US Hydraulic Fracturing Market Oversupplied by 3.6 Million Horsepower by Year-End 2012 While Global Capacity Reaches 20.1 Million
HOUSTON, Sept. 10, 2012 /PRNewswire/ — PacWest Consulting Partners has just published the latest release of its PumpingIQ report, which monitors the global hydraulic fracturing market. PacWest analysis concludes that the gap between aggregate US hydraulic fracturing supply will continue to widen through 2012. PacWest estimates that US hydraulic fracturing capacity utilization in the second quarter of 2012 averaged 85%, a significant drop from a revised first quarter of 2012 estimate of 95%.
“A falling US land rig count is driving a reduction in demand in hydraulic fracturing services, while frac capacity continues to increase, driving a net reduction in frac capacity utilization of 26% over the course of 2012,” says Christopher Robart, a Principal with PacWest. “All key US plays are now in a negative frac pricing environment. We forecast that in aggregate, frac pricing in the US will decrease by 14% in 2012. Even the Permian Basin, which until recently had experienced moderate price increases, has finally seen moderate reductions in frac pricing.”
The market environment for new oil/gas development activity has changed considerably over the past quarter, prompting a significant downward revision in US land rig count forecasts for 2012 and 2013. Due to consistent rig count reductions expected through 2012, PacWest forecasts that hydraulic fracturing capacity utilization will continue to fall throughout the year, ending the year at 78%. PacWest also forecasts a net reduction in rig count through 2013, resulting in a fall in capacity utilization to 75% by end of year.
Small- and medium-sized frac companies continue to take delivery of new equipment, bringing total US frac capacity at the end of 2012 Q2 to 14.7 million HHP (503 fracturing fleets). At the end of 2012, PacWest forecasts that there will be 530 fracturing fleets operating 15.6 million HHP of capacity in the US, an increase of 19% from the end of 2011.
PacWest has initiated coverage of the hydraulic fracturing services market outside North America in the latest release of PumpingIQ. PacWest estimates that global hydraulic fracturing capacity will total 20.1 million HHP at the end of 2012. PacWest forecasts that global hydraulic fracturing capacity will grow to 28.3 million by the end of 2016, an increase of 41% between 2012 and 2016. Markets outside North America are expected to experience significant growth, increasing from 12% of global capacity to 21% of global capacity.
PacWest will host a conference call on September 13th at 10:30 AM CDT to brief its customers and all other interested parties on its view of the market. Call details are provided below.
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PacWest Consulting Partners is a boutique strategy consultancy and market intelligence firm that specializes in the energy, industrial, and resources sectors. Much of its work is focused around the oilfield and the many industries that supply critical products and services to it. With the explosion of unconventional resources in North America, the energy landscape is changing quickly and PacWest is at the forefront of that change, helping companies better understand the market and develop and implement new strategies to position themselves for growth.
PumpingIQ is the only market research product that provides a bottom-up view of the US hydraulic fracturing market with granular counts of frac fleets and capacity, demand estimates, capacity utilization forecasts, and pricing forecasts. It also highlights major market trends for each play in real-time, gathered from on-the-ground field staff in each play.
In addition to PumpingIQ, PacWest also recently launched FracDB, a unique proprietary database of frac activity that includes over 26,000 wells frac’ed in the US in 2011 and 2012. It contains detailed operational and chemical data for each frac and continues to grow, with over 500 new wells added weekly. The product allows for granular pressure pumper competitive analysis, oilfield chemical consumption and market share, supply chain analysis, as well as completion forecasts, production forecasts, and frac design optimization.
Principal, PacWest Consulting Partners
SOURCE PacWest Consulting Partners