US Hydraulic Fracturing Market Oversupplied by 4.2 Million Horsepower by Year-End 2012 While Global Capacity Reaches 21.9 Million
HOUSTON, Dec. 4, 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 and demand will hit a trough in the first quarter of 2013. PacWest estimates that US hydraulic fracturing capacity utilization in the third quarter of 2012 averaged 79%, while it is expected to reach a low of 73% in the first quarter of 2013.
"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 31% 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 15% in 2012. "
The market environment for new oil/gas development activity has changed considerably over the past six months, 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 74%.
Small- and medium-sized frac companies continue to take limited delivery of new equipment, bringing total US frac capacity at the end of 2012 Q2 to 14.9 million HHP (499 fracturing fleets). At the end of 2012, PacWest forecasts that there will be 15.3 million HHP of capacity in the US, an increase of 18% from the end of 2011.
PacWest initiated coverage of the hydraulic fracturing services market outside North America in previous releases of PumpingIQ and has significantly expanded coverage in its recent release. PacWest estimates that global hydraulic fracturing capacity will total 21.9 million HHP by year-end 2012. PacWest forecasts that global hydraulic fracturing capacity will grow to 36.9 million HHP by the end of 2017, a 5-year increase of 68% between 2012 and 2017. Markets outside North America are expected to experience significant growth, increasing from 20% of global capacity to 41% of global capacity.
This quarter's release includes in-depth analysis of the hydraulic fracturing markets in both China and Russia. The PacWest team recently toured China for 2 weeks visiting with over 20 frac equipment manufacturers and service companies. Frac capacity in China has doubled over 2012, to nearly 1.4 million HHP, on tight oil/gas demand. The vast majority (83%) of this capacity is operated by service subsidiaries of NOCs. Nearly all of the capacity was assembled by the leading two Chinese OEMs, though many new players have recently entered launched OEM operations. A stand-alone China hydraulic fracturing market report is available for purchase.
PacWest will host a conference call on Wednesday, December 12th at 10:00 AM CDT to brief its customers and all other interested parties on its view of the market. Call details are provided below.
Conference Call
Dial-in: +1 800 830 3581
Passcode: 2922791
WebEx Presentation
About PacWest
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 30,000 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 vs. production analysis and frac design optimization.
CONTACT: Larianna Dunn, 1-713-929-3262, [email protected]
SOURCE PacWest Consulting Partners
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