Los Angeles, CA (PRWEB) January 25, 2013
The Electric Submersible Pump Manufacturing industry benefits from near-constant demand for oil and gas. Electric submersible pumps (ESPs) are a type of downhole devices used on drilling rigs to provide artificial lift for subterranean liquids like oil and water. According to industry leader Schlumberger, only about 5.0% of the world's nearly one million producing oil and gas wells flow naturally, so nearly all of the world's oil and gas production relies on artificial lift devices like ESPs. “This near-universal need has been a boon to the industry, supporting annualized revenue gains of 4.6% during the five years to 2013, even as recession-related dips threatened to turn growth negative” says IBISWorld industry analyst Josh McBee.
The ESPs included in this industry largely serve one downstream market: oil and gas extraction. In turn, that downstream market moves largely in line with global prices for crude oil, with a lag of a few years arising from long lead times associated with surveying, rig construction and exploration. According to McBee the industry exhibits a medium level of globalization and has operated at a trade deficit for the past decade, although exports have exhibited strong growth during the past five years. Meanwhile, high steel prices have allowed cheaper imports to grow as a share of domestic demand during 2010 and 2011, but cost-cutting initiatives taken by manufacturers have since lowered product prices and renewed purchases of US ESPs in domestic markets. Through 2013, revenue is expected to increase 7.2% and total an estimated $2.5 billion. Technological innovation will lead the way for this industry's success during the coming five years. ESPs usually exist as 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. At the same time, the base potential for ESP sales is projected to grow in line with increased US rig counts, as rising crude prices spur ongoing production efforts.
Concentration in the Electric Submersible Pump Manufacturing industry is considered high. In 2013, the top-four companies are expected to account for an estimated 78.2% of total industry revenue. The industry's leading companies have been around for several decades, growing and changing with the needs of downstream oil and gas production. Their worldwide operations and economies of scale enable them to reach emerging markets faster than their smaller competitors and also mass produce goods for less money through economies of scale. Concentration is expected to remain stable during the five years to 2013, as the number of industry companies is expected to return to its prerecession level of 80. 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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