM in 2018. The growth in production can be attributed to the improving global economic conditions. There has been increasing dependence on natural gas for electricity generation by the electricity generation companies worldwide due to its higher output and lower emissions than coal powered power plants. According to the BP Statistical Review of World Energy 2019, the use of natural gas for electricity generation grew from 5,952.8 Terawatt hours (TWh) in 2017 to 6,182.8 TWh in 2018; it is expected to grow during the forecast period. Due to the advantages of natural gas, upstream companies are focusing on the production of natural gas from both onshore and offshore drilling sites. Now, OCTGs are used in the construction of the oil well, through which oil is transported from reservoirs oil rigs. This will drive the demand for products, including casing, tubing, and drilling pipes, in the global oil country tubular goods (OCTG) market during the forecast period. The below figure depicts an increase in use of natural gas for electricity generation from 2017 to 2018.

The need for high oil and gas production to meet the demand for fossil fuel from end users increases the number of E&P. The oil & gas exploration activities have witnessed a recovery since 2016, post the last price slump. Therefore, the OCTG manufacturing companies are now gradually increasing their production along with the growing E&P activities, which is depicted by the number of operational rigs between June 2008 and June 2019.

The above figures show a steady rise in the number of operational rigs since 2016. This is expected to grow during the forecast period and drive the demand for OCTGs including tubing, casing, and drill pipes.

Additionally, due to the advancements in drilling technologies, including deep-water drilling, horizontal drilling, and directional drilling, E&P activities are increasingly being undertaken in difficult terrains. For instance, in July 2019, Kosmos Energy Ltd (US) announced the discovery of a substantial amount of natural gas in the Albian reservoir. The exploration processes use OCTGs of both American Petroleum Institute (API) and premium-grade. The demand for OCTGs is expected to be higher during the production period in cases where the production starts in offshore blocks. Further, there has been a steady rise in the number of oil wells drilled across countries, globally. For instance, according to World Oil, the total number of oil wells in the US increased from 14,632 in 2017 to 18,552 in 2018.

Thus, the growth of such operations ensure a high demand for high-quality OCTGs that can perform even in harsh conditions. Hence, the increasing oil and gas E&P activities is expected to drive the global oil country tubular goods (OCTG) market during forecast period

Deepwater oil & gas reserviors are located in water depths of more than 1,000 feet. The global oil & gas upstream industry participants are focusing on offshore oilfileds to meet the regional demand and reduce dependence on import. The the depletion of onshore reserves create the need for alternative fuel resources. Therefore, the vast unexplored reserves of oil and gas in offshore sites, increases the demand for deepwater and ultra-deep water E&P activities during the forecast period. The deepwater and ultra-deepwater environmental conditions are usually very harsh and demand high-quality OCTGs that can withstand extreme underwater pressures. Companies spend extensively on offshore exploration to meet the growing demand for oil and gas, globally.

Various countries in Asia-Pacific, including India, South Korea, and Japan, are highly dependent on oil imports, which further drives major oil producing companies to increase the production of oil and gas. For instance, in January 2018, Shell (the Netherlands) announced one of its largest discoveries in the Gulf of Mexico. The encountered well has more than 1,400 net feet of oil-bearing pay. Furthermore, in January 2018, Total (France) announced one of its major discoveries in the Gulf of Mexico, US. This discovery gave Total the access to large oil reserves in the Norphlet play . Such developments in the oil & gas industry are expected to increase the demand OCTGs during the forecast period. Offshore E&P activities are highly dependent on OCTGs to reach reserviors that might be located at depths of more than 1,000 feet. OCTGs like tubing and drill pipes form a protective layer between the extracted fossil fuel and the water body or the ground. Thus, the growing deepwater and ultra-deepwater activities in countries, such as Argentina, the Netherlands, India, South Africa, and Mexico, provides opportunities to key players in the global oil country tubular goods (OCTG) market.Therefore, the increasing deepwater and ultra-deepwater E&P activities is an opportunity for the players in the market during the forecast period

OCTGs include major drilling equipment such as tubing, casing, and drill pipes. OCTGs form very important aspect in the global oil & gas operations, as continuous production of oil and gas is highly dependent on the quality OCTGs. Crude oil and natural gas are flammable products and upstream companies rely on OCTGs for the uninterrupted extraction of fossil fuels, which necessitates product testing. Such testing procedures such as QTC testing at times provide inaccurate results during component manufacture, which can lead to catastrophic fractures during E&P operations and lead to severe environmental damage.

Failure in the casing, tubing or pipes can also occur due to electrochemical corrosion. According to statistical reports from Schlumberger, electrochemical corrosion at the inner and outer wall casing causes downhole casing failure. The corrosion of the casing varies with each well as in certain cases, casings can last for up to 50 years. Casing corrosion can lead to major failures in the well and eventually lead to extreme environmental damage.

OCTG failure during E&P operations can have adverse effects on both the upstream company and the surroundings of the drilling well. Therefore, the failure of OCTGs during E&P operations might restrain the global oil country tubular goods (OCTG) market growth