Report: Shale frack equipment demand set to increase in 2019

By Westwood Global Energy Group | April 04, 2019

Active supply by pressure pumpers will increase in Q2 2019, rebounding from a sluggish end to 2018, according to a new US Horsepower Outlook report from Westwood Global Energy Group (Westwood). A 9 percent increase in hydraulic horsepower (HHP) demand from Q4 2018 to Q4 ‘19 could lead to a tighter HHP market and potential undersupply in certain regions. 

Westwood’s quarterly report provides an outlook for seven key US unconventional basins— Permian, Eagle Ford, MidCon, DJ-Niobrara, Appalachia, Haynesville and the Bakken—and contains historical and forecast views (2014 to 2022). Looking across all seven basins, more than 4 percent of frack horsepower was removed from active status in Q4 ‘18, followed by just over 1 percent in Q1 ’19, but pressure pumpers are expected to place more than 300,000 HHP back into the field by Q2 ’19. 

Growing frac horsepower demand in the Haynesville Shale of East Texas and Louisiana, represents more than 35 percent of total active horsepower growth in Q2 ’19. The shale play benefits from growing natural gas demand, proximity to the Gulf Coast, and higher proppant loading per completion. 

US growth will be stymied by continued active horsepower reductions in the Permian during the first half of the year. The largest basin in the Lower 48 saw a 5 percent decline in active frac horsepower during Q1 ’19, but the declines are expected to trough in Q2 ’19. The alleviation of the basin’s midstream bottleneck—and the subsequent work down of the growing drilled-but-uncompleted (DUC) backlog—will push frac horsepower demand up 14 percent in the Permian from Q3 ’19 to Q4 ’19, resulting in tighter marketed utilization moving into 2020 as pumpers work to quickly reallocate crews back into the fields.

“Top pressure pumpers are securing contracts with key accounts, especially the majors that are doubling-down in the Permian,” commented Todd Bush, vice president, Commercial at Westwood Global Energy Group. “ExxonMobil and Chevron are running 14 total frac crews in the Permian as of Q1 ’19. Both companies have ambitious plans that requires more horsepower in the Delaware and Midland Basins.”

Illustrating a basin level supply/demand scenario, the report quantifies the significance of active crew locations, and how implications like mitigating midstream capacity constraints in regions like the Permian can impact that picture. The report includes a databook of quarterly horsepower supply, horsepower demand, and frac crews across shale plays.

Westwood’s US Horsepower Outlook Q1 2019 report is compiled using Energent and Westwood’s proprietary data.