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The offshore drilling market size is forecast to increase by USD 8.18 billion at a CAGR of 4.42% between 2023 and 2028. The market is experiencing significant growth, driven by the increasing demand for oil and natural gas. Mechanical processes on the sea bed for oil and gas extraction continue to evolve, enabling exploration in deeper waters and harsher environments. However, the environmental implications of offshore E and P activities remain a challenge, with concerns over fuel consumption and greenhouse gas emissions. The ocean floor's fragile ecosystems and potential impacts on marine life require careful consideration. The offshore oil supply chain faces complex logistical challenges, including transportation and infrastructure development. As the industry adapts to these trends and challenges, innovation and technological advancements will play a crucial role in minimizing environmental impact and maximizing efficiency.
The market is driven by the increasing energy demand and the need for oil production from hydrocarbon resources located in deep and shallow waters. Energy consumption is a significant factor, with the transportation sector, particularly the growing adoption of electric vehicles, shifting towards renewable energy sources. However, the transition to green energy is not expected to impact the market significantly in the short term. Drillships technology plays a crucial role in deepwater resource development, enabling exploration in areas with complex geological conditions. Automation and robotics are being increasingly adopted to enhance drilling efficiency and reduce operational costs. Petrobras and other energy companies continue to secure exploration contracts for both deepwater and shallow water drilling.
Further, environmental implications are a concern for offshore drilling, with seismic blasting and oil spills posing risks to marine ecosystems. Environmental agencies are implementing stricter regulations to mitigate these risks. Controlled pressure drilling and the use of advanced technologies, such as the sea bed drilling system, are helping to minimize environmental impact. The market is expected to continue its growth, driven by energy security concerns and the need to meet global hydrocarbon demand.
The market research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD billion" for the period 2024-2028, as well as historical data from 2018-2022 for the following segments.
The shallow water segment is estimated to witness significant growth during the forecast period. The shallow water segment of The market is experiencing significant growth due to several factors. Shallow water drilling, which refers to depths of up to 500 feet, has been a long-standing practice since the mid-20th century. Compared to deepwater and ultra-deepwater drilling, shallow water drilling is considered safer as oil spills are rare and less complex, leading to improved safety and economic viability. Petrobras, among other leading energy companies, has been actively involved in shallow water exploration contracts. With the increasing natural gas demand and the global energy sector's shift towards reducing carbon emissions, the role of offshore drilling in meeting energy requirements is more crucial than ever.
In shallow water, drillships and submersibles are commonly used due to the requirement for their structures to rest on the seabed. These factors are expected to drive the expansion of exploration activities in shallow water during the forecast period.
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The shallow water segment accounted for USD 17.70 billion in 2018 and showed a gradual increase during the forecast period.
North America is estimated to contribute 40% to the growth of the global market during the forecast period. Technavio's analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.
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In the market, North America holds significant importance, with Mexico and the United States being the primary contributors in 2023. The region's market growth is anticipated to accelerate over the forecast period due to the revival of deep and ultra-deep oil and gas projects in the Gulf of Mexico (GOM). The resurgence of these projects is driven by the increasing demand for natural gas and the subsequent rise in crude oil prices. Moreover, the untapped potential for exploration in offshore drilling has attracted substantial investments, further fueling the market expansion. Despite the growing emphasis on renewable energy sources and concerns over carbon emissions, offshore drilling remains a crucial global energy source. The market is characterized by the deployment of advanced technologies, including drillships, for exploration in shallow water areas.
Our researchers analyzed the data with 2023 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
Growth in demand for oil and natural gas is the key driver of the market. The global energy landscape is witnessing a significant shift towards increased energy consumption, with oil production being a key contributor. According to the US Energy Information Administration, global liquid fuel consumption is projected to reach 101.1 mbpd by the end of 2021, up from 96.94 mbpd in 2016. This growth can be attributed to the rising demand for oil and gas, as well as the depletion of existing reservoirs. To meet this demand, the market is experiencing a wave. Advanced technologies such as automation and hydrocarbon exploration are playing a crucial role in the development of deepwater drillships and the production of hard-to-reach reserves. Furthermore, the transition towards electric vehicles and renewable energy sources is expected to increase the demand for oil and gas in the coming years, making offshore drilling an essential component of the global energy mix.
Declining costs of offshore projects is the upcoming trend in the market. Offshore drilling refers to the exploration and extraction of hydrocarbons from beneath the seabed. Due to the complexities and additional requirements for processing and transportation after extraction, offshore drilling projects incur higher costs than onshore drilling projects. The drillships used in offshore locations are more sophisticated and expensive than onshore drilling equipment. The long timeline and added risks associated with offshore drilling necessitate significant investments. However, the profitability of offshore drilling has been improving, and its demand continues to be strong due to the increasing energy consumption and the rising demand for oil and gas to meet the energy needs of various industries, including transportation via electric vehicles.
Moreover, according to the International Energy Agency (IEA), the costs of offshore oil and gas drilling projects have been decreasing over the past few years, making them more economically viable. Automation and technological advancements are also playing a crucial role in reducing the costs and risks of offshore drilling. Despite the challenges, the market is expected to grow steadily in the coming years due to the increasing energy demand and the limited availability of onshore drilling sites.
Environmental concerns associated with offshore E and P activities is a key challenge affecting the market growth. The market plays a significant role in meeting the world's energy demand by producing hydrocarbons, primarily oil, which is a major source of energy consumption for transportation, heating homes, and manufacturing various products. However, the exploration and production (E&P) activities associated with offshore drilling have potential environmental implications. Oil spills, air and water pollution from toxic chemical emissions, and climate change due to methane emissions are some of the adverse effects of offshore drilling. Drilling mud, used in the drilling process to cool and lubricate the pipe and drill bit, contains toxic chemicals that can harm marine life when released into seawater.
Further, the offshore drilling industry is responding to these concerns through automation and the use of cleaner technologies. For instance, drillships, which are mobile offshore drilling units, are increasingly being used for deepwater drilling to minimize the environmental impact of onshore drilling. Additionally, the shift towards electric vehicles and renewable energy sources is expected to reduce the overall demand for oil and gas, potentially mitigating the environmental impact of offshore drilling in the long run.
The market forecasting report includes the adoption lifecycle of the market, covering from the innovator's stage to the laggard's stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth analysis strategies.
Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Archer Ltd.: The company offers engineering and OEM management services for offshore drilling operations in severe and legally-mandated conditions on fixed, modular, and mobile drilling facilities.
The market research and growth report includes detailed analyses of the competitive landscape of the market and information about key companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The market is driven by the increasing demand for oil production from hydrocarbon exploration in both deepwater and shallow water resources. Automation and drillships technology play a significant role in reducing energy consumption and enhancing efficiency in offshore drilling operations. The market is also influenced by the exploration contracts awarded by global energy sources for hydrocarbon exploration in various regions. Deepwater resource development is a key trend in the offshore drilling industry, with drillships being used to extract oil and natural gas from the ocean floor in ultra-deepwater areas. Controlled pressure drilling, directed drilling, and robotics are some of the advanced technologies used in offshore drilling to ensure compliance with environmental regulations and minimize fuel consumption. Financial incentives such as tax breaks, grants, and subsidies from domestic industries and governments are crucial for the growth of the market.
However, the market faces challenges such as rising oil prices, environmental implications, and compliance monitoring. The increasing demand for renewable energy sources and the shift towards greenhouse gas emissions reduction may also impact the market in the future. The offshore drilling industry also has implications for the marine ecosystem, with concerns over seismic blasting and carbon emissions. The petrochemical industry and the oil supply chain are significant consumers of oil and gas produced through offshore drilling, contributing to the industry's overall impact on climate change. The use of artificial intelligence and advanced drilling technologies such as semi-submersibles is expected to further optimize offshore drilling operations.
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Market Scope |
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Report Coverage |
Details |
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Page number |
175 |
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Base year |
2023 |
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Historic period |
2018-2022 |
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Forecast period |
2024-2028 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 4.42% |
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Market Growth 2024-2028 |
USD 8.18 billion |
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Market structure |
Fragmented |
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YoY growth 2023-2024(%) |
4.3 |
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Regional analysis |
North America, Middle East and Africa, Europe, APAC, and South America |
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Performing market contribution |
North America at 40% |
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Key countries |
US, Saudi Arabia, United Arab Emirates, China, and Russia |
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Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
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Key companies profiled |
AP Moller Maersk AS, Archer Ltd., Baker Hughes Co., China National Offshore Oil Corp., Eni SpA, Halliburton Co., Hercules Offshore Inc., KCA Deutag Alpha Ltd., Loews Corp., Nabors Industries Ltd., Noble Corp. Plc, Pacific Drilling Co., Parker Drilling Co., Saudi Arabian Oil Co., Schlumberger Ltd., Seadrill Ltd., Sembcorp Marine Ltd., Transocean Ltd., Valaris Ltd., and Weatherford International Plc |
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Market dynamics |
Parent market analysis, market growth inducers and obstacles, market forecast, fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, market condition analysis for the forecast period |
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Customization purview |
If our market report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
We can help! Our analysts can customize this market research report to meet your requirements. Get in touch
1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Application
7 Market Segmentation by Type
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
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