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Demand for Well Stimulation Materials on the Rise (posted 3/10/09)

March 10, 2009
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Global demand for well stimulation materials is projected to advance more than 14% per year to over $9 billion in 2012, according to “World Well Stimulation Materials,” a new study from The Freedonia Group, Inc. Growth will slow from the frantic pace of the past few years, which was prompted by record high oil and gas prices. However, advances will be sustained by expanded efforts to maintain productivity in maturing oil and gas fields, both in the large and well-established well stimulation markets, but also in areas that have not been traditional outlets for well stimulation materials, such as Latin America.

Producing nations around the world are increasingly turning to hydraulic fracturing and other stimulation techniques to reduce dependence on imports (e.g., the U.S.), increase export opportunities (e.g., Russia, Venezuela, Mexico) or to supply increasing domestic appetites for oil and gas (e.g., China, India and a host of developing countries in Africa, the Middle East and Asia).

Overall, the four largest markets (the U.S., Russia, Canada and China) will continue to account for a large majority of demand, nearly 90% in 2012. Russia and China are expected to register the fastest growth. A number of common factors contribute to the position of these four countries as significant markets for well stimulation materials. All are significant hydrocarbon producers, and all have large numbers of oil and gas wells. Perhaps most significantly, all have been longtime producers of oil and gas, and the most productive fields in these countries have long since seen their peak output. As such, oil producers in these four countries and others have turned to new and more difficult producing environments.

Although areas with declining production provide key opportunities for well stimulation materials, a substantial share of stimulation activity will be focused on less fully exploited reserves, such as deepwater areas in the Gulf of Mexico, the Caribbean, and coal beds in the Rocky Mountain region. To date, the U.S. and Canada have led in terms of coal bed development, but dozens of countries have the potential for such production. Several other countries offer strong prospects for well stimulation materials used in unconventional gas production via coal bed, shale gas or tight sandstone technologies, including many that are already significant producers of conventional oil and gas.

For more information, visit www.freedoniagroup.com.

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