Drilling Equipment and Consumables – Procurement Best Practices & Sourcing Strategies

DESCRIPTION

Drilling Equipment and Consumables Market Global Size:

ELINT Market Research’s procurement market analysis projected a 5.1-6% CAGR rise in the global consumables demand for the drilling equipment market from 2022 to 2024. Also, the market was evaluated at a $1.4 billion valuation in 2023 for consumables demand.

Thus, as stated by the report, the massive transition towards unconventional oil resources and shale gas deposits is one of the major reasons for the growth of the drilling equipment market. Additionally, in the context of drilling equipment’s global demand, the industry calculated at  $8.8 billion worth in 2023 and this demand is expected to rise by 6–7% CAGR until 2024.

Market Definition:

Drilling equipment and instruments are designed to provide operations that are secure, efficient, and cause less environmental damage. Some of the primary components of drilling equipment constitute cutting tools, conduits, logging devices, downhole resources, rotating pipelines, well fluids, and oil area cylindrical goods. Moreover, market players can choose either onshore or offshore drilling devices as per their location of use. However, employing customized drilling machinery is suitable for offshore applications, since it can endure extreme environmental conditions.

Drilling Equipment and Consumables Market Drivers:

1. Technological Improvements in Drilling Methods –

The global drilling equipment and consumables procurement market constantly manufactures advanced methods such as autonomous drilling infrastructure, continuous tracking tools, and smart drilling vessels. These innovations are the prominent growth drivers for this sector since companies employ them to enhance efficiency and decrease expenses.

2. Rise in Investigation and Production Moves –

As the shortage of conventional reserves for oil, gas, and other fossils is rising, worldwide exploration activities are also increasing, which automatically contributes to the drilling equipment and consumables industry.

Drilling Equipment and Consumables Market Challenges:

1. Shifts in Oil and Gas Prices –

One of the major challenges that drilling equipment and consumables industry players face is fluctuations in oil and gas costs, which influence their expenditure and investment plans.

2. Expanding Environmental Concerns –

Adhering to regulatory standards for environmental safety is another primary challenge in the drilling equipment and consumables market. Thus, businesses are necessitated to execute environment-friendly drilling practices and technologies.

Drilling Equipment and Consumables Market Opportunities:

1. Emergence of Renewable Energy-based Drilling Methods –

As clean energy initiatives are expanding, the requirement for sustainable drilling supplies also developing for multiple operations like turbine plant constructions, geothermal power drilling, and other green energy ventures. This transition towards renewable energy offers massive opportunities for the drilling equipment and consumables market players.

2. Growing Trend of Deepwater Drilling Techniques –

Nowadays, drilling equipment and consumables procurement market intelligence companies investing in specialized deepwater and ultra-deepwater investigation methods, as surface water resources become devoured. Hence, this trend propelled great opportunities in the drilling equipment and consumables market.

Drilling Equipment and Consumables Market Segmentation:

1. Various Drilling Equipment –

Drilling equipment and consumables market businesses can employ diverse devices for drilling operations including rotational rigs, uninterrupted tools, drilling in small portions, tubes, engines, and more.

2. Different End User Industries –

Multiple end-user industries utilize drilling equipment and consumables, among which metal mining and coal mining top the list holding 52% and 28% shares respectively from the overall market. Moreover, some other key end-user sectors comprise oil and gas, building manufacturing, solar energy, etc., which is a pivotal segmentation factor for this industry.

Increase in Commodity Demand/Price in the Drilling Equipment and Consumables Procurement Market:

An incremental increase in commodity demand and prices in some prominent regions like North America, Latin America, and China propelled the drilling equipment and consumables market to growth. These countries underwent a revival in their mining activities and adopted drilling supplies in large counts to sustain exploration and extraction measures. This proliferation happened due to expanding globalization, industrialization, and infrastructure maturation, which needs raw materials.

High and Medium Maturity Regions in the Drilling Equipment and Consumables Market:

Worldwide countries showcase varied maturity levels in the drilling equipment and consumables market. The high-maturity regions comprise North America and Australia, which implies that these nations are running well-established mining industries and intelligent drilling operations. Moreover, medium maturity levels are witnessed in South America, Africa, and APAC (excluding Australia), which means that these countries are operating with a moderate degree of development moves in the international drilling equipment industry and grabbing new expansion opportunities.

Negotiation Power in the Drilling Equipment and Consumables Market:

The negotiation power helps stakeholders foster long-term relations and fair transactions in the worldwide drilling equipment and consumables procurement market intelligence. In this sense, the buyer power is accounted for as medium to high in this sector, which implies that purchasers have a notable power to influence the terms and conditions of procurement contracts. On the other hand, the drilling equipment industry comprises a medium level of supplier power; thus, suppliers encounter fierce competition in this market and always try to optimize their products to satisfy buyers’ needs.

Impactful Cost Components in the Drilling Equipment and Consumables Market:

Two substantial and impactful cost components of the international drilling equipment and consumables market include HRC steel with 20–24% and labor with 30–35% stakes of the total costs. Hence, keeping track of and managing these price components is essential for stakeholders to be profitable since any kind of shift in their expenses could hinder the whole expenditure structure.

Pricing Formula in the Drilling Equipment and Consumables Market:

The prominent pricing formula of the drilling equipment market works on demand demand-based and price adjustment clauses based on raw material prices. This formula assists manufacturers in adjusting their expenses to reflect changes in the demands of their customers and the state of the market. Moreover, they also can make adjustments in costs based on differences in raw material prices.

Supply Contract Tenure in the Drilling Equipment and Consumables Market:

As per this drilling equipment and consumables procurement market research, the average supply contract duration lasts 2 to 3 years, which works as a medium-span framework for manufacturers, suppliers, and end-users. Thus, they can conduct collaboration and procurement activities during this contract period.

Leading Suppliers in the Drilling Equipment and Consumables Market:

Some of the well-known industry players that are constantly working hard to fulfill consumer drilling equipment and consumables needs include Caterpillar​, Hitachi​, Liebherr​, Epiroc AB​, XCMG​, Sandvik​, Robit​, Changsha Heijingang Industrial​, Brunner & Lay​, Western Drilling Tools​.