Based on its latest PumpingIQ hydraulic fracturing report, PacWest Consulting Partners forecasts that the US Land market will complete a record number of hydraulic fracturing stages in 2013. Despite lower US rig counts, increasing frac efficiencies and a higher number of horizontal wells are driving the growth in total frac stages. PacWest said that it does not expect improvements in market pricing for frac services until 2015.
Oil and gas drilling and completion activity in the US is robust, but increased efficiencies are restraining recovery of frac demand. PacWest forecasts that US horizontal rig count will increase by 1% in 2014 after falling by 5% in 2013. Additionally, PacWest forecasts the number of horizontal wells fracked to increase by 5% in 2014, following an 11% increase in 2013. Improvements in frac efficiency and productivity have structurally reduced demand for frac horsepower.
“The North American market for hydraulic fracturing services is expected to remain stubbornly over-supplied, with no meaningful increases in pricing likely until 2015,” said Christopher Robart, partner of PacWest's Market Intelligence business. “Frac pricing is still highly competitive, with pumpers of all sizes bidding aggressively. However, we do expect stable pricing in 2014.”
The report stated that the one potential bright spot in North America is Canada, where moderate pricing increases are expected in late 2014. Much of the anticipated demand ramp-up will occur as a result of activity growth in the Duvernay and the Montney plays to support West Coast liquefied natural gas development.
Global hydraulic fracturing capacity will total 24.6 million HHP at year-end 2013, with North America accounting for 75%. North America's share of global frac capacity is expected to decrease to 57% by year-end 2018, as international capacity grows. Globally, frac capacity is expected to grow by 12.0 MM HHP (49%) between 2013 and 2018 (year-end capacity), with markets outside North America accounting for 80% of that growth. China will lead the world in frac capacity additions in 2013, and, this year, it has already overtaken Canada as the second largest frac market in the world.