Shortages of labour and equipment at US oilfields are likely to get worse next year, according to the country’s biggest services group, as American production shows signs of a sharp acceleration.
A lack of everything from crews and drivers to drilling rigs and the sand used in the fracking process has added to the challenge of increasing production but has also led to bumper profits for oil services groups.
Jeff Miller, chief executive of Halliburton, said on Tuesday that the North American services market remains “all but sold out” this year and that there was no indication of that changing next year.
“What we see in our business is activity [and] demand moving up. We see a tighter 23 than we see in 2022,” he said. “All of these signals in our business are extremely positive.”
His comments came as Halliburton reported revenues of $5.1bn for the second quarter of the year, up 18 per cent on the previous three months and 37 per cent on the same period last year.
Net income of $117mn was about half of last year’s levels as a result of impairment charges from the company’s exit from Russia. Excluding these costs, it roughly doubled to $442mn.
The oilfield services sector has reaped the rewards of a tight market for the materials, drilling equipment and labour it provides. Halliburton, alongside rivals Schlumberger and Baker Hughes, have all reported surging revenues and profits in recent months.
Oil output in the US, the biggest producer in the world, was almost 13mn barrels a day before the pandemic slashed output and demand.
Production has since recovered to about 11.6mn barrels a day in April and the US Energy Information Administration said this month it expected output to average 11.9mn barrels a day this year and 12.8mn barrels a day in 2023.
As prices surged after the Russian invasion of Ukraine, US president Joe Biden called on the country’s oil producers to increase supply to help push down costs for motorists.
But producers have argued that labour and equipment shortages — alongside investor scepticism about rapid growth — meant they could not push up output overnight.
Prices have fallen slightly in recent weeks driven by worries about a global recession. Brent crude, the international benchmark, fell below $95 a barrel last week for the first time since the Ukraine war began in February.
But Miller dismissed any fears of an impending slowdown. Conversations with operators were focused on demand for “more equipment or more services” in 2023, he said. “Not recession — I can promise you that is not the discussion.”