Jump seen in N. American pressure pumping capacity
By OGJ editors
HOUSTON, Aug. 26 -- Pressure pumping capacity in North America, crucial to activity in burgeoning unconventional oil and gas plays, is set to increase by 40-45% through the end of next year, says Simmons & Co. International.
In a research note, the investment bank said it expects further drilling increases, pushed by additions to the land rig fleet, to help absorb the new capacity—but not enough to keep the utilization rate from slipping.
Simmons estimates North American pressure pumping capacity at 7.2 million hp, of which 6.2 million hp is in the US, excluding the Gulf of Mexico, and the rest in Canada.
The firm notes that disclosures vary among companies and that horsepower totals include some capacity not related to the hydraulic fracturing essential to completion of horizontal wells in shales and tight sands. And it believes some companies quote brake rather than hydraulic horsepower, which would further overstate total capacity.
“Our guess—and we emphasize the word ‘guess’—is that roughly 400,000 hp in our 6.2 million US industry horsepower tally is not truly frac horsepower that could be used for today’s horizontal fracs,” Simmons says.
It says pressure pumping service providers report they are “effectively sold out” and have waiting lists extending well into this year’s fourth quarter. In some regions, it adds, operators are trying to schedule frac dates in the first quarter of 2011.
At present, the Haynesville shale gas play of Louisiana is the largest pressure pumping market. But the Bakken oil shale play in the Williston basin and Eagle Ford gas and oil play in South Texas, where rig counts are rising, might eclipse the Haynesville later next year, Simmons says.
The firm estimates current utilization of pressure pumping capacity in the US at 92%. By the end of 2011, the utilization rate might slip to 81%, it says.
It bases its capacity utilization projection on assumptions of a net increase in horizontal drilling rigs of 110 with activity increasing in the Eagle Ford, Marcellus, Bakken, and Permian plays and declining in the Haynesville, Cotton Valley, Fayetteville, and Bakken; an increase in average frac stages per well in the Eagle Ford and Bakken; a 3% improvement in drilling efficiency across all basins; and an increase of 2.7 hydraulic hp in the US pressure pumping market.
“We also assume that by the end of 2011 effective market capacity will be more heavily impacted by the wear and tear on the industry fleet as we assume that on any given day nearly 9% of the fleet is down for maintenance and/or overhaul,” the firm says.
An adjustment to the expected slippage in the utilization might be a return to 12-hr work days from the 24-hr days to which service providers have moved in some areas.