Oil and gas storage industry to benefit from increased capital investment
The global oil and gas storage service market is projected to reach $10.38 billion by 2022 and show a compound annual growth rate (CAGR) of 2.6% from 2017 to 2024, according to Esticast Research and Consulting.
The global oil and gas storage service market was valued at $8.42 billion in 2016, and is projected to reach $10.38 billion by 2022 according to Esticast Research & Consulting. The industry is expected to grow at a compound annual growth rate (CAGR) of 2.6% from 2017 to 2024. In 2016, the storage segment generated the highest revenue share. Among major regions, the U.S. oil and gas storage service market was the highest revenue generating market valued at $2.51 billion in 2016.
Oil storage services are expected to witness an impressive growth in the near future owing to a recent boom in oil production. The oil storage service market is witnessing a considerable rise in the current scenario. Companies use oil storage as a strategic tool in order to get returns in the global market. They purchase oil at low prices and wait until prices rise before selling.
Moreover, a "contango" condition is witnessed in the oil market where it is expected that people will be willing to pay more in the future than at the current price. When this happens, the price difference makes it profitable to purchase and store oil for a given period of time before selling at a higher price.
On a national level, governments use storage tanks to increase energy security. In the context of global concern for "peak oil" and decreasing crude oil reserves, storage tanks pose a unique strategic opportunity. Saudi Arabia, U.S., Russia, and Japan are some of the prominent countries using the storage services market, primarily driven by the surging oil production and declining oil prices. However, the gas storage services market is expected to lead the market in terms of growth pace, holding a CAGR of 2.8% in 2016.
Holding more than 25% of the global market share, the U.S. is emerging as the leading market for oil and gas storage services. Over the past five years, unconventional oil and gas activity has pushed the nation into an unexpected position. The U.S. is now the global growth leader in crude oil production capacity. In addition, the U.S. is now a leading natural gas producer, at 65 billion cubic feet, (Bcf) per day.
At the same time, unconventional activity is encouraging the growth of natural gas liquids (NGLs) production, adding over 500,000 barrels of oil equivalent (boe) per day since 2008. This has brought the total increase in liquids production capacity to 1.7 mbd since 2008. Driven by growth in U.S. natural gas, natural gas liquids, and crude oil, the past 2 years have witnessed a considerable growth in direct capital investment in terms of oil and gas infrastructure assets. There are around 400 underground storage facilities holding around 110 bcm of gas according to the EIA.
– Edited from an Esticast Research & Consulting press release by CFE Media.
Original content can be found at Oil and Gas Engineering.