Demand for products, services used in U.S. shale gas development forecast to grow to US$50B in 2015 as industry activity continues to escalate in emerging Marcellus, Haynesville, Fayetteville shale plays, report predicts

Rachel Carter

ROCKVILLE, Maryland , September 7, 2011 (press release) – MarketResearch.com has announced the addition of the new report "Shale Gas" to their collection of Energy market reports. For more information, visit http://www.marketresearch.com/GlobalData-v3648/Eastern-Europe-Leverage-Shale-Gas-6441791/

Demand for products and services used in U.S. shale gas development will grow to nearly $50 billion in 2015 as industry activity continues to escalate in the emerging Marcellus, Haynesville and Fayetteville shale plays. While shale gas drilling will slow from the rapid buildup of the 2005-2010 period, the industry will still bring more than 8,000 new producing wells online through 2015. Increasing demand for drilling and completion products and services for new shale gas wells will be accompanied by growing markets for work-over, re-stimulation, and well site reclamation services in areas where production is maturing.

Low natural gas prices since 2008 have narrowed the profit margin of shale gas investment. Shale gas producers are responding to this trend by seeking improvements in well economics, in many cases through the use of higher value products and services. Through the forecast period, shale gas producers will continue to embrace innovations such as multiple-well drilling pad systems and advanced hydraulic fracturing materials in order to improve drilling efficiencies and increase per-well gas output, thus bolstering profitability as gas prices remain below 2008 highs.

Demand for drilling equipment and consumables in the shale gas plays will grow to more than $6.8 billion in 2015, led by nearly double-digit growth in tubular goods, the largest equipment category. Shale operators will continue to consume more tubular goods overall and on a per-well basis. Growth in demand for chemicals and materials will slightly outpace that seen for drilling equipment and consumables, reflecting the intensive material demands of the wells that will be drilled in the newer shale plays. Stimulation products, especially proppants, used in hydraulic fracturing will be the dominant source of chemicals and materials demand.

The market for services used by shale gas producers will reach more than $38 billion in 2015. Demand for services will continue to be dominated by contract drilling and pressure pumping, which together account for more than 60 percent of the total market. Service providers will continue to benefit from high levels of shale gas drilling activity as well as the increased scale and sophistication of wells in the emerging plays, despite these trends slowing from the 2005-2010 period. Other segments such as completion and production services and waste management and remediation services will be promoted by a range of factors. This will include increased work-over and re-stimulation activity as well as new state and federal laws requiring additional environmental services at well sites.

Regional variations in the shale gas market are strong due to geographical differences in recoverable reserves and the different stages of industry development in the major plays. The Southern Region dominated products and services demand in 2010 and will retain half of the total market through the forecast period, even as the Midwestern Region registers faster annual gains based on activity in the Marcellus, Woodford and a number of other emerging shale plays. Through 2020, the Marcellus Shale will be the fastest growing market for products and services of the major plays.

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