Global hydraulic frac market seen up 19% this year: consultant
Houston (Platts)--19Jan2012/355 pm EST/2055 GMT
The global hydraulic fracturing market generated revenues of $31 billion
last year, up a whopping 63% from $19 billion in 2010, and is projected to
rise a further 19% to $37 billion in 2012, a top oilfield consultant said
And although the US and Canada comprise the largest chunk of the
hydraulic fracturing market by far -- just shy of 90% -- activity in other
markets is expected to rise over the next several years, Richard Spears, vice
president of oilfield consultants Spears & Associates, said during a Credit
Suisse conference call about the hydraulic fracturing market.
"If that international piece is $4 billion, $5 billion [in 2011], I
think five years from now it grows to $10 billion," Spears said.
Areas likely to show the biggest growth globally are Latin America,
particularly Argentina, where shale drilling has gotten off to a running
start, and parts of Africa.
"Argentina sounds, looks and smells very much like West Texas," said
Spears, adding Latin America currently accounts for $1.7 billion/year of
Meanwhile, the consultant projected that horizontal drilling -- most
commonly used in shale and unconventional plays -- in the US would rise
nearly 16% this year to around 18,600 wells, up from 16,100 last year and
12,225 wells in 2010. That should boost the need for more services such as
pressure pumping, wireline and fracking, he said.
Frac horsepower is also growing at an unprecedented pace. For example,
it totaled 14 million hp last year in North America, 42% higher than the
nearly 10 million hp in 2010 and is about double the 7.1 million used in 2008
-- which was a bustling year for industry activity. This compares with 2
million hp available in 2003, when shale and unconventional activity was just
getting started, said Spears.
"Of the 15 frac companies I've visited with in the last three months,
[just] one is cautious" about adding capacity this year, he said, while the
rest are adding capacity at about the same pace as they did last year.
"I get calls weekly about people looking to put frac spreads together.
It's certainly top of the mind for guys that have capital," said Spears.
Globally, the projected rig count should average 3,800 this year, up 10%
over the 3,446 average rigs employed in 2011. That should pay off in a more
than 11% jump in the global oil service and equipment market, with oilfield
revenues worldwide jumping to nearly $350 billion in 2012, up from about $314
billion last year and $265 billion in 2010, said Spears.
He targets the US rig count alone to average 2,113 rigs, up from 1,876
last year and 1,536 in 2010. Canada is pegged to average 472 rigs this year,
up from 428 in 2011 and 348 in 2010. Spears' forecast assumes a $95/b oil
price, a few dollars lower than current prices, and a $4/Mcf natural gas
price, sizably higher than current price that is hovering around $2.50/Mcf.
One thing that could maintain or even grow the momentum of fracking is
re-fracking of older wells, which is not currently widespread but which may
occur in future years, said Spears.
"I believe we'll get there, but [re-fracking] is not material yet," he
said. "It will take a slowdown in industry for completion engineers to have
enough breathing room to do a post-mortem" on wells.
Spears gave the example of a well with a 10-stage frac, where each stage
forces sand or other material at intervals to crack open the rock and expose
more hydrocarbons. In evaluating the potential for re-fracking, engineers
will examine, for instance, a well's 10 frac stages to see if it actually
produced from all 10 stages or just from, say, six or seven, said Spears.
"I'm hearing in places like the Barnett Shale, folks are going back and
looking at wells done five years ago. They're realizing that we didn't get
everything from everywhere," said Spears.
--Starr Spencer, firstname.lastname@example.org