Recovery still on hold for the global geophysical services market
There is a hint of recovery for the upstream oil and gas industry, but the geophysical services market may experience a further weakening before recovery. That's the mixed message from Oilfield Market Report - 1999, an annual assessment from market analysts Spears & Associates, based in Tulsa, USA. Oil and gas companies are said to be poised to increase their E & P budgets in the light of the recent recovery in commodity prices. The report suggests that spending will exceed $67 billion in 2000 for 35 market segments in the drilling and production sector of the worldwide petroleum industry. The US and Canada are expected to see drilling activity up by 20% to 35% spurred by a strong demand for natural gas. Outside North America drilling activity is only expected to increase by 6%, according to the report. It goes on to say that improved oil prices have brought some deferred international oilfield developments back into the frame, but suggests that major oil companies are unlikely to undertake ambitious spending programmes while an estimated six million barrels per day of shut-in production continues to threaten the longer term price stability of oil. In view of its forecast, Spears & Associates indicates that the equipment used in the drilling and completion process such as bits, mud, rig time, logs and the like will see an increase in demand of more than 15%. More modest increases are expected in those market segments linked to the maintenance of existing wells.