Small Pressure Pumpers Continue to Add to US Frac Capacity Glut, Global Frac Story Still Unfolding
HOUSTON, May 15, 2013 /PRNewswire/ — Overall North American hydraulic frac services pricing is stabilizing as small/start-up pumpers continue to add capacity into an oversupplied market, according to the 13Q1 release of PacWest Consulting Partners’ PumpingIQ report. PumpingIQ monitors and forecasts the global hydraulic fracturing market and unconventional oil and gas activity on a regional basis. PacWest estimates that US hydraulic fracturing capacity utilization in the first quarter of 2013 averaged 76%, up from 72% in the fourth quarter of 2012. PacWest is also forecasting that small pressure pumping companies will add an additional 600,000 HHP (hydraulic horsepower) of net frac capacity in US market in 2013, bringing total US capacity to 16.3 million HHP.
PacWest’s WellIQ report, which monitors and forecasts rigs and well completions by region, expects well completions to rise throughout 2013, but not enough to structurally change the supply/demand balance in the frac market. PacWest forecasts that capacity utilization will increase to 79% by the fourth quarter of 2013, still only enough to decrease excess capacity to 3.4 million horsepower, 21% of available capacity in the market.
“While overall rig counts fell, US Land well completions count grew 6% in the first quarter of 2013 from the previous quarter, increasing frac capacity utilization to 76%,” says Christopher Robart, a Principal with PacWest and the lead author of PumpingIQ and WellIQ. “While some regions were stronger than others, we estimate that aggregate frac pricing in the US fell by 2% in the first quarter of 2013. We expect aggregate pricing to fall by 6% over 2013 across all US plays.”
Conditions in the US frac market are expected to improve through 2014 but only enough to increase average 2014 capacity utilization to 81%.
PacWest forecasts that global hydraulic fracturing capacity will total 24.3 million HHP by year-end 2013, a total of 2.2 million HHP net frac capacity increase over year-end 2012. This capacity growth is split evenly between North America, China, and Rest-of-World. While markets outside North America are expected to experience significant growth, economically viable production from shale is yet to be commercially proven. However, pressure pumping companies are positioning to capture the potential growth outside North America, leading to forecast international capacity additions of 25% per year.
As a part of the 13Q1 release of PumpingIQ, PacWest published the first detailed study of the hydraulic fracturing market in Argentina. “We forecast that frac capacity in Argentina will grow moderately from 260,000 HHP at year-end 2013 to 775,000 million horsepower by year-end 2017,” according to Alexander Robart, a Principal at PacWest. “While the geology is extremely compelling, the politics make the capital investments required to prove and economically scale shale production a risky endeavor for foreign players.”
PacWest will host a conference call on Wednesday, May 22(nd) at 10:00 AM Central Time to brief its customers and all other interested parties on its view of the market. Call details are provided below.
Dial-in: 1+ (800) 830-3581
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. 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 North American and global 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.
WellIQ, PacWest’s newest quarterly updated market research subscription product, provides a 3-year forecast of total well completions by each major US and Canadian play. It also includes a forecast of drilling rig counts, drilling efficiencies, frac stages completed, and multi-well pad penetration.
SOURCE PacWest Consulting Partners