Industry sales will grow in line with US rig counts as rising crude prices spur ongoing production efforts
New York, NY (PRWEB) March 09, 2015
The Electric Submersible Pump Manufacturing industry benefits from near-constant demand for oil and gas. Electric submersible pumps (ESPs) are a type of downhole device used on drilling rigs to provide artificial lift for subterranean liquids like oil and water. According to industry leader Schlumberger, only a small percentage of the world's nearly one million oil- and gas-producing wells flow naturally, so much of the world's oil and gas production relies on artificial lift devices such as ESPs. This near-universal need has been a boon to the industry over the five years to 2015, supporting annualized revenue gains.
Nevertheless, Electric Submersible Pump Manufacturing industry revenue is forecast to decline over 2015, commensurate with challenging conditions in downstream energy markets. The ESPs produced by this industry largely serve one downstream market: oil extraction. “In turn, that market fluctuates alongside global prices for crude oil, with a lag of a few years arising from long lead times associated with surveying, rig construction and exploration,” IBISWorld Economic Analyst Amal Ahmad says in the updated report. Oil prices, which exceeded $100 a barrel in 2013, have fallen sharply since the end of 2014 due to global oversupply. By 2015, the price of crude oil is expected to have lost over half of its value, forcing losses on oil and gas companies and limiting their demand for ESPs. However, average profit is expected to remain stable, buoyed by the margins of the largest industry operators.
Fortunately for the industry, oil prices are expected to rebound over the next five years as major producers tighten supply on the world market. As a result, ESP sales will grow in line with increased US rig counts as rising crude prices spur ongoing production efforts. Industry operators are also expected to benefit from ongoing technological innovation. “ESPs are usually part of a larger system of retrieval, monitoring and other devices, and growing sophistication regarding installation techniques and real-time data feeds are increasing the value of an already crucial component for downstream drillers,” Ahmad says in the updated report. Through 2020, revenue is forecast to increase.
For more information, visit IBISWorld’s Electric Submersible Pump Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry manufactures electric submersible pumps (ESPs) for oil and gas well drilling. Firms also provide monitoring systems, equipment engineering and other services that complement ESP systems.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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