Synopsis

Demand for pressure pumping services in the Bakken Shale is flat as the backlog for drilled but uncompleted wells climbs back above 1,000.

Low oil prices are taking a toll and service providers now expect recovery will not occur until later in 2016 for some, and 2017 for others. While the date for recovery may be hard to predict, the price is a little more certain with both operators and service providers indicating the region needs $60 oil before activity will pick up.

Survey respondents say regional effective capacity for pressure pumping has dropped below 500,000 in hydraulic horsepower (HHP), or less than half of estimates earlier this year.

The total number of fleets active in the region has declined to 15. Meanwhile the average cost per stage has declined further to $30,300 among survey respondents as operators cut back on proppant usage.

Service providers insist, as they have each quarter, that cost cannot go any lower. However, per stage price in November was down 18% vs. August.

Watch for the next Bakken well stimulation report in February 2016.

Part I. – Survey Findings

Among Survey Participants:

  • Demand Flat Quarter-To-Quarter in the Region
    [See Question 1a and 1b on Statistical Review]
    All respondents reported that demand in the fourth quarter of 2015 remains flat quarter-to-quarter because of the low oil price. Most respondents expect demand to continue to decline until the price of oil recovers, hopefully in 2016.
    • Mid-Tier Service Provider: “Demand continues to drop as the recovery is likely to be pushed out into 2016.”
  • HHP Supply Sufficient
    [See Question 2 on Statistical Review]
    ​Six of eight respondents reported a sufficient supply of HHP capacity, but two continue to report excessive supply even with several frack providers exiting the region.
    • Mid-Tier Service Provider: “Budgets continue to decline for end of year and most are waiting to establish a plan for 2016.”
  • Fracking Capacity Estimated At 462,000 HHP
    [See Question 3a, 3b, and 3c on Statistical Review]
    ​According to respondents, HHP capacity in the region is estimated to range between 400,000- to 500,000 HHP in the play, down from 1 million HHP estimated in August. Most respondents guessed that 12 to 15 fleets continue to serve the area. While several providers reportedly have left the area, a high number of idled fleets remain along with underutilized active fleets as well.
    • Mid-Tier Service Provider: “We are the only company besides Halliburton running more than one fleet here now.”
  • Williston Basin Well Metrics: Vertical Depth Averages 10,000 Feet For Bakken Wells
    [See Question 4 on Statistical Review]
    ​Average vertical depth reported is about 10,000 feet for Bakken wells, similar to August findings. However, one operator is now focused on the shallower Madison formation at 6,000 feet. Average lateral length is 9,000 feet in the Bakken and average number of stages is 31. Injection rates average 63 barrels per minute with about six stages completed daily on a 24-hour schedule.
    • Mid-Tier Operator: “We are doing 30-40 stage fracks in the Bakken on 10,000-foot laterals.”
  • Average Cost Per Stage: ~$30,300
    [See Question 5a and 5b on the Statistical Review]
    ​The average per stage price is reported at $30,300, down again from the average $37,000 reported in August. Seven respondents expect prices to remain the same over the next three months, but one expects more price erosion.
    • Mid-Tier Service Provider: “Prices are at bottom now. Most are working at breakeven to hold on until recovery.”
  • Delayed Completions Continue In Bakken Despite Well Backlog
    [See Question 6b on the Statistical Review]
    ​Delayed fracks continue as many operators push back completing wells until the oil price recovers. Several respondents mentioned that the backlog surpassed 1,000 wells in September.
    • Top-Tier Operator: “We are still delaying and restricting drilling and completing horizontals due to the [oil] price. We don’t see a ramp up until prices come back into the $60s.”

End Survey Findings

Survey Demographics

H A R T E N E R G Y researchers completed interviews with eight industry participants in the well stimulation/pressure pumping service segment in the Bakken region. Participants included six managers or sales personnel with well stimulation companies, and two production/completion engineers working for E&P companies. Interviews were conducted during the second week of November 2015.

Part II. – Statistical Review

Well Stimulation/Pressure Pumping

[Bakken Shale]

Total Respondents = 8

[Fracking service providers = 6, Operators = 2]

1. Do you expect demand for pressure pumping equipment to grow, remain the same or shrink in fourth-quarter 2015 compared to the third quarter?

Remain the same:

1

Shrink:

7


2. Would you characterize the supply of pressure pumping equipment in your area as excessive, sufficient or insufficient to meet late 2015 demand?

Sufficient:

6

Excessive:

2


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

Average total HHP:

~462,500 HHP active


3b. How many total crews (spreads) do you think are active in the area?

12-15:

8


3c. Have any service providers left the play in the last 90 days?

Yes:

8


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

Average vertical depth:

10,000 feet

Average horizontal lateral length:

9,000 feet

Average number of frack stages:

31

Injection rates (barrels per minute):

63

Average number of frack stages per day:

6

12-hour or 24-hour:

24-hour


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

$28,000-32,000:

7

$32,000-35,000:

1

Average cost per stage:

~$30,300 per stage*

*Slickwater plug and perf fracks continue to be most common, but coil fracks with sleeves are often used at slightly higher costs.


5b. Do you expect fracking prices to increase, remain the same or decrease over the next three months?

Remain the same (0%):

7

Drop further:

1


6a. What strategies are companies putting into place to cope with a low price environment? (Some respondents gave more than one answer.)

Negotiating pricing:

2

Delaying drilling and frack jobs:

8


6b. What are you seeing in terms of the number of wells drilled, but not completed in your area?

Negotiating pricing:

2

Delaying drilling and frack jobs:

8


End Statistical Survey