Global drilling activity is poised to bounce back from a tough 2020 with close to 58,000 wells lined up for this year and over 600,000 expected to be drilled by 2030, according to Norway-based energy research and business intelligence company, Rystad Energy.
“This 15% uptick comes as a relief to global oil service markets after the slowdown brought on by the pandemic and the oil-price slump,” Rystad Energy said.
The conventional well market is expected to remain a key driver in the drilling market, with China leading the way with around 170,000 wells to be drilled in the 2021-2030 period. At the same time, the share of tight oil wells is expected to double from around 15% to 30% during this decade. While the US accounts for the lion’s share of these unconventional wells, Canada’s share is expected to rise to almost 25% of all tight oil wells drilled by 2030.
As the overall oil and gas industry is on a steady path to recovery, service companies’ revenues are also slowly catching up, with close to $102 billion in revenue expected in 2021. Although these numbers are still 30% lower than in 2019, the top five service companies are battling their way out of last year’s downturn and are on track to record an average 2% revenue growth this year, a trend that is expected to continue through to 2025.
Spending on upstream well services is expected to continue to make up a major share of exploration and production players’ expenditures – but at the same time, companies like ExxonMobil, Shell and Chevron are ramping up their efforts to tackle the energy transition.
ExxonMobil has invested $10 billion over the past two decades on low-carbon solutions such as carbon capture and storage and plans to invest $3 billion more through 2025. Chevron has allocated $300 million for investments to advance the energy transition in 2021, although this represents just 2% of its total budget and significantly trails the company’s European peers. Chevron is also exploring alternative power sources, such as fusion technology and advanced geothermal, which are emerging technologies with reduced intermittencies compared to other renewable sources.
Rystad Energy said while governments are setting ambitious targets to minimize their CO2 emissions and speed up the shift towards green energy, this does not mean that oil and gas production will cease or lose its significance in the energy industry.
“In fact, while we expect tremendous growth in renewable energy, be it wind, solar, geothermal or hydrogen, oil and gas will continue to serve as a key energy source for at least the next decade,” Rystad Energy said.
That means demand for drilling and well services will remain strong – Rystad Energy anticipates that a total $1.7 trillion will be spent on well services in the 2021 to 2030 period, with PetroChina, Saudi Aramco and Rosneft leading the investments.