Drilling Products & Services forecasts for 2012 & 2017 Supply concerns drive record oil prices - US demand for

products and services used in drilling oil and natural gas wells is forecast to continue expanding from a high base through 2012 as a result of record-setting energy prices. Underlying the recent spikes in spot prices for crude oil is the continuation of global and regional market tightness in crude oil and natural gas supplies. Despite emerging economic concerns, rising demand in industrializing nations is pushing up global oil consumption at a time when many key producing areas are facing difficulties in maintaining and expanding their oil output. This tenuous market situation has eroded spare production capacity and sharply increased crude prices, a development not aided by continuing concerns over the political stability of several important oil exporting nations. Similar supply concerns are found in the US natural gas market, as stagnant production and import infrastructure limitations have restrained supplies, pushing prices high enough to force a significant portion of industrial consumers out of the market. Although domestic oil and natural gas prices are likely to ease by 2012, continued market tightness is expected to leave prices elevated through the forecast period. Due to the heavy depletion of the most profitable deposits after over a century of production, developing US oil and natural gas resources requires higher levels of investment than in many other part of the world. However, the combination of high energy prices and technological advances are expanding the pool of profitable oil and gas drilling projects, which has driven strong increases in drilling activity in recent years. Much of this new drilling is directed toward higher cost projects and difficult operating environments, such as the deepwater fields of the Gulf of Mexico, and toward previously unexploited resources, such as unconventional coalbed methane fields. Although this surge of new drilling investment is being tempered somewhat by sharply rising upstream capital costs, project economics remain favorable for the continued growth of drilling activity. The pending rise in drilling activity will boost drilling products demand going forward, although gains will be muted relative to the exceptional growth observed during the energy price run-up of the past few years. Overall spending on drilling products is expected to increase almost two percent annually through 2012, with growth being heavily restrained by an expected pullback in spending on new drilling rigs. Excluding drilling rigs, spending is expected to rise at more than four percent annually. Gains for drilling equipment and consumables will be driven by steady gains for tubular goods, drill bits and downhole tools, although the fastest growth will be for drilling services. This large market is benefitting from the continuing shift toward directional and horizontal drilling, which is not only raising contract drilling spending but also driving demand for directional drilling control and measurement- and logging-while-drilling services. Within the smaller drilling fluids market, future demand gains will be supported not only by the expansion of drilling activity, but also by a continuing shift toward synthetic-based muds and higher value water-based muds that is driving growth in market value. For more information kindly visit: http://www.bharatbook.com/detail.asp?id=73128