Over the next three years, price growth for oil and gas well maintenance is anticipated to accelerate as the number of oil wells rise with increasing domestic oil production.
Los Angeles, CA (PRWEB) February 25, 2015
Oil and gas well maintenance has a buyer power score of 2.4 out of 5, which indicates limited negotiation power for buyers. “Buyers may struggle to secure contracts from a supplier base that is highly specialized and moderately regulated,” says IBISWorld procurement analyst Keiko Cadby. “Moreover, the domestic oil boom has fueled demand for oil drilling and gas extracting support services, and buyers face record-high prices and limited options due to the low availability of substitutes.”
The level of specialization is high in the oil and gas well maintenance market, meaning that buyers must carefully evaluate the capabilities of potential suppliers to ensure that all of their oil and gas well maintenance needs will be fulfilled. This process adds to buying lead time and switching costs, which are important considerations for buyers if services are not adequate. A new supplier must be evaluated, updated on well maintenance conditions and put to work with minimal well downtime. “The lack of substitute services and the time-sensitive nature of repair work and required maintenance also limit buyer negotiation power because inoperable oil and gas wells can be costly for the buyer,” adds Cadby.
Furthermore, increasing demand for oil and gas well maintenance is causing prices to climb, contributing to the negative negotiating environment for buyers. Domestic oil production has risen strongly over the past three years due to new exploratory efforts. Prices for oil and gas well maintenance services have been trending upward as a result and are anticipated to accelerate over the next three years, further hindering buyer power. Buyers are encouraged to secure contracts sooner rather than later to lock in lower rates before prices increase further over the next three years. In addition, buyers should take advantage of the high level of competition among suppliers by eliciting multiple bids and assessing both local and national supplier options. For more information, visit IBISWorld’s Oil & Gas Well Maintenance procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of oil and gas well maintenance. Also known as well intervention or well work, well maintenance encompasses any work carried out on oil or gas wells after production has started. This includes a range of services on all parts of the well, mainly involving repair, cleaning and greasing of well parts. This report excludes well completion, cementing and construction services.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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