The natural gas-rich Marcellus Shale of Pennsylvania has dethroned the oil-rich Permian Basin of West Texas at the top destination in the United States for hydraulic fracturing crews as record-low crude prices continue to take their toll on the industry.
Out of the 450 available hydraulic fracturing fleets in the United States and Canada, there are only 70 deployed in the field, according to new figures from the Houston investment advisory firm Tudor, Pickering, Holt & Co.
With crude oil prices stubbornly stuck at record-low $30 per barrel prices, oil companies have tightened their budgets and are taking “frac holidays” where they are not bringing newly drilled wells into production — lowering demand for hydraulic fracturing services.
More immune to oil prices, the natural gas-rich Marcellus Shale now has 31 percent of the active hydraulic fracturing crews in the field, followed by the Permian Basin with 30 percent and the Eagle Ford Shale of South Texas and the Haynesville Shale of East Texas and Louisiana each with 14 percent, figures from Tudor, Pickering, Holt & Co. show.
Downturn: Oil companies taking “frac holidays”
The U.S. shale industry started the year with frac crews using 11.5 million horsepower. That number fell to 10.5 million in March down to 4.7 million in April and is expected to fall to 3.1 million horsepower in May.
Some industry experts believe that there are less than 50 active hydraulic fracturing fleets in the field but Tudor, Pickering, Holt & Co. Managing Director George O’Leary wrote in a research note that “both levels are putrid” and that either way, a recovery is not expected until the fourth quarter or the first quarter of 2021.
“This is setting up to be the sharpest quarter over quarter active horizontal frac crew count decline in memory,” O’Leary wrote. “Putting lipstick on a pig, it was a teeny-tiny bit comforting to see the month over month decline rate slow in May versus April, but it’s certainly quite bloody out there.”
