In the desert of New Mexico, just forty miles from producing wells in Artesia, lies an aircraft boneyard filled with the remains of once great aeroplanes. Like these planes, nearly 4,000 frac trucks are sitting idle throughout the United States as the demand for horsepower (HP) has fallen as quickly as WTI over the past year. Could there be potential for these trucks to be utilised again, or will frac trucks join aeroplanes in boneyards across Texas and North Dakota?
From 2011-2014 frac pump manufacturers were in a race to see how fast horsepower could be added to the United States’ frac fleet. Frac HP capacity rose from 12.6m HP (million horsepower) in 2011 to over 17m HP in 2014. With onshore wells drilled in the US expected to fall 42% in 2015 from 2014 highs, a glut of oilfield equipment is likely to continue in the US for some time.
With the major equipment glut in the US, are there opportunities outside of drilling-led completions or are North American pressure pumpers treading water until drilling activity picks back up? While some service companies are bullish on re-fracturing as a source of additional frac truck utilisation, the process comes with a high price tag and relatively unproven benefits. Some hope may lie in the over 4,500 drilled but uncompleted wells in the United States that are awaiting a commodity price recovery to be completed, but the EIA’s forecast 2016 average price of $53.57 does not provide rosy economics. One of the only benefits of this underutilisation for pressure pumpers is the ability to save money on replacement costs by switching an idle truck out for one requiring maintenance.
When the frac fleet was at its utilisation peak in 2014, over 20,000 horizontal wells were drilled in the US, and it is highly unlikely that we will see such a high number of wells drilled before the North American pressure pumping market is restructured. The question on pressure pumpers’ minds is simple: what will it take to get utilisation back up?
Jacob Halevy, Douglas-Westwood Houston
+1 713 714 4787 or Jacob.Halevy@douglaswestwood.com