Why Are Oil and Gas Companies Installing Pump Jacks in Aging Oilfields?

The U.S. Energy Information Administration (EIA) estimates that the production of crude oil in the U.S. increased by 12.7% from 2018 to 2019. As per the EIA, onshore production in the Lower 48 states increased from 3,141 million barrels (MMBbl) in 2018 to 3,591 MMBbl in 2019. The surge in onshore oil drilling activities can be ascribed to the low cost associated with the extraction process and the presence of a majority of the aging wells in onshore fields. Thus, the rising onshore oil drilling activities will facilitate the deployment of pump jacks in the forthcoming years.

Additionally, the increasing number of mature oil reserves, which cannot be economically restarted once they are shut down, will also help the pump jack market grow at a CAGR of 5.0% during the forecast period (2017–2023). According to P&S Intelligence, the market was valued at $2,712.8 million in 2016, and it will generate $3,800.0 million revenue by 2023. Deployment of pump jacks in oilfields allows the extraction of even the last drop of oil and extends the age of oil reserves by improving the pumping efficiency, without causing any increment in the operating expenditure.

The weight segment of the pump jack market is categorized into more than 300,000 lbs, less than 100,000 lbs, and between 100,000 lbs and 300,000 lbs. Under this segment, the 100,000 lbs to 300,000 lbs category accounted for the largest market share in 2016. Oil and gas companies select pump jacks on the basis of the depth of oil wells and pump jacks that weigh 100,000 lbs to 300,000 lbs are ideal for such wells, which have an average depth of 5,500–7,000 feet. 

Globally, North America accounted for the largest share in the pump jack market during the historical period (2013–2016), and it is expected to retain its dominance throughout the forecast period. This can be owed to the presence of established players and the existence of a significant number of mature oilfields in the region. Additionally, the burgeoning energy demand is also fueling the market growth in the region. Owing to these reasons, the North American market is also projected to demonstrate the fastest growth in the forecast years. 

Therefore, the surging onshore oil drilling activities and the soaring number of mature oilfields are expected to fuel the adoption of pump jacks in the upcoming years.

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