Click here to close now.

Welcome!

News Feed Item

Frac is Back: Robust D&C Activity is Heating up the Frac Market in North America

HOUSTON, Aug. 21, 2014 /PRNewswire/ -- PacWest Consulting Partners forecasts strong market growth in the North American market for hydraulic fracturing services through 2016 due to robust drilling and completion (D&C) activity, with frac pricing increases expected through 2015.  Tightening market conditions are resulting in supply chain constraints in key growth plays.  Constraints in the availability of frac sand and the logistics capacity to transport the frac sand are leading to cost escalation and work delays.  PacWest provides an in-depth analysis and set of forecasts for the North American and International frac markets in the 14Q2 release of its PumpingIQ report, just published on August 15, 2014. 

D&C activity is robust in both the US Land and Canadian markets, with HZ wells frac'ed increasing 9% in 2014 and HZ frac stages increasing by 19%.  In the US Land market, significant growth in key plays – the Permian, DJ Basin, Utica – and continued growth in the Eagle Ford, Marcellus, and Bakken is driving growth across all D&C activity metrics, including rig count, well spuds, wells frac'ed, and frac stages.  In the Canadian market, strong growth in the Montney and Duvernay plays, in addition to growth in the Cardium and Deep Basin, is driving increases in D&C activity. 

According to PacWest Managing Partner, Nilesh Dayal, "Rapidly tightening market conditions have resulted in price increases for many E&Ps.  After more than 3 years of pricing pressure in the frac market, the dam has finally broken for pricing, and service providers are finally having success in negotiating higher pricing." 

While market conditions are driving price increases, costs recovery on key consumables, including sand and chemicals are driving a large part of the increases. North American frac sand demand is expected to increase by nearly 30% in 2014, compared to 2013.  This has resulted in logistics constraints in both rail and trucking capacity and price increases across the sand value chain.

However, not all pumpers are consistently benefiting from price increases. Chris Robart, PacWest Partner notes that, "There has been wide variance in price increases across pumpers/customers, with some reporting price increases as high as 20% in key growth plays where market conditions are most tight. However, price negotiations will continue to be on-going and in many cases higher prices will not be implemented until late 2014."

Given the evolving demand landscape and operational requirements, including aging fleets, continuous pumping operations, and increased refurbishment activity, PacWest has begun analyzing the frac market in terms of "Marketed Capacity" and "Effective Utilization."  PacWest analysis reveals that utilization is quickly improving, and estimates that raw utilization is 84% in 14Q3, while effective utilization is 90%, with higher rates in key growth plays.

In response to increased demand, pumpers have upgraded 2014 newbuild programs and have begun committing to sizable 2015 newbuild programs, with 1.4 million HHP in net capacity additions estimated for 2014 and 1.6 million HHP in 2015.  "While capacity additions may allow some pumpers to secure more work, it will be supply chain execution and delivery that will make or break their bottom lines," adds Mr. Dayal.

PacWest will hold a conference call on Thursday August 28, 2014 at 9:30am CST to discuss these and other views on the market. Call details are provided below. The call is open to the public.

Conference Call:
Dial-in: +1 (800) 830 3581  
International Dial-in: (262) 320 4698
Passcode: 2922791 

Presentation Link:
https://join.me/PacWest_Market_Update

For more information, contact Jennifer Thomas, 713.929.3285, [email protected].

SOURCE PacWest Consulting Partners

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
While DevOps most critically and famously fosters collaboration, communication, and integration through cultural change, culture is more of an output than an input. In order to actively drive cultural evolution, organizations must make substantial organizational and process changes, and adopt new technologies, to encourage a DevOps culture. Moderated by Andi Mann, panelists discussed how to balance these three pillars of DevOps, where to focus attention (and resources), where organizations migh...
Containers have changed the mind of IT in DevOps. They enable developers to work with dev, test, stage and production environments identically. Containers provide the right abstraction for microservices and many cloud platforms have integrated them into deployment pipelines. DevOps and Containers together help companies to achieve their business goals faster and more effectively. In his session at DevOps Summit, Ruslan Synytsky, CEO and Co-founder of Jelastic, reviewed the current landscape of...
SYS-CON Events announced today that Alert Logic, the leading provider of Security-as-a-Service solutions for the cloud, has been named “Bronze Sponsor” of SYS-CON's 17th International Cloud Expo® and DevOps Summit 2015 Silicon Valley, which will take place November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Alert Logic provides Security-as-a-Service for on-premises, cloud, and hybrid IT infrastructures, delivering deep security insight and continuous protection for cust...
The 4th International Internet of @ThingsExpo, co-located with the 17th International Cloud Expo - to be held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA - announces that its Call for Papers is open. The Internet of Things (IoT) is the biggest idea since the creation of the Worldwide Web more than
Agile, which started in the development organization, has gradually expanded into other areas downstream - namely IT and Operations. Teams – then teams of teams – have streamlined processes, improved feedback loops and driven a much faster pace into IT departments which have had profound effects on the entire organization. In his session at DevOps Summit, Anders Wallgren, Chief Technology Officer of Electric Cloud, will discuss how DevOps and Continuous Delivery have emerged to help connect dev...
The 17th International Cloud Expo has announced that its Call for Papers is open. 17th International Cloud Expo, to be held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, APM, APIs, Microservices, Security, Big Data, Internet of Things, DevOps and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding bu...
SYS-CON Events announced today that Harbinger Systems will exhibit at SYS-CON's 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Harbinger Systems is a global company providing software technology services. Since 1990, Harbinger has developed a strong customer base worldwide. Its customers include software product companies ranging from hi-tech start-ups in Silicon Valley to leading product companies in the US a...
Explosive growth in connected devices. Enormous amounts of data for collection and analysis. Critical use of data for split-second decision making and actionable information. All three are factors in making the Internet of Things a reality. Yet, any one factor would have an IT organization pondering its infrastructure strategy. How should your organization enhance its IT framework to enable an Internet of Things implementation? In his session at @ThingsExpo, James Kirkland, Red Hat's Chief Arch...
The 5th International DevOps Summit, co-located with 17th International Cloud Expo – being held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA – announces that its Call for Papers is open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the ...
SYS-CON Events announced today that Secure Infrastructure & Services will exhibit at SYS-CON's 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Secure Infrastructure & Services (SIAS) is a managed services provider of cloud computing solutions for the IBM Power Systems market. The company helps mid-market firms built on IBM hardware platforms to deploy new levels of reliable and cost-effective computing and hig...
DevOps Summit, taking place Nov 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 17th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long development...
To many people, IoT is a buzzword whose value is not understood. Many people think IoT is all about wearables and home automation. In his session at @ThingsExpo, Mike Kavis, Vice President & Principal Cloud Architect at Cloud Technology Partners, discussed some incredible game-changing use cases and how they are transforming industries like agriculture, manufacturing, health care, and smart cities. He will discuss cool technologies like smart dust, robotics, smart labels, and much more. Prepare...
SYS-CON Events announced today that ProfitBricks, the provider of painless cloud infrastructure, will exhibit at SYS-CON's 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. ProfitBricks is the IaaS provider that offers a painless cloud experience for all IT users, with no learning curve. ProfitBricks boasts flexible cloud servers and networking, an integrated Data Center Designer tool for visual control over the...
The cloud has transformed how we think about software quality. Instead of preventing failures, we must focus on automatic recovery from failure. In other words, resilience trumps traditional quality measures. Continuous delivery models further squeeze traditional notions of quality. Remember the venerable project management Iron Triangle? Among time, scope, and cost, you can only fix two or quality will suffer. Only in today's DevOps world, continuous testing, integration, and deployment upend...
SYS-CON Events announced today that MangoApps will exhibit at SYS-CON's 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. MangoApps provides private all-in-one social intranets allowing workers to securely collaborate from anywhere in the world and from any device. Social, mobile, and easy to use. MangoApps has been named a "Market Leader" by Ovum Research and a "Cool Vendor" by Gartner. 20,000+ business custome...