The U.S. land market will complete a record number of hydraulic fracturing (fracking) stages in 2013, driven by horizontal drilling and efficiencies, according to PacWest Consulting Partners.
The Houston-based firm's PumpingIQ report, issued on Friday, said the domestic rig count may be lower, but frack stages have risen because of better technology, which gives better results from individual wells.
That's good news production-wise, but it won't translate into market pricing improvements for oilfield services before 2015.
"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."
Drilling and completion activity in the U.S. market remains robust, "but increased efficiencies are restraining recovery of frack demand,” according to PacWest.
Halliburton Co., the largest pressure pumper in North America, expects an oversupplied market until late 2014 or early 2015 (see Shale Daily, Oct. 21). In its first monthly Drilling Productivity Report in October, the Energy Information Administration pointed to increases in drilling efficiency and well productivity, rather than an increase in the active rig count, as the main drivers in expanding U.S. production (see Shale Daily,Oct. 22).
The U.S. horizontal rig count now is forecast to increase in 2014 by 1%, after falling by 5% in 2013, according to PacWest. Horizontal well fracking in the coming year is expected to be about 5% higher than in 2013. This year there was an 11% increase in fracking over 2012.
"Improvements in frack efficiency and productivity have structurally reduced demand for frack horsepower."
A potential bright spot for the oilfield services market in 2014 could be Canada, where a "moderate" pricing bump may come late next year. The anticipated demand growth would result from activity expanding in the Duvernay and Montney shales, which would support liquefied natural gas export development on British Columbia's west coast, PacWest said.
Global fracking capacity by the end of this year is forecast to be around 24.6 million hydraulic horsepower (hhp), with North America responsible for 75%.
"North America's share of global frack capacity is expected to decrease to 57% by year-end 2018 as international capacity grows," said PacWest. Globally, frack capacity is on track to expand by 12.0 million hhp, or 49%, between now and the end of 2018, with markets outside North America accounting for 80% of the growth.
China is seen leading the world in frack capacity additions this year after it overtook Canada as the second largest market for capacity additions in the world.