Looking Up, But Still Tough Outlook Brightens for Unconventional Oil

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US drilling and completion companies that were slashing workforces and cannibalizing pumping trucks for parts 6 months ago are now hiring crews and repairing equipment to meet rising demand.

“Utilization of crews is already effectively at 100% and that is driving our prices up,” said Richard Spears, managing partner for Spears & Associates, during a recent presentation put on by the SPE Gulf Coast Section and the American Association of Drilling Engineers. The firm that tracks oilfield services is expecting that prices for pressure pumping will rise 10 to 20% when multiwell service contracts come up for renewal early in 2017.

The sector, which was the first to feel the pain of the downturn, began to recover late last year and then got a boost from OPEC, which agreed to cut production to push up oil prices.

“Generally, across the Lower 48 even before the OPEC decision, there was a sense that 2017 would be a better year for oilfield service companies,” said Jackson Sandeen, senior research analyst for Wood Mackenzie. The oilfield information firm predicts a 10% inflation rate in the US drilling and completion service sector.

He and other analysts see increases in the cost of pressure pumping, sand, and wireline services early in the year, and rising drilling rates later on.

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Looking Up, But Still Tough Outlook Brightens for Unconventional Oil

Stephen Rassenfoss, JPT Emerging Technology Senior Editor

19 January 2017

Volume: 69 | Issue: 2