The Drill Pipe Market is forecast to reach US$1.6 billion by 2027, after growing at a CAGR of 3.4 % during the forecast period (2022-2027). Generally, drill pipes refer to hollow, thin-walled, steel, and aluminum alloy piping which are mainly used for horizontal drilling or in order to facilitate the drilling of a borehole. Its hollow shape allows the drilling fluid to be pumped down the hole through the bit and back up the annulus. Moreover, the drill pipe is just a portion of the overall drill string that comprises of both the bottom hole assembly and the drill pipe. Tool joints are used in order to connect every section of the drill pipe that is fitted with two ends. Drill pipes can be categorized into standard drill pipes, heavy weight drill pipes, and drill collars. Drill pipes are used in a wide range of applications such as mining, agriculture, oil, and gas industry, and more. An increase in mining activities along with the development of new oil and gas fields act as major drivers for the market. On the other hand, high costs along with fluctuating prices of raw materials such as crude oil can act as a major constraint for the market.
COVID-19 Impact
There is no doubt that the COVID-19 lockdown has significantly reduced construction, and production activities which in turn has resulted in the country-wise shutdown of construction sites, shortage of labor, and the decline of supply and demand chain all over the world, thus, affecting the market. Studies show that the outbreak of COVID-19 sharply declined oil and gas production in 2020 due to a lack of operations across multiple countries around the world. However, a slow recovery in new development and production activities has been witnessed across many countries around the world since the end of 2020. For instance, in September 2020, the Indian Oil Corporation (IOC) had approved an investment of INR 1,268 crore ($ 173.5 million) in order to set up a needle coker unit at the firm's Paradip refinery in Odisha. The proposed unit is expected to have a total Calcined Needle Coke (CNC) production capacity of around 56-kilo tonnes per year. Likewise, Australia announced its Scarborough Gas Project and Pluto LNG Expansion worth $11 billion to be resumed since 2020. The facility was built with a targeted capacity of 4-5 mtpa, which will be responsible for developing the gas from the Scarborough field, located 270km off the coast of Western Australia. In this way, a slow and steady increase in mining, along with oil and gas production activities will require the use of drill pipes for pumping drilling fluid during the process. This will eventually, lead to an increase in demand for drill pipes which indicates a slow and steady recovery of the market in the upcoming years.
Drill Pipe Market Segment Analysis – By Type
Standard drill pipes held the largest share in the Drill Pipe Market in 2021 and is expected to grow at a CAGR of 3.2 % between 2022-2026. The major reason behind this is that standard drill pipes are more lightweight due to which they can be easily moved and operated. In addition to this, standard drill pipes also require less manual labor and are comparatively cheaper in comparison to heavy weight drill pipes.
For instance, in March 2021, Coal India Ltd (CIL) approved 32 mining projects with an investment of around INR 47,300 crore ($ 6.47 billion) in order to achieve its target goal of 1 billion tons coal production by 2023-2034. Furthermore, China is considered to be one of the largest producers of gold, coal, and other minerals. A recent study shows that there are over 10,000 mines all over the country that is expected to generate the largest amount of the total world’s supply. Likewise, an infrastructure company called Power Mech Projects based in Hyderabad, India obtained a mine development and operation project worth INR 9,292 crore (US$ 12.6 million). The contract mainly includes mine infrastructure development, along with extraction, removal, processing, crushing, and transportation of coal. The concession period is expected to be of 25 years which includes two years of the development period. All of these factors have significantly increased the demand for drill pipes required for pumping drilling fluid during mining activities, thus, increasing the market growth.
Drill Pipe Market Segment Analysis – By Material
Composite materials in the Drill Pipe Market held a significant share in 2021. The major reason behind this is that the drill pipes based on composites have higher resistance to corrosion, increased flexibility, durability, strength, and stability in comparison to metallic alloys (such as aluminum alloy) based drill pipes. Since drill pipes based on composites are comparatively lightweight, cost-effective, and require low maintenance, their demand is most likely to increase in the upcoming years.
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Drill Pipe Market Segment Analysis – By Grade
API grade drill pipes held the largest share in the Drill Pipe Market in 2021. The major reason behind this is that higher API graded drill pipe indicates a lighter or low-density crude, and lighter crudes are generally more valuable since they produce high-value products. The use of these products also ensures reduced operating costs for E&P and operator companies. API grade products are mostly preferred in a normal environment and conventional basins, due to easy availability and reduced OpEx for both E&P and contractors. Exploration under unconventional and harsh environmental conditions, particularly in shale, CBM, and tight reserves, is expected to drive the demand for API-grade drill pipes over the forecast period.
Drill Pipe Market Segment Analysis – By Application
The Oil and Gas Industry held the largest share in the Drill Pipe Market in 2021 and is expected to grow at a CAGR of 3.6 % between 2022-2027. The major reason behind this is the increasing demand for oil and gas production in several countries across the world. For instance, in 2019, the NGOC announced that it had allocated INR 6,000 crore (US$ 8.2 billion) for the drilling of 200 wells in Assam over the next seven years to increase state output. The wells are expected to be drilled for the next seven years. Likewise, the Ministry of Petroleum and Natural Gas (MoPNG) announced the continuity of its operations of five major ongoing projects worth INR 1.67 lakh crore ( $22.85 billion) since April 2020.
Likewise, Africa’s largest private project, the Rovuma LNG project worth $33 billion started its operations in 2020. The Rovuma facility is estimated to produce an output of 15.2 million tons of LNG per year, along with an operational lifespan of 30 years. Kuwait also announced the delivery of its ongoing project called Al Zour Refinery worth $16 billion in 2020. It is expected to produce 100,000 barrels per day of low-sulfur fuel oil and it is expected to use more than 1.5 million b/d of crude and 300 MMcf/d of gas feedstock.
In this way, an increase in demand for oil and gas production activities will also significantly increase the demand for drill pipes required for pumping drilling fluid during the production activities, thus, leading to market growth in the upcoming years.
Drill Pipe Market Segment Analysis – By Geography
North America held the largest share in the Drill Pipe Market in 2021 up to 29 %. For instance, the government of the USA made an announcement to continue to operations of the Alaska LNG Liquefaction Plant project worth $43 billion in 2020. The Alaska LNG represents a three-train liquefaction plant, gas treatment plant, an 800-mile pipeline. The facility is expected to export around 3.5 billion cubic feet of gas per day from Alaska’s North Slope gas fields. Likewise, another project called Cameron LNG Liquefaction Plant worth $10.2 billion located in Louisiana, USA, was due delivery in 2020. The facility was built with an anticipated capacity of 14.95 million tons per annum from three liquefaction trains.
Furthermore, in 2019, the Canadian Association of Petroleum Producers (CAPP) stated that Canada is capable of producing 16,000 barrels of crude oil per day along with 5.5 billion cubic feet of natural gas per day. It also states that Canada's oil production is estimated to reach 106.3 million barrels per day by 2040.
Due to an increase in demand for oil and gas production activities in these regions, the demand for drill pipes required pumping drilling fluid during these production activities will also most likely increase, thus, leading to market growth in the upcoming years.
Drill Pipe Market Drivers
An increase in mining activities are most likely to increase demand for the product
The use of drill pipes play a major role in mining activities and projects, due to which an increase in mining activities is most likely to increase the demand for the drill pipes as well. For instance, the Portuguese mining contractor recently made an announcement that it had signed a contract worth £220.3 million (US$ 263.8 million) through its African subsidiary solely for the purpose of preparation, excavation, and transport at the Gamsberg zinc mine located in South Africa’s Northern Cape. The preparation of the project work started by April 2021, with a maximum duration of 96 months. The project activities included site preparation, blasting, drilling, and excavation of waste and ore.
Similarly, in March 2021, Coal India Ltd (CIL) approved 32 mining projects with an investment of around INR 47,300 crore (US$ 43.6 million) in order to achieve its target goal of 1 billion tons of coal production by 2023-2034. In this way, an increase in mining activities will significantly increase the demand for use of drill pipes, hence, leading to market growth.
Increasing demand of oil and gas production is most likely to increase demand for the product
Continuously increasing demand for oil and gas supplies from the industrial, transport, and residential sectors is a key driver of market growth. In addition, drill pipes play an important role in oil and gas exploration as they can withstand immense stress, heat, and load during drilling and flow completion operations. For instance, Nigeria announced the start of its project called Dangote Refinery and Polypropylene Plant worth $ 11 billion which is due delivery by the end of 2021. The facility is expected to process different grades of crude including shale oil, along with a production capacity of 104,000 b/d of diesel, 153,000 b/d of gasoline, 4,109 b/d of LPG, 73,000 b/d of jet fuel, and 12,300 b/d of fuel oil.
Similarly, Russia announced the continuity of its project called Nord Stream 2 Gas Pipeline worth $10.8 billion since 2020. The pipeline is expected to increase the gas capacity of the Nord Stream route to 110 billion m3 per annum.
Hence, an increase in demand for oil and gas production activities will also increase the demand for drill pipes required for pumping drilling fluid during these production activities, thus, leading to market growth in the upcoming years.
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Drill Pipe Market Challenges
Fluctuating prices of raw materials such as crude oil can cause an obstruction to the market growth
Drill pipe is the major component for the production of raw materials like crude oil. The price of raw materials from drill pipes is also hampered by uncertainty in the demand for crude oil. For instance, the international benchmark for petroleum prices across the world also known as Brent crude prices decreased to $9.12 per barrel on April 21, 2020, which was the lowest record since December 10, 1998. In April 2020, India’s Crude Oil Basket (COB) reached $19.90 per barrel, which was the lowest record since February 2002. During the first 11 months of the year 2020-21, the average annual price of India’s COB was around $42.72 per barrel, which decreased by 30 % than the average COB price in 2019-20. Likewise, as per revised estimates for 2020-21, the COB has increased by around 35% from its initial budget estimate.
In this way, the uncertainty regarding the price of crude oil also increases the price of the drill pipes. Hence, the instability in crude oil prices can act as a major challenge for the drill pipe industry suppliers, which can obstruct the growth of the drill pipe market.
Drill Pipe Market Landscape
Technology launches, acquisitions, and R&D activities are key strategies adopted by players in the Drill Pipe Market. Drill Pipe Market top companies are:
Hunting PLC
Hilong Group
International Drilling Services Ltd. (IDS)
TMK Group
National Oilwell Varco, Inc. (NOV)
Tenaris S.A.
Drill pipe international LLC
Oil Country Tubular Limited
Workstrings International
Texas Steel Conversion, Inc.
Acquisitions/Technology Launches
On December 2020, SBS Energy Services (US) completed its multi-phase project developed for the purpose of decommissioning around 29,000 feet of 10 inches by 6 inches insulated pipeline in the Gulf of Mexico. The drill pipeline was designed to take advantage of gravity along with the vertical drill pipe section, utilizing the weight to lower the lateral drill pipe string.
On October 2020, Reelwell AS (Norway), completed a full-scale demonstration of its DualLink powered and wired drill pipe. This drill pipe was used for the purpose of powering and communicating with downhole tools that were provided by an international service company. Reelwell was also supplying along-string measurement and high-speed MWD replacement tools.
Key Takeaways
The Ministry of Petroleum and Natural Gas (MoPNG) announced that activities related to 8,363 Oil & Gas projects worth INR 5.88 lakh crore ($80.47 billion) have resumed in India since April 2020. This, in turn, has increased the demand for drill pipes required for these activities, thus, driving the market growth.
North America dominated the Drill Pipes Market in 2020, the major reason behind this is the increasing demand for drilling pipes due to the shale gas exploration in the region in recent years. For instance, the Government of Canada has recently announced three offshore exploration drilling projects that will be operated by BHP, Equinor, and Chevron to progress in 2021.
New environmental-friendly methods are being employed in order to reduce the negative effects of the use of drill pipes on the environment.
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