High demand for sand has enabled states, like Wisconsin, offer natural resources to aid the oil producing states in fracking processes. PacWest was quoted in the Wall Street Journal December 2nd, 2013, noting, “Energy companies are expected to use 56.3 billion pounds of sand this year, blasting it down oil and natural gas wells to help crack rocks and allow fuel to flow out. Sand use has increased 25% since 2011, according to the consulting firm PacWest, which expects a further 20% rise over the next two years.” To read the full article, please visit: http://online.wsj.com/news/article_email/SB10001424052702304868404579194250973656942-lMyQjAxMTAzMDAwMzEwNDMyWj
Based on our latest PumpingIQ hydraulic fracturing report, we forecast that the US Land market will complete a record number of hydraulic fracturing stages in 2013. Despite lower US rig counts, increasing frac efficiencies and a higher number of horizontal wells are driving the growth in total frac stages. Improvements in market pricing for frac services aren’t expected until 2015.
Oil and gas drilling and completion activity in the US is robust, but increased efficiencies are restraining recovery of frac demand. We forecast that US horizontal rig count will increase by 1% in 2014 after falling by 5% in 2013. Additionally, we forecast horizontal well frac’ed to increase by 5% in 2014, following an 11% increase in 2013. Improvements in frac efficiency and productivity have structurally reduced demand for frac horsepower.
The North American market for hydraulic fracturing services is expected to remain stubbornly over-supplied, with no meaningful increases in pricing likely until 2015. Frac pricing is still highly competitive, with pumpers of all sizes bidding aggressively. However, we do expect stable pricing in 2014.
The one potential bright spot in North America is Canada, where moderate pricing increases are expected in late 2014. Much of the anticipated demand ramp-up will occur as a result of activity growth in the Duvernay and the Montney plays to support West Coast LNG development.
Global hydraulic fracturing capacity will total 24.6 million HHP at year-end 2013, with North America accounting for 75%. North America’s share of global frac capacity is expected to decrease to 57% by year-end 2018, as international capacity grows. Globally, frac capacity is expected to grow by 12.0 MM HHP (49%) between 2013 and 2018 (year-end capacity), with markets outside North America accounting for 80% of that growth. China will lead the world in frac capacity additions in 2013, and sometime in 2013 it has overtaken Canada as the second largest frac market in the world.
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“The North American market for hydraulic fracturing services is expected to remain stubbornly oversupplied, with no meaningful increases in pricing likely until 2015,” said PacWest partner Christopher Robart. “Frack pricing is still highly competitive, with pumpers of all sizes bidding aggressively. However, we do expect stable pricing in 2014.” To read the full Shale Daily article, please visit: http://www.naturalgasintel.com/articles/96528-record-us-fracking-stages-this-year-says-pacwest
Alexander Robart was quoted in the Energy Intelligence article, Latin American Shale Gas Still a Long Shot on October 30, 2013, in which he suggests “In total, Latin America has just shy of 600,000 HH capacity—versus 16.3 million HH in the US.” Robart estimates that Argentina’s entire fleet of fracking trucks has about 298,000 HH, however, the lack of infrastructure poses challenges to large-scale development. A single frack job in Eagle Ford requires 15-20 rail cars of sand and 3-5 rails cars of chemicals. Argentina’s rail system, in its present state, isn’t ready for this type of activity.
More on the story at http://www.energyintel.com/ Latin American Shale Gas Still a Long Shot
Industry expert panelists discussed funding the commercialization of unconventional resources at the Bloomberg Oil & Gas conference this month. As a way of coping with higher capital investment requirements, Chris Robart, Partner with PacWest Consulting Partners, notes that “Companies are grappling with operational challenges and seeking to reduce costs and boost operating efficiency. Oil and gas companies can’t take all the credit for reduced costs, however, as the decline in prices for oilfield services across the supply chain has aided oil and gas companies in managing costs.”
Cost remains a huge issue as companies enter the commercialization phase. Foreign companies seeking joint ventures have assisted in the investment for acquiring land with the hopes of continuing into commercialization of shale reserves. This trend is likely to continue. “A number of Asian clients also are interested in entering the U.S. oilfield service business to position themselves for growth in the United States and outside North America,” said Robart.
The number of horizontal wells in the United States is expected to grow by 4 to 5 percent in 2013, and in 2014 and 2015. Robart shared that “service prices will remain flat as more service capacity comes into the market and operations become more efficient .” Increasing efficiencies will continue to improve costs in the long term.
See more at: http://www.rigzone.com/news/oil_gas/a/129682/Massive_Spending_Ahead_As_Industry_Develops_US_Shale/?all=HG2#sthash.MkVyArgs.dpuf