Survey Demographics

Hart Energy researchers completed interviews with eight industry participants in the well stimulation/pressure pumping service segment in the Bakken Shale area. Participants included one completions consultant, one oil and gas operator, and six managers or sales personnel with well service companies. Interviews were conducted during the third week of November 2014.

Part I. – Survey Findings

Among Survey Participants:

  • Budgeted Commitments Keep Demand Steady through 1Q15 [See Question 1 on Statistical Review]. All respondents reported that demand through 1Q15 for pressure pumping equipment will remain steady in the Bakken Shale even with lower oil prices. Respondents explained that fracking of wells had already been planned and budgeted for early 2015 before the oil price drop.
    • Anecdotal Information/Quotable: Top-Tier Operator: “We are already committed out through the first quarter 2015 but we are watching closely to see what to do beyond then.”
  • HHP Supply Sufficient for the Region [See Question 2 on Statistical Review]. Service providers reported that the pressure pumping (HHP) capacity in the region is sufficient. There is very little backlog of drilled wells so any slowdown in drilling will cause immediate oversupply.
    • Anecdotal Information/Quotable: Mid-Tier Service Provider: “There is plenty of horsepower for now as things reset. If the price recovers and drilling ramps back up, supplies will tighten, but for now most are expecting demand to stay flat for a few months.”
    • HHP Capacity Stablizes at ~1.9 Million HHP [See Question 3 on Statistical Review]. Respondents reported stable hydraulic horsepower (HHP) over the past 90 days as most providers have remained the same and no new providers are reported in the play. Respondents estimated current HHP capacity at ~1.9 million.
      • Anecdotal Information/Quotable: Mid-Tier Service Provider: “Supply and demand has been stable during last half of 2014. We were expecting demand to tighten in 2015 before this price fiasco.”
    • Bakken Well Metrics: Vertical Depth <10,000-ft, Horizontal Laterals >10,300-ft. [See Question 4 on Statistical Review]. Average vertical depth reported is 9,656-ft. with an average of 10,312-ft. of horizontal lateral. Average number of stages is 46 with spacing between 150-250 ft. Injection rates average 60 bpm with approximately 7 stages completed daily on a 24-hour schedule.
    • Average Cost Per Stage in Bakken ~$86,000 [See Question 5a on the Statistical Review]. The average per stage price is $86,000 and is expected to remain the same during the next three months. Logistics cost increases could happen and will be passed through to operators. The number of completions using crosslink gel increased slightly and raised the cost per stage. The crosslink frac and the use of ceramics has caused the cost per stage average to rise, but most respondents reported a reassessment is occurring as operators look to lower completion costs in face of lower oil prices.
      • Anecdotal Information/Quotable: Completions Consultant: “There has been a recent realization that the slick water fracs were not necessarily the most efficient. There has been a resurgence of crosslink and hybrid fracs and a corresponding increase in cost per stage.”
    • Steady Prices Expected QTQ [See Question 5b on the Statistical Review] All eight respondents expect price per stage to remain the same during the next three months. Several respondents mentioned, however, that any rising rail and trucking costs would pass through to operators.
      • Anecdotal Information/Quotable: Mid-Tier Service Provider: "No one will try to raise prices in this market now. Only trucking or rail increases will pass through and cause overall costs to rise.”

Part II. – Statistical Review, Well Stimulation/Pressure Pumping

Total Respondents = 8 [Consultants = 1, Oil and Gas Operators = 1, Service Providers = 6]

1. Do you expect demand for pressure pumping equipment to grow, remain the same or shrink in 1Q15 compared to 4Q14?

Stay the same: 8

2. Would you characterize the supply of pressure pumping equipment in your area as excessive, sufficient or insufficient to meet early 2014 demand?

Sufficient: 8

3. How would you estimate total HHP capacity for the region?

Avg. total HHP among respondents 1,900,000 HHP*

*slight increase since August 2014

4. What is the average vertical drilling depth, average horizontal lateral length, number of frack stages and injection rates (barrels/min) in this play? What is the average frac stages per day? Is this a 12-hour or 24-hour shift?

Bakken Shale

Average Vertical Depth: 9,656-ft.

Average Horizontal Lateral Length: 10,312-ft.

Average Frac Stages 46

Injection rates (barrels/min) 60 bpm

Average No. of Frac Stages/Day 7

12-hr or 24-hr 24-hr

5a. What is the average cost per stage in your area now?

$50,000 - $60,000 1

$60,000- $70,000 1

$70,000 1

$70,000-90,000 1

$75,000 -$100,000 1

$80,000-$90,000 1

$90,000-100,000 1

$100,000-$150,000 1

Average cost per stage: $86,000 per stage

5b. Do you expect fracking prices to increase, remain the same, or decrease over the next 3 months? By what percent (%)?

Remain the same (0%): 8*

*Several respondents reported any increase in logistical costs would pass through to customers.

6a. What has been the near-term effect of the drop in the price of oil on activity in your area?

Freeze on expansion: 1

Stable for one quarter to assess: 2

Reassessment in first quarter: 1

Operators looking for savings: 1

WY slowed considerably already, ND stable for now: 1

Cautiousness 2

6b. Looking to 2015, what are your expectations of work volumes if the oil price hovers around $80?

No change through 1st quarter: 2

Slowdown in 2nd quarter drilling, then a slow rebound: 1

Tweaking of completions to lower cost: 1

All o.k. at $80, but a big slowdown if it drops more: 1

Growth or shrinkage based on raised or lowered price of oil: 2

Drilling will follow price up or down with a one quarter lag: 1