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Offshore O&G exploration projects ramp up drill pipe industry growth

Jun 16, 2022

Continued reliance on fossil fuels in the utility and transportation sector has fueled new exploration activities and further development of existing oil and gas fields. A report by Exxon Mobil projects that natural gas liquid use is expected to grow by over 80% by 2050, as unconventional oil and natural gas production in the U.S. expands.

As the oil and gas industry continues to thrive, despite a steady shift to renewable energy sources, the use of drill pipes will expedite over the next few years. An essential tool in oil exploration, drill pipes and equipment, play an important role in overall drilling activities that focus on extracting oil and other liquified fuels.

Unlike traditional pipelines used in oil extraction, drill pipes pump drilling fluids downward to the drill bit to reduce friction and heat buildup. They are designed to bear complicated strength subject to loading, pulling, pressing, torsion and bending.

In recent years, drill pipe manufacturers have invested in improving the technology used in oil exploration and production (E&P). For instance, new carbon fiber and epoxy resin-based composite drill pipes (CDP) are gaining ground in the O&G industry for onshore sites as the product allows existing rigs to drill to greater depths. Apart from oil extraction, CDP also has significant potential for embedded cables or optical fibers wires in the field of high-speed communication technology.

Offshore drilling activities on a rise

Economic effects of Covid-19 pandemic and shifting demand for oil from countries worldwide have stimulated the offshore energy sector. Currently, O&G production has been growing across OECD countries and developing economies. Drill pipe demand is expected to elevate along with the construction of new mega-FPSOs, as well as the re-use of existing infrastructure.

Energy companies, including those that produce hydrocarbons, are signing new drill contracts across offshore locations which will positively impact the drill pipe market. In 2022, Italian offshore services firm Saipem won new offshore drilling contracts worth over $400 million in the Middle East and Africa for two high-spec jack-up drilling rigs units. The contracts will consist of drilling and workover operations for the duration of the next five years.

Similarly, Maersk Drilling has been awarded contracts with Shell for the provision of the 7th generation drillship Maersk Voyager for drilling services offshore in multiple countries.

Wired drill pipes to transform drilling activities

Over the years, the drilling sector has experienced generational and innovative technological advancements. Next generation drilling technologies that use powered and wired drill pipes are arguably a big thing in the sector to improve overall drilling performance. Wired drill pipes are steadily replacing traditional pipes as they excel in terms of reliability and efficiency.

Wired drill pipes are already gaining grip across new oil exploration sites to support drilling operations. In, 2021, Reelwell AS received purchase orders for its electrically driven, wired drill pipe technology ‘DualLink’ from Nabors Industries for its US land applications.

The era of advanced technologies like digital process control, automation and IoT has also compelled O&G companies to begin adopting technologies like robotic drilling systems (RDSs) that help gain access to small isolated offshore reservoirs as well as areas characterized by extreme environments.

Influence of geopolitical tensions on drill pipe market

Surging oil and gas prices due to geopolitical tension – like the recent Russia-Ukraine crisis – is forcing developing countries to ramp up exploration of oil and gas to meet regional energy demands and quit the dependency on oil imports from other countries. The crisis has caused a significant dent to the global O&G sector, forcing many nations to boycott Russian oil and gas which has led to boosting oil and other liquified fuel extraction to fill the void.

Recently, PTT Exploration and Production (PTTEP) – a Thailand-based petroleum exploration and production company – revealed plans to invest massively to raise production capacity and capitalize on high fuel prices caused by the Russia-Ukraine war. It has accelerated its focus on reserves with strong potential near Thailand as well as some projects in the Middle East

Similarly, countries in the European Union (EU) that were previously sourcing over 40 percent of their supply from Russia are cutting their reliance on the country and ramping up gas exploration activities which could propel the demand for drill pipes in the years to come. Lately, Greece has touted plans to speed up gas exploration as it looks to cut its reliance on Russian energy, with the first test drilling expected by the end of 2023.

In a nutshell, the drill pipe industry is on the cusp of witnessing momentous growth amid new O&G exploration projects being commenced worldwide, to meet the demand for the thriving industrial and transportation sector. Development in advanced drilling technologies like wired drill pipes will catapult efficiency and reliability across explorations sites, offering a noteworthy boost to drill pipe manufacturers.

Source Link – https://www.gminsights.com/industry-analysis/drill-pipe-market