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Will Increasing U.S. Demand for Shale Gas and Tight Oil Affect the Adhesives Industry?

March 11, 2014
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Demand for products and services related to the development of shale gas and tight oil resources in the U.S. is forecast to rise 3.5% annually to $98 billion in 2017, according to a recent study from The Freedonia Group Inc.

“Growth in tight oil applications will continue to be strong, supported by high oil prices and the development of newer liquids-rich plays,” said Lee Steinbock, analyst. In addition, the outlook for dry gas plays is expected to improve as natural gas prices increase, especially after 2017. 

A combination of improved technologies, especially horizontal drilling and high-volume hydraulic fracturing, as well as high oil and gas prices, helped make the development of shale gas and tight oil economically feasible and played a significant role in the industry’s rapid expansion from 2007-2012. The discovery that longer laterals and more fracturing stages with greater proppant loads improved output led to increased demand for many products. Much of this demand growth was in areas that are not traditional oil and gas hotbeds, resulting in insufficient infrastructure and product and service shortages.

Due to sustained high levels of activity, growth for all products is expected to be favorable. The fastest gains are predicted for products that help in optimization efforts or are used in maximizing the performance of existing wells. In addition, operators continue to focus on improving their environmental image, which will spur growth in products like closed loop drilling systems and water-based drilling muds. Products such as guar gum gelling agents and services like pressure pumping that saw price spikes due to availability shortages will register slow (or no) growth in market value as competition increases and prices return to more sustainable levels.

For more information, visit www.freedoniagroup.com.

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