Oil Gas Storage Market

The global oil and gas storage market is expected to register a notable growth rate during the forecast period, owing to the urgent need for storage space for petroleum reserves (SPRs) capacities. However, the high maintenance cost of storage is expected to restrain the growth during the forecast period. The growing demand for natural gas is expected to create a growth opportunity for the players operating in the global market.

Due to the outbreak of COVID-19, the global oil & gas market is facing an unprecedented challenge of storing surplus oil. The market players have begun running out of storage space. For instance, in May, the U.S. West Texas Intermediate witnessed a negative territory for the first time in history, and the traders had to pay to get oil taken off their hands. The oil surplus has further created a demand shock in energy markets with both onshore and offshore storage filling quickly. Similarly, in India, refiners are flooding the market with petroleum products, which does not have enough buyers in the absence of demand in the current lockdown situation. Additionally, the storage capacity in the country is almost full at the fuel stations and other sites created by refiners. It is also estimated that the almost 85-million-barrel storage capacity of state-run companies is already full. In order to cope up with this challenging problem, various measures are being taken by refiners and other oil companies. For instance, oil companies in Texas found many steel tanks to store the surplus oil, which were kept idle earlier when shale producers stopped drilling. Currently, the oil companies are trying to store as much oil as possible in these tanks to handle the space crunch. All these factors are driving the global market for oil and gas storage, especially in the near future, when the demand will not be at its normal rate, creating a need for more storage space.

Many conventional reservoirs around the globe are depleting rapidly. The exploration and production companies are looking forward to tapping unconventional resources located in difficult terrains, such as offshore and mountain areas. The extraction of fossil fuels in such regions is a very complex procedure, and companies depend on reservoir analysis techniques to determine the feasibility of exploration and production activities of well sites.

Offshore oil and gas fossil fuel production are expected to increase at a steady rate during the study period due to the increasing need for fossil fuels. Furthermore, shale production techniques such as fracking are witnessing an increased demand from countries across the globe. For instance, in May 2018, Saudi Aramco (Saudi Arabia) signed a contract with Halliburton (US) to handle its hydraulic fracking needs in its unconventional gas fields. China has also been investing substantially in unconventional reservoirs to reduce its dependence on imported oil and gas. For instance, in August 2019, the China National Petroleum Corporation (China) started drilling its first shale oil well in the South Western province of Sichuan in China. Similarly, several countries across the world, such as Canada, Australia, and Saudi Arabia, are expected to gradually increase their exploration activities in the unconventional reserves, which involve shale, deep-water, and other reservoirs. Conventional oil and gas reservoirs are depleting at a steady rate, which is prompting stakeholders in the oil & gas industries from various countries are seeking opportunities to explore unconventional reservoirs, which is expected to create a growth opportunity for the players in the reservoir analysis market. The increasing exploration would require storage facilities for oil and gas. Additionally, it is anticipated that after the first quarter of 2021, the demand for oil and gas will increase, and storage space will be required to accommodate the increasing oil and gas production. Thus, the exploration of unconventional reservoirs is expected to create a growth opportunity for the players operating in the global oil and gas storage market during the study period.

The global oil & gas industry is facing a storage crunch, and tanks are filing fast at a rapid rate, despite the increasing lease cost for the storing space. Millions of barrels of oil and gas have been stored while the oil and gas manufacturers are facing the uncertain struggle to find buyers among industrial users. This has ultimately impacted the operations in Saudi Arabia, where surplus oil is abundant with no buyers available. Moreover, fuel storage rates also doubled in March and April in a few onshore hubs in countries in Europe and the US, as traders rushed to secure tanks in the hope of selling their products at a higher price once the outbreak eases and demand recovers. The limited storage space and increased rates are likely to affect the global market negatively. Thus, the high storage cost is expected to restrict the growth of the global oil and gas storage market during the forecast period.