According to an analysis from PacWest Consulting Partners on May 29, the market for hydraulic fracturing services in North America will be strong through 2016 due to “robust drilling and completion [D&C] activity.”
Prices will increase “moderately” in 2014, according to a press release about the PumpingIQ and WellIQ reports. These will be the first price increases since late 2011, the press release said.
PacWest said that domestic demand for fracturing services should increase by 10% this year, adding that the demand should increase by 11% in Canada.
D&C has become more efficient, and this will “continue to erode” demand for fracturing services, “although at a slower rate than in 2012/2013,” the press release said."Multiwell pad drilling, smart scheduling, 24-hour operations and other practices have softened frack demand growth since 2012, and will continue to do so into 2014. In particular, the Permian Basin should see greater efficiency impacts, as more companies shift to horizontal well and multiwell pads," said Chris Robart, the lead author of the PumpingIQ report and a partner at PacWest.
Frack capacity utilization should increase to 81% this year, the press release said, noting that PacWest forecast these improvements “being dampened by aggressive frack capacity additions.” The smaller Tier 2 and Tier 3 pumpers will make up almost two-thirds of the 1.1 million net additions expected this year, the press release added.
PacWest said that “weather and supply chain challenges in first-quarter 2014 “drove up supply costs for many frack consumables,” and noted that “costs for key materials will continue to rise through 2015.”
The Canadian frack services market should “develop similarly” to the U.S. market, PacWest said, noting that the Duvernay and Montney plays would see high activity growth.
Outside North America, the worldwide increase in frack capacity—estimated at more than 65% between 2013 and 2018--will be led by China, the second-largest frack market, PacWest said. It passed up Canada for that spot in 2013, PacWest added.
PacWest Consulting Partners is based in Houston.
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