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Halliburton CEO Sees Obstacles to Overseas Shale Development

Shale drilling beyond North America may be moving at a snail's pace but the opportunities for oilfield service operators overseas are "fantastic and phenomenal," according to Halliburton Co. CEO Dave Lesar.

The Halliburton chief spoke Tuesday at the Barclays Capital CEO Energy-Power Conference in New York City.

"There is a lot to be excited about in the shale plays, but there are obstacles that need to be overcome and that's good because I don't think the industry today could serve a number of increasing shale plays outside the U.S.," Lesar said.

Demand for pressure pumping services that help to release gas and oil from shale rock has outstripped Halliburton's ability to provide services, he noted. Pressure pumping today is Halliburton's No. 1 service offering, jumping from fourth place 10 years ago to now lead land drilling, offshore drilling and offshore construction services.

North America holds an estimated 15% of worldwide shale reserves but it has about 80% of global pressure pumping capacity, noted the CEO.

"Even then we cannot keep up with the demand," he said. "The challenge is going to be getting ramped up to address the shale opportunities outside the U.S."

In the overseas markets, Lesar said Australia, Poland and Argentina are three of a handful of countries that hold significant potential for shale development but only Australia currently has all of the necessary ingredients that would operations to ramp up quickly: geology, regulatory environment, pricing and infrastructure. Poland lacks infrastructure and in Argentina government-regulated gas prices are too low, he said.

"Shale gas could develop very quickly in Argentina, but only at the right price and we're not there yet," he said.

To improve its unconventional services offerings Halliburton plans to acquire Multi-Chem Production Services, the fourth largest production and completion chemicals provider. Acquiring the Texas-based company, which has provided chemicals and services to more than 30,000 producing wells across North America, would help to optimize Halliburton's fracture stimulation fluids business and allow the company to become less reliant on other companies' chemicals, Lesar said.

"It's been frustrating pumping competitors' chemicals through our equipment," he said. The transaction, which was announced Tuesday, is expected to be completed later this year; financial details were not disclosed.

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