Oilfield services industry

Oilfield services companies assist drilling companies in the oil industry in setting up oil and gas wells. Such companies may manufacture, repair or maintain the equipment used in oil extraction and transport. Services can include seismic testing (mapping the geological structure beneath the ground), transport services (such as movement of land and water rigs) and directional services (such as angled or horizontal holes). National Oil Companies (NOCs) and international oil companies (IOCs) often lack such technical and geological skills and so turn to service companies.

According to a 2010 report by GBI Research, the global oilfield services industry has witnessed considerable growth in recent years, is expected to become US$200 billion industry by 2015 (an increase on US$140 billion in 2008). In part this is due to the growth in activity in offshore fields around the world. However the global economic downturn in 2009 did lead to a period of slower growth.

=Major Trends=

Unconventionals and Offshore Drilling
Industry observers predict that the burgeoning unconventional energy industry will create a boost in demand for the services industry. Production of shale oil and other unconventionals brings logistical and technological challenges and demands a huge increase in the number of rigs supplied. A surge in offshore drilling activity is also predicted to boost demand. The Economist reported, for example, that America's Halliburton was planning to boost its workforce of 60,000 by 25% over 2011. Dahlman Rose, a privately owned financial institution, estimated that global exploration budgets would rise by around 14% in 2011 to US$533 billion.

According to reports in the Economist newspaper, America is the centre of the oilfield service boom, where firms pioneered the technique of horizontal drilling in order to access shale oil and shale gas.

Demand for Local Content
According to Ayman Asfari, CEO of UK-based Petrofac, NOCs are increasingly demanding to see "local content" (i.e. local operators) playing a part in new contracts for exploration, production and plant construction. This puts international oil companies at a disadvantage and creates an opportunity for oil services companies to build assets with local partners, maintain that asset for a period of time and then "hand it back" to the NOC to run in the long term.

=Key Industry Players=

According to Arabian Oil and Gas, as of 2008 the ten largest oilfield service companies globally were:


 * 1) Schlumberger Limited
 * 2) Halliburton
 * 3) Saipem
 * 4) Transocean Ltd.
 * 5) Baker Hughes
 * 6) Fluor
 * 7) Weatherford International
 * 8) BJ Services Company
 * 9) Petrofac
 * 10) China Oilfield Services Ltd.

An Economist report suggests that by offering a full range of oilfield services, the "big four" of the industry (Schlumberger, Halliburton, Baker Hughes and Weatherford International) enjoy an advantage over smaller firms, as NOCs often prefer to deal with only one firm rather than deal with several.

In 2011, a group of business school professors carried out a study to identify the 100 most innovative companies globally. They found that the oilfield services industries accounted for six of the top 100. Two of these were Schlumberger and Halliburton, and a further two were leading drilling equipment companies FMC Technologies and Cameron International. The remaining two were China Oilfield Services and Tenaris SA.

=References=