Introduction

Crude oil prices have decreased significantly over the last seven months. This has led to a sharp decline in revenues of many oil exporting countries. On the other hand, oil importing countries are paying lesser for heating oils, diesel, and petrol, as prices of these commodities are directly linked to crude oil prices. From 2010 to mid-2014, the global oil prices were fairly stable at about $110 per barrel. However, since June 2014 the prices have more than halved and had reached $30 per barrel for the first time in 12 years. The West Texas Intermediate (WTI) crude oil has settled at $46.2 per barrel, while Brent has settled at $47.2 per barrel for the week ended June 17, 2016. There are two main reasons for such a sharp decrease in oil price.

First, the weak demand in many countries due to slow economic growth and second, the rising US crude oil production from unconventional shale oil.

The oilfield services market forms the backbone of the oil and gas industry. It provides end-to-end support to the upstream industry right from the exploration phase to the development phase. The oilfield services market is valued at more than $500 billion, with more than 75% of the market share held by Schlumberger, Halliburton, Baker Hughes, and Weatherford. With oil plunging close to $30 per barrel, oil companies have already started to feel the heat and they have started slashing their CAPEX by almost 50%. This decrease in CAPEX will directly impact the oilfield services business and will have a significant impact on their revenue realization.

Coiled tubing (CT) is an integral part of oilfield services market and finds its application from drilling to production phase of E&P activity. “Coiled tubing is a process of using continuously -milled tubular product manufactured in lengths that require spooling onto a take-up reel, during the primary milling or manufacturing process.  The tube is normally straightened prior to inserting into the wellbore to carry out workover, completion and drilling applications”.

key elements of coiled.gif

Two Key Applications of CT

2 key applications of ct.gif

Apart from the ones mentioned above, CT finds wide application in other areas of E&P activity as well. Some of the applications are discussed below.

  • CT is routinely used as a cost effective solution for workover applications. The main advantage of CT is that it uses its own pressure to control equipment in the live well. This avoids potential formation damage associated with well killing operation.
  • CT is the most common method of removing sand or fills, such as formation sand, proppants flowbacks, or fracture operation screenout and gravel-pack failures. These materials if not removed may impede fluid flow and reduce well productivity.
  • In a wellbore that has developed fluid column with sufficient hydrostatic pressure, the reservoir fluid is prevented from following into the wellbore. By using CT nitrogen is pumped to displace some of these fluids and reduce the hydrostatic head.
  • CT can be applied when fracturing multiple zones in a single well using horizontal drilling, as it can easily move in and out of the formations. Moreover, CT has an ability to accurately spot the treatment fluid to ensure complete coverage of the zone of interest.
  • CT drilling has been commercially used for many years and can provide significant economic benefits. It can be used in both directional and non-directional well. Non-directional wells have a fairly conventional assembly as compared to directional, which requires use of orientation device.
  • CT can be used for numerous pipeline applications, such as:
    • Removing organic deposits and hydrate plugs
    • Removing sand or fill
    • Placing a patch or liner to repair minor leaks
    • Setting temporary plugs text

How is the Overall Coiled Tubing Market Performing?

global coiled tubing market.gif

Global CT market is expected grow from $5,100 million in 2013 to $5,291.1 million by 2023 at a CAGR of 10%. This market has witnessed a sharp decline in 2015, mainly due to significant drop in crude oil price. Though CT represents only 1.3% of the total oilfield services market, it is an important segment for service companies. Global decrease in the rig counts have significantly impacted the CT market and the numbers of CT units have decreased from 2,079 in 2014 to 2,000 in 2016. There has been significant drop in CT units in North America, Latin America, Europe, and Africa, whereas Middle East and Asia-Pacific have experienced increase in CT units. The decrease of CT units in North America, Latin America, Europe, and Africa is mainly due to the weak demand for oil and decrease in oil price, which has forced many oil companies to shut down their operation temporarily. The cost of oil production in Middle East is extremely less as compared to other countries, hence the region is still able to run its operation with reasonable profit. Most of the oil production in Asia-Pacific is for the domestic use and hence decrease in oil price has not impacted the region’s operation.

coiled tubing market by region.gif

Conclusion

The global CT market has witnessed a strong decline of -34.1% in revenue in 2015 and is expected to decline further in 2016, as oil price continues to be low. Maximum drop in CT business will be witnessed in North America, as companies have low bottom lines and less cash reserves for further CAPEX investments. Despite low oil price some regions such as Middle East and Asia-Pacific will have a positive growth in the CT market. This growth is mainly due to low cost of production and sufficient cash flow for capital expenditure (CAPEX) and operational expenditure (OPEX) in Middle East and high domestic oil and gas demand in Asia-Pacific. According to Frost & Sullivan analysis global oil price will begin to attain its position by end of 2017, and the global CT market will stabilize beginning 2018, and will show an exponential growth rate.

About Frost & Sullivan

For six decades, Frost & Sullivan has been world-renowned for its role in helping investors, corporate leaders and governments navigate economic changes and identify disruptive technologies, Mega Trends, new business models and companies to action, resulting in a continuous flow of growth opportunities to drive future success.

Frost & Sullivan

For six decades, Frost & Sullivan has been world-renowned for its role in helping investors, corporate leaders and governments navigate economic changes and identify disruptive technologies, Mega Trends, new business models and companies to action, resulting in a continuous flow of growth opportunities to drive future success.

Share This
X