Horizontal Directional Drilling (HDD) Market

Market Overview

The global horizontal directional drilling (HDD) market size was valued at USD 12.7 billion in 2022. It is estimated to reach USD 24.2 billion by 2031, growing at a CAGR of 7.4% during the forecast period (2023–2031).

Highlights

• Offshore dominates the application segment
• Oil and gas excavation dominates the end-user segment
• North America is the highest shareholder in the global market

"Horizontal directional drilling" (HDD) describes a trenchless drilling technique that digs horizontal bores using steerable motor assemblies. The equipment and procedures utilized in the HDD procedure are a byproduct of the oil well drilling business. It entails precisely drilling along the selected bore path using rigs, bits, beamers, and pipes to install underground pipelines, service conduits, electrical semiconductors, and cables. HDD improves overall efficiency, flexibility, and cost-effectiveness by enhancing the contact between the reservoir and the wellbore.

HDD offers substantial environmental benefits compared to conventional cut-and-cover pipeline/utility installations. The technique is frequently used when traditional trenching or excavation is impractical or only minor surface disturbance is needed. HDD can also be carried out with the fewest needs and the least amount of soil contamination or landscape harm. It consequently finds wide use in many industries, including telephony, oil and gas, power, and utilities.

Market Dynamics

Global Horizontal Directional Drilling (HDD) Market Drivers:

Growth of Telecommunication and Oil and Gas Industry

Horizontal directional drilling has applications ranging from utility work to oil and gas sectors and the fiber optic and telecommunications market. High-speed broadband and cable providers are pushing to expand their networks to meet the escalating demand for such services. Moreover, the ramping up of fiber-optic and telecommunications line installation to support 3G, 4G, and 5G networks has positively impacted the HDD market.

Traditional drilling techniques are now being replaced by methods that allow more control and precision, thereby increasing oil production. Horizontal directional drilling and hydraulic fracturing enable various organic-rich shales into a massive gas-productive well. The HDD technique is feasible to excavate oil and gas from areas beyond the reach of vertical drilling. Therefore, the rise in the telecom, oil and gas industry may contribute to the significant growth of this market.

Economical, Reliable, and Efficient Trenching as Compared to Other Technologies

The cost of both trenchless and open-cut methods is affected by various factors, such as the size of the pipeline, its depth, and its location. Technology advancements are making this process more cost-effective and more efficient. The expenditure of Trenchless Rehabilitation in New Zealand is reportedly decreasing as the market becomes more mature due to technological developments that lower the rates. At the same time, the cost of open-cut repairs and replacement becomes more expensive as the cost of social and environmental impacts increases.

In addition, HDD machines require shorter completion times, resulting in an overall cost reduction. Contractors are increasingly spending on new compact and midsize horizontal drilling rigs to take up the forthcoming projects in the telecom industry, thereby proving to be cost-effective to the companies, as they are hiring the setup on one time use basis. Thus, the cost-effective feature may contribute to the market growth of the directional drilling market.

Global Horizontal Directional Drilling (HDD) Market Restraint:

Underpriced HDD Services Market

The HDD setups are costlier than other trenchless methods, including drill rigs, reamers, drill pipes, mud motors, and many other components. Owing to such high investments in a single project, end-users prefer hiring contractors or deploying these setups on a rental basis. However, many contractors, especially new entrants in the HDD industry, fail to conduct a proper risk assessment. Sometimes, new contractors may undercharge due to unawareness of suitable pricing and procedures. Similarly, some contractors and rental service providers deploy cheaper HDD equipment and setups to reduce initial investments. This may degrade the quality of projects and harm the HDD techniques, creating a barrier to the HDD market growth.

Global Horizontal Directional Drilling (HDD) Market Opportunities:

Minimized Environmental Damage

Horizontal directional drilling has extensive ecological benefits over traditional vertical wells. The process includes drilling two holes-entry and exit, to surpass pipes through the obstacles instead of removing them to let the pipelines through. Horizontal drilling enables the installation of different pipes in one location, creating fewer fractures in underground rock formations. In addition, the HDD technique requires fewer wells drilled, allowing the machines to penetrate many pipes through a surface location, involving less land usage.

Traditional drilling can cause contamination of groundwater. However, advanced horizontal drilling technologies can avoid contamination of the below-the-surface water reservoirs. Horizontal directional drilling also has the least impact on the environment. According to a study on open-cut versus horizontal drilling, open-cut techniques have around 65% more impact on the environment than HDD, making this technique more environmental-friendly. The setup of horizontal directional drilling is far from the land surface, causing less disturbance below and above that surface, thereby having the least environmental impact. Such factors are expected to create opportunities during the forecast period.

Regional Analysis

Based on region, the global horizontal directional drilling (HDD) market is bifurcated into North America, Europe, Asia-Pacific, Central and South America, and the Middle East and Africa.

North America Dominates the Global Market

North America is the most significant global horizontal directional drilling (HDD) market shareholder and is anticipated to exhibit a CAGR of 9.81% during the forecast period. North America dominated the HDD services market and is expected to lead. The region has many significant players, such as Ditch Witch, Vermeer Corporation, Barbco Inc., and McCloskey International. Moreover, there is high growth for HDD services in the region because of the growing demand for technology from the oil and gas, construction, and telecommunications industries.

Additionally, the high penetration of digital services, increased adoption of fiber optic cables in the telecommunication sector, and early adoption of advanced technologies in numerous verticals like government, residential and commercial, and transportation and logistics, among others, have triggered the overall market growth. Key players such as Virgin Media make huge investments in the next-generation networks to expand networking capabilities, and mobile operators such as Vodafone Group in enhancing LTE networks and developing 5G technology. Such factors drive the regional market over the forecast period.

Asia-Pacific is estimated to exhibit a CAGR of 10.3% over the forecast period. China's national energy infrastructure is designed to use renewable energy sources to promote the growth of a secure, sufficient, and clean energy sector. As a result, the nation is presently working on several significant infrastructure projects promoting cutting-edge drilling machinery. Chinese businesses also offer horizontal drilling and directional boring equipment at far lower prices. The regional market is growing due to more spending in the region's telecoms industry for deploying 4G and 5G networks.

Furthermore, the increasing Indian government initiatives, such as the concept of smart cities and digital India, amongst others, will require the installation of fiber optic cables, increased broadband services, enhanced communication facilities, and more Internet use. These initiatives have attracted investments from other nations' governments and the private sector. They are thereby expanding the demand for HDD services over the forecast period.

The Latin American regional HDD machines and services market includes Mexico, Brazil, and other South American countries. According to Duncan Wood, Mexico Institute director at the Woodrow Wilson Center for International Studies, Mexico is an essential oil supplier to the U.S. The Mexican refineries are anticipated to boost their production significantly over the coming years. Moreover, Mexico has created a new energy model based on market dynamics and attracted foreign and private investment. This is anticipated to boost the demand for the HDD services market in the region.

The Middle East and African region comprises major oil-producing countries such as Saudi Arabia, UAE, Iran, and Iraq. The maturing oilfields and increased industrialization are expected to trigger market growth. Due to the rapidly growing population, the demand for water supply, improved infrastructure, and power stations in the region have increased, enabling the installation needs of conduits and pipes. Therefore, the Utility market is expected to grow over the forecast period, triggering the HDD services market.

Segmental Analysis

The global horizontal directional drilling (HDD) market is segmented by application and end-user.

Based on application, the global horizontal directional drilling (HDD) market is divided into onshore and offshore. 

The offshore segment is the most significant contributor to the market and is anticipated to exhibit a CAGR of 9.61% over the forecast period. The offshore HDD services market has driven demand for HDD services in the North American region, and the trend is expected to continue over the forecast years. There has been a significant increase in the demand for nanoActiv products from the oil and gas sector. The nanoActiv HRT (Hydrocarbon Recovery Technology) is an additive treatment automatically powered by extremely surface-modified nanoparticles that penetrate deep into the network and facilitate sustaining and expanding oil and gas production. The growing demand for nanoActiv chemicals from the oil and gas sector is estimated to boost the demand for HDD services in the onshore services sub-segment over the forecast period.

Additionally, the offshore HDD services market is expected to grow faster than the onshore sub-segment. This may be attributed to the environmental benefits of offshore trenching as it reduces the damage on steep slopes and sediments and allows easy placement of the underground system without the need for open excavation. For instance, in Williams Lake, a city in Canada, pipes for utilities were set up using HDD technology around railroads, roads, and buildings.

Onshore projects are more economical than offshore horizontal directional drilling operations since they require less infrastructure and upkeep. The volatility of crude oil prices significantly impacts the market projects. The telecommunications industry is heavily deploying fiber optic cables in offshore and onshore locations to provide 4G and 5G networking services, increasing both segments' growth potential.

Based on end-user, the global horizontal directional drilling (HDD) market is divided into oil and gas excavation, utility, telecommunication, and others.

The oil and gas excavation segment dominates the global market and is estimated to exhibit a CAGR of 8.39% over the forecast period. The oil and gas extraction HDD services market sub-segment is anticipated to boost significantly over the forecast years owing to several benefits offered by HDD over the conventional drilling techniques, such as less invasion, less setup time, reduced surface disruption, the ability to conduct deep penetration, and avoiding surface obstacles as highways, railways, or rivers. HDD facilitates drilling multiple holes from multiple angular directions from a single source of origination, which gives it an advantage over the traditional drilling method. Moreover, enhancements in Global Positioning Systems (GPS) and drilling sensors have improved HDD technology, which increases the use of HDD services in oil and gas extraction.

In the telecommunications sector, technological innovations, like the 5G network, require the installation of cables for high-speed broadband services offered by HDD technology, driving the market over the forecast period. Additionally, due to the growing mobile broadband penetration and use of smartphones, the demand for high bandwidth requirements is increasing, further driving the need for fiber optic cables and components. Fiber optic cables offer agility, high speed, and accessibility, which saves time and causes lower latency. Due to such advancements in cabling technology, the demand for HDD technology is anticipated to increase over the forecast period.

Recent Developments

• May 2023- LITE ACCESS TECHNOLOGIES INC. ("Lite Access" or the "Company"), a world leader in fiber optic products and advanced installation methodologies, revealed that it signed a non-binding Letter of Intent (the "LOI") on May 3, 2023, to acquire 1097195 B.C. Ltd. ("Ironman") and its wholly-owned subsidiary, Ironman Directional Drill.

• December 2022- HardRock Directional Drilling, LLC ("HardRock"), one of the top suppliers of horizontal directional drilling ("HDD") services in the U.S. and a portfolio business of Tower Arch Capital, announced its partnership with J&J Raymond Construction, LLC in connection with its founders, James and JB Raymond. This partnership expands HardRock's presence in the natural gas utilities industry and adds skilled personnel and equipment to the company's fleet.