According to CW Research's World Oil Well Cement Market Forecast 2026, oil well cement (OWC) prices saw a severe decrease in premium over OPC in 2016 as a consequence of the oil price crash, but are expected to recover in key markets, including the United States, Russia and Brazil, as oil prices rebound.
Oil well cement has been traditionally traded at a premium to OPC. However, with the decline in drilling activity in 2015/2016 due to oil price crash, OWC prices were barely higher than OPC. Just as the market was recovering in the succeeding years, the onset of the pandemic once again resulted in OWC premiums showing a sharp contraction.
“Over the forecast period we expect significant shale activity in North America, Argentina and Saudi Arabia to be the primary driver for OWC consumption. We expect oil well cement prices to be strengthened as the global economy rebounds from the economic carnage inflicted by the pandemic over the coming years”, states Carolina Pereira, CW Group’s Manager, Advisory & Research.
OWC prices in the United States to rise over the next five years
OWC price premium in United States is expected to recover in 2021, rising above 2011 and 2016 levels. Prices fell approximately 10 percent between 2011 and 2016, but are estimated to recover in 2021 and continue to rise further over the forecast period.
The outlook for drilling activity in North America, of which the U.S. accounts for more than 75 percent of demand, is positive for the next five years due to an expected increase in oil prices as well as in shale drilling activity.
Middle East oil producers to ramp up activity
The Middle East and North Africa region is expected to see improvement in the number of wells drilled in the 2021-2026 period, mainly driven by shale well drilling that started in Saudi Arabia in 2018, as well as the development of Iran’s onshore well drilling.
The region’s current oil well cement demand for high grade API OWC is mainly driven by Saudi Arabia, Kuwait, Iran and Iraq.
New well drilling and extender use to drive oil well cement demand by 2026
The outlook for oil well drilling is expected to be positive in short term and to increase moderately over the next five years. After a decline in 2020, oil well cement demand is expected to see a recovery in 2021.
In spite of this expected increase, drilling activity in 2026 is estimated to still register well counts significantly below the peak year of 2014. North America is expected to be the main driver for this global well count growth, since it accounts for close to 80 percent of the global well drilling in 2021.
The World Oil Well Cement Market Forecast 2026 provides an in-depth, data-centric market assessment of the global API-certified oil well cement industry. The report includes a comprehensive bottom-up outlook, driven by indicators such as crude oil pricing, which provide an understanding of future drilling activity in terms of linear drilling distance and depth. The study breaks down oil well drilling activity and oil well cement demand by type of well (onshore, offshore, shale and geothermal applications), as well as by type of oil well cement (API oil well cement classes A, G, H and others). Use of extenders such as fly ash in oil well cementing is also considered and quantified.
Find out more about the report here.