The Drilling tools industry is anticipated to experience a CAGR of 3.4% over the forecast period of 2025 to 2035. The industry's sales are projected to soar from USD 8.2 billion in 2025 to USD 11.5 billion in 2035.
In 2024, the industry for drilling tools witnessed moderate growth due to intensified oil and gas exploration activities in the Middle East, North America, and offshore areas. Increased energy demand in the wake of post-pandemic economic growth resulted in a higher rig count, leading to investments in improved rotary steerable systems (RSS) and PDC drill bits.
However, supply chain interruptions, especially in steel and tungsten carbide manufacturing, led to isolated price fluctuations for critical drilling components. Furthermore, tough environmental rules in the United States and Europe prompted a move toward environmentally friendly water-based drilling fluids and lower carbon footprint equipment.
The industry will remain on the growth trajectory during the projection period between 2025 and 2035. Offshore drilling, especially in deepwater ventures, will be one of the prime movers while expanding geothermal power projects will generate new avenues for demand. AI and IoT integration into drilling optimization is likely to drive productivity higher, and investments in green drilling technology will drive long-term industry dynamics.
| Metrics | Values |
|---|---|
| Industry Size (2025E) | USD 8.2 billion |
| Industry Value (2035F) | USD 11.5 billion |
| CAGR Value | 3.4% |
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The industry for drilling tools is in a steady growth pattern, driven by increasing oil & gas exploration, growing offshore drilling operations, and the rise of geothermal energy.
Businesses that invest in automation, artificial intelligence-based drilling optimization, and green technologies will benefit, while major industrial players who are hesitant to digitalize and adopt green solutions will lose their share. Even with regulatory hurdles and fluctuations in oil prices, the drive for efficiency and innovation within the industry will fuel steady demand until 2035.
Invest in Advanced Drilling Automation & AI Integration
Executives ought to invest in AI-facilitated drilling optimization, real-time data analysis, and automated drilling systems to maximize efficiency and minimize costs. Investment in intelligent drilling tools will enhance precision, reduce downtime, and maximize well productivity.
Capitalize on Sustainable & Geothermal Drilling Innovations
Align with the energy transition by creating low-carbon drilling tools, water-based mud-compatible systems, and geothermal-specific equipment. Moving into the geothermal energy industry will not only diversify against oil price volatility but also create new growth opportunities in renewable energy.
Enhance Supply Chain & Increase Strategic Alliances
Executives must diversify sourcing approaches for key materials such as steel, tungsten, and rare earths to promote supply chain strength. Broadening alliances with international contractors and regional drilling service companies will increase industry access, and M&A within drilling technology companies can drive innovation and competitiveness.
| Risk | Probability |
|---|---|
| Regulatory & ESG Compliance Challenges | High |
| Supply Chain Disruptions (Raw Materials) | Medium |
| Oil Price Volatility & industry Uncertainty | High |
| Risk | Impact |
|---|---|
| Regulatory & ESG Compliance Challenges | High |
| Supply Chain Disruptions (Raw Materials) | High |
| Oil Price Volatility & industry Uncertainty | Medium |
| Priority | Immediate Action |
|---|---|
| Supply Chain Resilience | Run feasibility on nickel-based insert sourcing to mitigate material shortages. |
| Product Innovation & Industry Alignment | Initiate OEM feedback loop on hybrid insert demand to refine R&D priorities. |
| Aftermarket Expansion & Partnerships | Launch aftermarket channel partner incentive pilot to drive sales growth. |
To remain competitive in the changing drilling tools industry, the customer needs to accelerate AI-based drilling automation, expand raw material sourcing, and leverage geothermal growth. The near-term actions should be to secure substitute suppliers for essential materials, optimize hybrid insert designs from OEM input, and initiate focused aftermarket incentives.
This insight redefines their strategy by allocating foremost emphasis on resilience, innovation, and sustainability so that they maintain a competitive advantage in an increasingly digital and ESG-driven industry. Businesses that act on these imperatives will outperform legacy players, reduce risk, and open new revenue streams in traditional and renewable energy industries.
(Surveyed Q4 2024, n=500 stakeholder participants across drilling tool manufacturers, oil & gas operators, service providers, and distributors in North America, Middle East, Western Europe, and Asia-Pacific.)
Key Priorities of Stakeholders
Regional Variance:
Take-up of Advanced Drilling Technologies
Excessive Difference in Take-up Levels:
Return on Investment (ROI) Viewpoint:
Material Preferences & Performance Considerations
Consensus:
Tungsten carbide & PDC (polycrystalline diamond compact) drill bits were chosen by 68% of participants for their resistance in abrasive formations.
Regional Material Variance:
Price Sensitivity & Investment Trends
Shared Challenges
85% of stakeholders mentioned increasing raw material prices (tungsten up 28%, steel up 20%) as a key concern.
Regional Pricing Trends:
Pain Points in the Value Chain
Manufacturers:
Distributors:
End-Users (Operators & Service Providers):
Future Investment Priorities
Global Trends
76% of R&D on automation & AI-based drilling solutions by 2026 is planned by drilling tool makers.
Regional Investment Priorities:
Regulatory Influence & Market Influence
Conclusion: Key Takeaways & Strategic Insights
Regional Differences:
Strategic Outlook:
A one-size-fits-all approach will fail-successful players must tailor product strategies to regional needs, balancing performance, sustainability, and affordability to gain industry traction.
| Country/Region | Regulatory Impact & Mandatory Certifications |
|---|---|
| United States |
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| Canada |
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| European Union |
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| United Kingdom |
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| Middle East (UAE, Saudi Arabia, Qatar) |
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| China |
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| India |
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| Australia |
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| Russia |
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| Brazil |
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| Japan & South Korea |
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The USA drilling tools industry is expected to register steady growth between 2025 and 2035, driven by continued investment in shale exploration and offshore drilling. Horizontal drilling and rotary steerable systems remain dominant, with mounting automation and AI-optimized optimization.
Environmental regulations, including EPA limits on methane emissions, are driving operators to use low-carbon drilling technologies. Offshore Gulf of Mexico drilling is steady, but federal leasing bans could temper new projects on public lands.
Leading oilfield services companies such as Schlumberger and Halliburton are investing in digital drilling technology, boosting efficiency and cutting costs.
FMI opines that the United States Drilling Tool sales will grow at nearly 3.8% CAGR through 2025 to 2035.
The UK drilling tools industry is set to expand consistently by 2035. This growth of the industry is driven by regulatory risk and the UK Net Zero 2050 targets. The North Sea continues to be an important drilling location, although fresh oil & gas licensing has dropped under governmental oversight.
UK operators are concentrating on offshore efficiency, and the resultant demand for automated drilling systems, remote-operated tools, and carbon-neutral solutions. The UK Oil & Gas Authority (OGA) is encouraging the electrification of offshore drilling rigs to mitigate emissions.
Though decommissioning projects are on the rise, there is also a carbon capture and storage (CCS) investment being made by the UK, opening doors for drilling technology companies.
FMI opines that the United Kingdom Drilling Tool sales will grow at nearly 2.9% CAGR through 2025 to 2035.
France's drilling tools industry growth is fuelled by stringent environmental regulations and shrinking domestic oil & gas production. The emphasis on renewable energy and the withdrawal of fossil fuel subsidies by the government of France is deterring investment in conventional drilling technology.
Domestic exploration is restricted, but French oilfield service firms actively participate in international operations, especially in Africa and the Middle East. France's prominent energy firm, Total Energies, is expanding into geothermal drilling and hydrogen power.
FMI opines that the France Drilling Tool sales will grow at nearly 2.3% CAGR through 2025 to 2035.
Germany's drilling equipment industry is forecasted to grow at a CAGR of 2.5% led by geothermal energy exploration more than conventional oil & gas drilling. With Germany's Energiewende (energy transition) policy, hydrocarbon exploration is decreasing while investment in deep drilling for geothermal and hydrogen storage is increasing.
The EU Green Deal and Germany's 2045 carbon-neutrality target are compelling firms to innovate in low-emission drilling technologies. The nation has witnessed growing demand for drilling automation, sensor-based monitoring, and high-precision drilling manufacturing equipment for geothermal wells.
FMI opines that Germany’s Drilling Tool sales will grow at nearly 2.5% CAGR through 2025 to 2035.
Italy's drilling equipment industry will develop rapidly, led by offshore drilling in the Adriatic Sea and increased geothermal energy initiatives. New onshore oil & gas developments have been halted by the Italian government, moving focus to ecologically friendly drilling.
Eni, the largest energy firm in Italy, is also heavily investing in carbon capture and storage (CCS) and geothermal drilling, driving the demand for corrosion-resistant and high-temperature drilling tools. Italy is also the leading European industry for geothermal power, calling for specialized drilling equipment.
FMI opines that Italy’s Drilling Tool sales will grow at nearly 2.7% CAGR through 2025 to 2035.
The South Korean drill tools industry is expected to expand at a 3.1% CAGR, driven by the rising demand for offshore drilling technology and geothermal exploration. South Korea has sparse indigenous oil & gas reserves but is heavily investing in deep-sea drilling and subsea technologies.
State-owned companies such as Korea National Oil Corporation (KNOC) are teaming up with global companies to produce sophisticated deepwater drilling equipment. South Korea is further boosting geothermal drilling in line with its target of carbon neutrality by 2050.
FMI opines that South Korea’s Drilling Tool sales will grow at nearly 3.1% CAGR through 2025- to .
Japan’s drilling tools industry is forecasted to grow contineously, with geothermal drilling emerging as a key driver. Given Japan’s low domestic oil & gas reserves, the government is emphasizing renewable energy projects, particularly enhanced geothermal systems (EGS).
Japan is also investing in deep-sea methane hydrate extraction, requiring specialized high-pressure drilling tools. Companies involved in R&D for deepwater drilling will have a competitive edge.
The industry is driven by strict environmental and safety regulations, requiring compliance as an essential aspect. Firms are required to adhere to high-precision, mechanized drilling tools in order to meet Japan's stringent industrial requirements.
FMI opines that Japan Drilling Tool sales will grow at nearly 2.8% CAGR through 2025 to 2035.
China's drilling equipment industry is fueled by aggressive offshore drilling expansion and shale gas exploration. The state is driving for energy independence, and investments are on the rise in domestic oil & gas production.
State-run companies such as CNPC and Sinopec are accelerating hydraulic fracturing and unconventional gas drilling, fueling the demand for high-performance drill bits and downhole equipment.
China's domestic content policies are pro-local drilling tool producers, pitting foreign firms against them. AI-optimized drilling and intelligent automation, however, offer high-value opportunities for global players that can provide cutting-edge technology.
FMI opines that the China Drilling Tool sales will grow at nearly 4.2% CAGR through 2025 to 2035.
The Australian & New Zealand drilling tools industry is likely to expand rapidly, driven by LNG growth, offshore drilling, and geothermal energy. Australia is a significant LNG exporter, with continuous drilling on the Northwest Shelf and Beetaloo Basin.
The National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) has stringent regulations, requiring sophisticated well control and eco-friendly drilling tools.
New Zealand is emphasizing geothermal drilling, which demands high-temperature drill bits and corrosion-resistant downhole equipment. Operators targeting this region need to make investments in low-emission, high-efficiency drilling technology to fit into net-zero ambitions.
FMI opines that the Australia-NZ Drilling Tool sales will grow at nearly 3.6% CAGR through 2025 to 2035.
From 2025 to 2035, the tubular segment will be vital in drilling. As key drivers of the drilling process, tubular including drill pipes and casings are expected to experience growing demand from rising exploration and production activity across both onshore and offshore fields. This will lead to a transformation toward using stronger and more corrosion-resistant materials, creating tubulars that can withstand extreme drilling environments for longer periods of time.
As drilling activities become increasingly complex and demand higher efficiency, the motors segment will also see steady growth. Operators will keep bolstering penetration rates and reducing non-productive time through investments in higher-performance downhole motors. Automation and real-time monitoring will increasingly be integrated into all drilling activities, improving the performance of motors and enabling operators to optimize speed and torque when drilling through challenging formations.
Geographically, the bits segment is expected to dominate the drilling tools industry during the forecast period. With the increase in drilling activities, the need for highly durable and efficient drill bits will increase.
High demand for the reamers and stabilizers segment will be observed when it comes to addressing wellbore stability, which is among the most important aspects of complex drilling processes. Innovation in reamer and stabilizer designs will come through the need for vibration reduction, improvement in hole quality, and fewer tool failures. More adjustable and expandable reamers will become popular to give operators more versatility when operating in unpredictable geology.
Collars will always remain an important part of bottom hole assembly, as they provide weight and stability to the drill string. More significant drill collars will be required as drilling depths increase, especially to ensure proper weight-on-bit and enhance overall drilling efficiency.
The steady demand for the Others segment (jars, subs and stock tools) will be attributed to the growing complexity of drilling operations. They are essential for keeping drilling on track and saving the hole from the stuck pipe, not to mention reducing the impact of shock loads.
Continuing to occupy the largest share of the drilling tools industry will be the onshore segment with the ongoing increase in oil and gas production in onshore reservoirs. A key focus of these operators will remain on streamlining and optimizing operations to help offset declines from mature onshore fields with tighter integration of advanced drilling tools to achieve higher rates of penetration and longevity of a well.
Demand for high-performance bit designs, motors, and reamers well-suited to meet high-load torque requirements for horizontal and directional wells will also be driven by unconventional resource extraction, most notably shale gas and tight oil drilling.
The difficulty and high costs of offshore drilling will propel the demand for advanced drilling tools capable of withstanding extreme pressures and temperatures. Performance-oriented motors, smart drill bits, and new-generation reamers will play an important role in sustaining that efficiency, thereby reducing construction time.
The drilling tools industry is highly fragmented with many players and a competitive industry. The major players in the drilling tools industry are placing their bets on innovation, strategic collaborations, and expansion across geographies to protect and strengthen their industry positions.
Investment in next-generation technologies like automation and environmentally friendly products forms the core of their strategies. Furthermore, companies are creating partnerships and taking over other businesses to expand their product lines and move into new industries.
Mergers and Acquisitions:
Joint Ventures:
Automation, digitalization, and sustainability are driving innovation and adoption.
Baker Hughes, Schlumberger, Halliburton, and NOV are among the top players.
Oil & gas exploration, technological advancements, and regulatory policies impact demand.
Companies are focusing on mergers, acquisitions, and partnerships to expand capabilities.
AI, IoT, and automation enhance efficiency, safety, and precision in drilling operations.
Tabular, Motors, Bits, Reamers and Stabilizers, Collars and others
On-shore and Off-shore
North America, Latin America, Europe, Asia-Pacific, Middle East and Africa
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