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 Thursday.

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 fracturing revenues.

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, starr_spencer@platts.com