Wellhead Equipment Market

Market Overview

The global wellhead equipment market size was valued at USD 6,417.36 million in 2022. It is estimated to reach USD 9,786.06 million by 2031, growing at a CAGR of 4.8% during the forecast period (2023–2031).

Wellhead equipment is a device permanently affixed to the oil and gas well's surface. The wellhead equipment consists of a complete line of wellhead components and parts utilized for drilling and production of oil & gas. This equipment typically connects tubes and casing to an oil or gas pipeline. This installation attaches the casing, seals the well, and suspends the casing strings. The components of wellhead equipment include casing heads, casing spools, tubing head spools, crosses, and tees, among others.

Generally, the assembly of wellhead equipment is called a Christmas tree. These tools, used to suspend the casings and seal the well, can be set up differently depending on the well's pressure, temperature, location, size, and drilling technique. In addition, the wellhead equipment is primarily used to drill the surface of a well in the oil and gas industry. It is manufactured and designed to meet the application-specific requirements and service type.

Highlights

• Casing spools dominate thetype segment
• On-shore dominates the application segment
• North America is the highest shareholder in the global market

Market Dynamics

Global Wellhead Equipment Market Drivers

Growth in Exploration and Drilling Activities for Oil Around the Globe

Oil exploration and drilling activities around the globe have witnessed significant growth in the past century, owing to improvements in drilling technology and an increase in demand for fuel for vehicles and other requirements. Moreover, growth in the success rate of petroleum extracting drives the market growth. The improved economic competitiveness in the oil exploration, drilling, and service industries boosts the utilization of wellhead systems, fueling the demand for wellhead equipment.

In order to obtain a competitive advantage over their rivals and meet the rising worldwide demand for oil, several oil corporations and governments are concentrating on new exploration and drilling activities for oil and gas. For instance, in November 2018, PetroChina, a China-based oil & gas, aims to raise the oil output in 2021 in the Northwestern Xinjiang region. The site is a newly discovered oilfield. In addition, PetroChina and Sinopec, the China-based top oil companies, have collaborated to explore and produce crude oil in the Western regions of China to increase domestic output. Similarly, in February 2019, Saudi Aramco planned to expand its oil and gas exploration internationally. The company aims to compete with major competitors like Royal Dutch Shell and Exxon Mobil to expand into overseas drilling. Such factors drive market growth.

Recovery of Oil Price

In 2018, the average annual oil price per barrel increased by around 15%, owing to growth in production costs and political unrest in an oil-producing country. Further, the Organization of Petroleum Exporting Countries (OPEC), which includes 14 oil production countries, especially in the Middle East, controls around 40% of global oil production and is one of the main influencers of oil prices. Moreover, this association sets oil production levels to meet the global demand for crude oil, influencing the oil price and decreases and increases in oil production.

Oil prices also fluctuate due to the laws of demand and supply; prices go up when demand is higher than supply. There are also ongoing concerns regarding the storage of oil, which impacts the level of investments in the oil industry, which helps in a rise in oil prices. All these factors lead to the recovery of oil prices, further driving the growth of the global wellhead equipment market.

Global Wellhead Equipment Market Restraints

Increasing Prices of Raw Materials

Some key raw materials wellhead equipment manufacturers use include iron and other alloys. The manufacturers are vulnerable in the value chain due to the shifting pricing of these raw materials. The key material suppliers are typically large enterprises that have the power to pass on their higher commodity costs which lead to a surge in the costs of the materials, thereby increasing the input prices.

On the buyer's side, manufacturing firms must supply their goods to significant and influential consumer goods corporations, who cannot pass on price increases to end users. Instead, they must use the fear of switching suppliers to maintain supplier compliance. Similarly, fluctuating raw material prices and the unavailability of certain raw materials in certain geographic regions constitute higher costs for architectural hardware manufacturers, which is expected to restrain the market growth.

Global Wellhead Equipment Market Opportunities

Technological Developments in Wellhead System

The wellhead equipment is integral and essential part of the wellhead system. The wellhead equipment is an associated accessory required to assemble the wellhead system. These systems are required to control pressure during production and drilling operations. In addition, it connects the surface pressure-control equipment and serves as a point to suspend tubing and casing strings. The advanced technology in the wellhead systems provides reduced life cycle cost and superior reliability for pressure seals and suspension points.

For instance, in March 2019, ABB, a Swiss-Swedish multinational corporation, launched ABB Ability Wellhead Manager, a versatile new cloud-based visualization system for oil & gas operators. Similarly, in August 2017, Australia-based KINETIC and WEFIC collaborated to launch high-end wellheads in Australia. The new feature of wellheads includes nested hanger configurations. The new wellheads can drill without dismantling the blowout preventer (BOP). Therefore, technological developments in the wellhead systems are anticipated to generate lucrative opportunities for market expansion during the forecast period.

Regional Analysis

North America Dominates the Global Market

The global wellhead equipment market is bifurcated based on region into North America, Europe, Asia-Pacific, and LAMEA. 

North America is the most significant global wellhead equipment market shareholder and is anticipated to exhibit a CAGR of 5.6% during the forecast period. The increase in oil and gas sector investment with the discovery of new oil fields is expected to fuel market growth. The key regions in North America are expected to project an increase in demand for wellhead equipment as there is major oil and gas production along with massive exploration of the same. Moreover, the number of petrochemical companies in the prominent regions of North America is expected to boost the demand for wellhead equipment. Furthermore, increasing investments in North America's oil and gas industry offers lucrative growth opportunities for the market players. For instance, the Canadian Association of Petroleum Producers forecasted a 41% growth in the production of oil sands from 2019 to 2035. In September 2019, Shell, one of the major oil and gas companies, invested USD 13 billion in a liquefied natural gas project in Canada. Similarly, in November 2018, major U.S. firms planned to invest USD 2.4 billion in the oil and gas industry of Equatorial Guinea. These firms are set to start drilling around 11 wells, driving the market growth.

Asia-Pacific is estimated to exhibit a CAGR of 3.9% over the forecast period. The demand for wellhead equipment is growing, owing to the high rate of oil exploration in countries such as China and Australia. Growth in these countries' oil and gas industries is expected to boost the market's growth. In addition, wellhead equipment manufacturers have been heavily active in R&D to create cutting-edge technology due to lower field production. In August 2017, Australia-based KINETIC and WEFIC collaborated to launch a service facility to promote high-end wellheads in Australia. Many developing nations in the Asia-Pacific region have focused on creating a comprehensive solution for crude oil to obtain a competitive edge in the oil and gas sector. For instance, India invested US$118 billion in oil and gas exploration and establishing the setting up of natural gas infrastructure to meet the needs of oil and gas. In July 2019, China lifted restrictions on foreign investment in its conventional oil and gas upstream to boost resource development.

In Europe, the oil and gas sector growth drives the market growth. The rise in the trend of the redevelopment of mature fields is expected to foster the demand for wellhead systems, which in turn is expected to expedite market growth in this region. An increase in crude field production in the European region due to underwater oil and gas reserve discoveries in the North Sea drives the market growth. Furthermore, the increase in demand for crude oil has been prompting the production and exploration of oil in Europe. Many companies are involved in extensive drilling activities in off-shore and on-shore locations.

In addition, many major oil and gas exploration companies are expanding their business through strategic partnership agreements. Such factors are expected to offer growth opportunities for the market players in the region. For instance, in March 2019, PAO NOVATEK and TOTAL S.A. signed an agreement at the 22nd Saint Petersburg International Economic Forum to participate in the Arctic LNG 2 project. Similarly, in 2018, NOVATEK continued the exploration of the Gydan and Yamal Peninsulas to expand the resource base of LNG projects.

The LAMEA region is studied across Latin America, the Middle East, and Africa. The surge in investment in the oil and gas industries and the discovery of new oil fields in Latin America fuels the demand for wellhead equipment in LAMEA. Key nations in the LAMEA region are seen utilizing wellhead equipment in wellhead systems on a large scale in the petrochemical industry, which drives market growth. Moreover, an increase in oil and gas exploration in the Middle East, owing to the expansion of the oil and gas sector, is anticipated to boost market growth shortly. For instance, the Middle East and North Africa (MENA) have invested more than USD 250 billion in petrochemicals and oil and gas projects in the initial phase.

Segmental Analysis

The global wellhead equipment market is segmented by type and application.

Based on type, the global wellhead equipment market is bifurcated into casing heads, casing spools, Christmas trees, tubing adapters, and others. 

The casing spools segment dominates the global market and is projected to exhibit a CAGR of 4.4% over the forecast period. The casing spool includes a tubing head at the uppermost part of a wellhead assembly. This upper part comprises a straight-type bowl with a load shoulder to support the tubing string. The casing spools include lock screws that safely secure the tubing hanger, which is situated in the head part. The lower section consists of a secondary seal, which is used to isolate the casing string. The weld-on tubing head is attached directly to the production casing. These spools are available in pressures ranging from more than 1,500 psi to 20,000 psi. Moreover, the technological advancements to improve the drilling efficiency in the oil and gas industry to serve the limit costs are expected to offer lucrative growth opportunities for the casing spool manufacturer during the forecast period.

The casing head is a part of the wellhead system, a metal flange welded on the top of the drive pipe, also known as the conductor pipe. The casing heads offer a sealing point and attachment to the surface casing. Its advantageous features include a versatile design capable of supporting a maximum load, a 45° landing shoulder, preventing test plugs from wedging under pressure, and a versatile straight bore design. In addition, it is available with 7-5/8″ production casing with a 7-1/16″ nominal bowl. Moreover, the oil and gas industry utilizes casing heads for HTHP applications as they are an essential part of piping systems in the oil and gas industry. In addition, these casing heads support the tubing string in an oil well using an affixed tubing adapter at the top. All such elements are expected to boost the growth of this segment.

Based on application, the global wellhead equipment market is segmented into on-shore and off-shore. 

The on-shore segment owns the highest market share and is estimated to exhibit a CAGR of 5.3% during the forecast period. The on-shore refers to the mainland exploration and production of oil and gas, accounting for 70% of worldwide oil production. The equipment and structures are constructed directly on the soil for drilling and exploration—the on-shore wellhead equipment market benefits from the newly discovered oil and gas resources. In addition, the companies dealing in oil and gas businesses are focusing on discovering new oil and gas resources to address the rising demand. The wellhead equipment is a part of the wellhead system installed at the external opening of an oil or gas drilling well. It plays a vital function by offering control of wellhead pressure for drilling equipment. The wellhead equipment in on-shore applications is also widely used for proper pressure sealing of the total casing.

The offshore refers to extracting oil and natural gas from the field deposits under the ocean surface. The adoption of wellhead equipment for offshore has increased, owing to growth in underwater drilling activities for oil and gas exploration. The stabilization and recovery of crude oil prices are increasing the production and exploration activities in offshore underwater areas. The growing dependency on pressure-pumping solution components in offshore drilling activities drives the market growth. In addition, the redevelopment of mature offshore oil fields and replacing oil field machinery and components fuel the demand for offshore wellhead equipment. Moreover, the surge in the oil and gas industry and stringent laws and regulations for the usage of effective solutions and components are expected to propel the business of wellhead equipment for offshore oil fields in the coming years.

Recent Developments

• January 2023- FlexSteel Technologies Holdings, Inc. and its affiliates will be acquired by Cactus, a wellhead equipment company, through a merger with FlexSteel's holding company, HighRidge Resources, Inc., and Atlas Merger Sub, LLC, a recently established subsidiary of Cactus, Inc. Customers often purchase spoolable pipe technology from FlexSteel during the production stages of a well's lifespan.
• March 2023- Plexus Holdings PLC secured a EUR 5 million order for its POS-GRIP wellhead equipment and sealing technology. It will be deployed over the next 12 months for a specialized project.