North American Oil and Gas Field Services Market

Increased Demand for Pipeline Construction and Infrastructure for Energy Transmission Fires Up the Oil and Gas Field Services Market

The upstream oil and gas field services in North America represent nearly 40 percent of the global field services. The market's technological competence is serving it well at a time when the world is running out of easy oil. The maturity of onshore fields is turning oil producers all over the world toward the more technically complex fields in deepwater or the Arctic. Other major participants target smaller fields or more complex horizontal wells, such as the oil sands in Canada, which are estimated to hold between 1.7 and 2.5 trillion barrels of non-conventional oil. "This will drive capital investment in the oilfield services industry, as producers require sophisticated technologies to explore reserves never before accessed," says the analyst of this research. "As a result, existing rigs will witness increased demand, augmenting day rates as oil companies seek to expand their global production."

However, most of these exploration activities and thereby, field services are largely dependent on oil prices, as customers invest in production activities based on the price volatility. While price erosion has led to a low-volume market with tight margins, the current economic slowdown and consequent credit crunch will further affect the oilfield services market by lowering the capital spending on new project exploration and market development. Key market participants have been adopting a wait-and-watch approach and are not expecting the government and regulatory bodies to help them tide over this challenging phase. Instead, they are strategically preparing for the rebound and subsequent market growth by investing in R&D and technology innovation.

Once field service companies have their services and technologies in place and the economy recovers, the market could experience a significant expansion, mainly due to increased energy demand. "Emerging markets such as China and India are projected to demand huge amounts of energy to sustain their economic growth," notes the analyst. "This is expected to drive oilfield service investments in exploration and production, thus raising the number of rigs in activity." The most promising regions for U.S. oil and gas equipment producers are those where oil production is expected to pick up in the short-to-medium term, namely west Africa, Russia, Libya, and Iraq.

Market Sectors

Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:

• Drilling contractors
• Equipment manufacturers
• Support services