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The Global Drill Pipe Market and How It Will Affect Exports From US to Top Importing Countries

Experts say the global drill pipe market will reach more than $1.6 billion by 2027. Moreover, the market will grow at a compound annual growth rate (CAGR) of more than 5%.

The demand for oil and drill pipes grows in tandem. As you may know, a drill pipe is a hollow pipe used on drilling rigs. It allows fluid to flow freely throughout the pipe, making the pumping process successful. 

Keep reading to learn more about drill pipes and the global drill pipe market. We’ll review a brief history of the market, where it stands today, and where it’s going. 

The Basics Behind the Drill Pipe Market

Before jumping into market trends, it’s important to understand the composition of the market and how experts analyze it.

There are three main types of drill pipes. They are:

  • Standard Drill Pipes
  • Heavy Weight Drill Pipes
  • Drill Collars

Standard drill pipes make up the majority of the drill pipe market. Yet, experts say heavy-weight drill pipes (HWDPs) will see the fastest growth. This is because oil and gas companies are exploring new geographical regions that are harder to drill. 

Manufacturers usually make drill pipes from steel or aluminum alloy. Drill pipes come in two grades, which are APL and premium. 

The market also differentiates drill pipes by application, either onshore or offshore. 

The market recognizes several uses for drill pipes, such as:

  • Oil and gas
  • Mining
  • Agriculture 
  • Other

This article will focus on drill pipes for the oil and gas industry since it makes up the biggest share of the market. 

Finally, there are five distinct regions in the market. You will read more about these later on.

20 Years of History

From 2000 to 2020, the global drill pipe market mostly showed steady growth. It’s no lie that demand for crude oil has continued to grow despite challenges like:

  • The September 11th terrorist attacks
  • The 2008 global recession 
  • Global warming and climate change

But, the oil industry and politics have deep-seated ties that may never come undone, making challenges more difficult to navigate.

Around 2015, there were significant oilfield expansions, especially in North America and the Middle East. With ongoing wars in Iraq and Afghanistan, plus the rise of ISIS, both regions saw a need to expand their oil capacity.

Additionally, onshore fields declined in production for several reasons. This aided the need for offshore reserve exploration. It also led to the development of unconventional reserves. These include:

  • Coal bed methane
  • Tar sands
  • Shale reserves

Further, improved drilling techniques and technologies allowed for an increase in oil and gas activities. 

Notable Industry Developments 

In 2018, Brazilian state-owned Petrobras awarded a contract to the American-Irish public company, Weatherford. The contract supplied drill pipe riser (DPR) invention systems and services. The agreement was valid for four years with an optional one-year extension. 

Also, in 2018, NOV Inc. and Schlumberger secured a wired drill pipe contract from Equinor. National Oilwell Varco (NOV) and Schlumberger are both US public companies. Equinor is a Norway-based public company. The agreement was worth nearly $120 million. 

In 2019, Schlumberger and Wellbore Integrity Solutions (WIS) aligned. WIS is a private US company. WIS acquired the business and assets of:

  • Tomas Tools
  • Fishing and Remedial Services

WIS also took over part of a manufacturing facility in Houston, TX. WIS aimed to provide significant products and services to the oilfield industry with the acquisitions.

The Effects of COVID-19

Initially, the pandemic had adverse effects on oil and gas extraction procedures worldwide. Plus, international trade bans and lockdown restrictions decreased demand for crude oil.

Thus, demand for drill pipes also fell. 

At the same time, the pandemic significantly disrupted the value and supply chains. 

But it didn’t take long for demand to reach and surpass pre-pandemic levels. 

Now, if anything, the pandemic is pushing demand further for the global drill pipe market than previously expected.

What Is Driving Drill Pipe Demand?

Despite efforts to slow the use of oil and gas, major economic sectors are driving the demand for drill pipes. These sectors include:

  • Industrial
  • Transportation
  • Residential

Oil remains the most important energy source, followed by coal and natural gas. Further, hydrocarbon demand has been rapidly growing as investments in the global oil and gas infrastructure skyrocket. 

Hydrocarbons include:

  • Oil
  • Natural gas
  • Natural gas liquids (condensates)

Additionally, drill pipes are essential in oil and gas exploration. They can withstand incredible stress, heat, and load during drilling and other operations.

They also prevent operation failures, which can lead to delays and loss of resources. 

In well-drilling, drill pipes cut through rocky layers. As explorations seek new geographical areas, the market demands advanced drill pipes.

drill pipe

Who Is Driving the Demand?

As mentioned, the global drill pipe market breaks itself into five regions. They are:

  • North America 
  • South America
  • Europe
  • Asia-Pacific
  • The Middle East and Africa

North America is the biggest market for drill pipes. This is because there is increased drilling activity in shale reserves. Thus, horizontal directional drilling (HDD) and fracking have caused an increased demand for drill pipes. 

The US explicitly plays a significant role in the growing demand for drill pipes worldwide. By the way, Canada is starting to become an important player too.

This doesn’t discount the Middle East. Of the 20 biggest onshore fields, nearly half are in the region. 

As new advancements in drill techniques and technologies come about, Asia, South America, and Africa continue to expand oil production. Notably, China is quickly catching up. 

So while North America holds the most significant market share, the fastest-growing region is Asia-Pacific. Africa is not far behind.

Which Companies Control the Market?

Additionally, there are four major market players, including:

  • Hilong Group
  • TMK Group
  • Tenaris SA.
  • National Oilwell Varco.

These four companies alone control nearly 75% of the market. Other important companies are:

  • Hunting PLC
  • Jindal Saw Ltd.
  • NOV Inc.
  • Oil Country Tubular Ltd.
  • PetroMaterials Corporation
  • Tejas Tubular Products, Inc.
  • Texas Steel Conversion, Inc.
  • Weatherock Group Holding Limited

Still, the drill pipe market is not as consolidated as it seems. There are plenty of dominant forces, and the market remains competitive. 

Drill Pipe Market Factors

Of course, the price of crude oil is a major factor in the drill pipes market. But there are several other market factors to consider too. So let’s look at some. 

Onshore Fields vs. Offshore Reserves

In the drill pipe market, there are two applications. They are onshore and offshore. Each application requires slightly different equipment.

Currently, onshore fields hold more market share. But, offshore and unconventional reserves are growing faster.

Onshore fields refer to hydrocarbons located under the land. The largest oil field in the world in reserves and daily production is Ghawar Field, Saudi Arabia. 

Saudi’s state-run Aramco owns and operates the field, producing nearly four million barrels a day (Mbopd). 

The three largest offshore reserves are in the Persian Gulf. Kazakhstan and Brazil also have considerable offshore resources. 

Offshore drilling is also growing in the US. The most successful sites are in the eastern Gulf of Mexico and the coastal areas of Alaska.

But the US Department of the Interior says the country’s outer continental shelf (OCS) may contain up to 18 billion barrels of oil and 76 trillion cubic feet of natural gas underneath the surface. However, much of this territory is under the protection of federal law against offshore drilling. 

There are also state protections due to environmental and tourism concerns. 

Further, as climate change continues to melt the poles, new oil and gas exploration occurs in the Arctic and Antarctica. The United States Geological Survey estimates the Arctic may have as much as 20% of Earth’s undiscovered reserves. 

That’s five times more oil and more than 21 times more natural gas than in the US’s OCS!

Finally, oil and gas companies are exploring ultra-deep drilling, despite its many challenges. Some say there are expansive reserves 15,000 to 30,000 feet deep in the ocean. 

The biggest challenge to ultra-deep drilling is the immense pressure.

The risks of offshore and unconventional drilling stimulate the onshore drill pipe market. 

Plus, where hydrocarbons come from affects their price. For example, it’s much more expensive to extract oil from the Arctic than from well-established fields with decades of exploration and mining.

API vs. Premium Grade

The drill pipe market also differentiates pipes by grade.

Grade describes how sturdy the drill pipes are. American Petroleum Institute (API) grade drill pipes provide excellent fatigue resistance and high mechanical and hydraulic performance. 

Yet premium-grade drill pipes exceed the API standards. As a result, they are the best choice for harsh environments and rigorous use. 

Replacing Existing Drill Pipes

Another key market driver is the need to replace existing drill pipes. Drill pipes don’t last forever, but the environment and pressure they face can shorten their lifespan. 

While regular inspection and protective equipment can prolong its lifespan, eventually, you need new pipes. 

Yet, the cost of this investment is enormous. And both onshore and offshore drill pipe markets are seeing a growth in demand for replacement pipes. Drill pipe replacement enhances the production capability of the rig. 

Availability of Raw Materials

Although it sounds like the global drill pipe market could continue to grow exponentially, the availability and price of raw materials limit growth. 

Political instability and value chain disruption affect oil country tubular goods (OCTG) demand. And this slows growth for drill pipes. 

For example, steel tariffs between the West and China continue to be a problem for the manufacturing, selling, and transporting of drill pipes.

Climate Change

With each scientific study comes new warnings for the oil and gas industry. This creates pressure to cut emissions and transition to clean energy. 

But in reality, the world cannot switch from oil and gas to sustainable energy overnight. The global energy demand is too high. Moreover, a sudden switch would trigger a collapse of the electrical grid. 

As companies continue to explore new oil and gas extraction options, they are looking for ways to reach net-zero carbon emissions during operations. This may help the drill pipe market in the short term. 

But concerns over global warming and climate change can significantly damage the market in the long run. 

Drill Pipe Imports and Exports

As of 2019, the top importers of casings, tubing, and drill pipes were:

  • The United States
  • Algeria
  • Kuwait
  • Oman
  • Iraq

The counties that made up the most global drill pipe exports were:

  1. Japan 
  2. China
  3. Mexico
  4. Brazil
  5. Argentina 

These findings are not a surprise. For example, since the US and the Middle East are driving the drill pipe market, it’s evident why they are the top importers.

Further, China is a massive global producer of steel. So seeing that it’s a significant exporter of drill pipes doesn’t come as a shock. 

However, with more oil and gas exploration in China, Mexico, and South America expected soon, the market may demand more exporters. As a result, several European countries like France, Austria, and Italy could quickly become more important in the exporting market. 

The US could also rise to become a crucial exporter, as it did with oil production when the market demanded more oil.  

The Effects of the Russia-Ukraine War 

No analysis of the global drill pipe market would be complete without mentioning the ongoing Russia-Ukraine war. This is because Russia is the third-largest exporter of oil in the world. 

Russia will produce less oil per day while at war. It will also export less oil so that it can supply its army. More importantly, Western countries have sanctioned the Russian government and some influential oil industry members. 

Most notably, Germany froze the Nord Stream 2 Baltic Sea gas line, which Europe relies heavily on for oil supplies. With rising demand, the oil needs to come from somewhere. 

The world is looking to the US and the Middle East to increase production to meet the demand. Increased production can also help lower already skyrocketing prices. 

All it takes is for one sudden event to shift the market. Thus, all current predictions about the drill pipe market could change depending on the demand for crude oil and geopolitical outcomes. 

If you’ve learned anything from this analysis, it’s how deeply tied the three are with each other.

Learn More About Drill Pipe Transportation

For the time being, the drill pipe market will continue to grow despite the various factors affecting it. In addition, new players may join the ranks in exporting supplies as the market pushes others out. 

If you’re interested in learning more about the transportation of drill pipes, contact us at Onsite Global Logistics (OGL). We offer our customers partnerships with more than 164 countries and innovative freight solutions to meet all your needs.

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