US Frack Fleets Find New Life Abroad as Shale Slump Persists

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(Bloomberg) — US fracking companies are increasingly sending their idle equipment overseas, finding new markets abroad as growth slows in the shale fields of Texas, New Mexico and elsewhere.

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Over the past two years, hundreds of pumps the size of 18-wheelers have been sent to Argentina by providers including Halliburton Co., Calfrac Well Services Ltd. and Tenaris SA, and to Australia by Liberty Energy Inc. and Halliburton, according to estimates from analytics firm Primary Vision. The shipments also include sand towers, water tanks, industrial blenders and miles of hoses used to inject fluid and sand into rock layers more than a mile underground.

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All this equipment amounts to nearly one-fifth of the fracking power deployed in the Permian Basin as recently as last year, and more could follow. Halliburton, the world’s largest fracking service provider, has said it sees incentives to move equipment abroad as its international business expands. Patterson-UTI Energy Inc. also sees an opening in Argentina for its diesel equipment as it transitions its US fleet to run on natural gas, Chief Executive Officer Andy Hendricks said.

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“The opportunity in Argentina is one of the most promising that we see to put our idle assets to work globally,” Hendricks said on a call discussing fourth-quarter results earlier this month. 

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Sending underused diesel-powered fleets abroad could help oil-field service companies recover after years of squeezed profits and pressure from customers to lower costs. There is a downside, however, for the oil and gas producers that hire Halliburton and the others to frack their wells: less equipment in the US is apt to drive up costs when and if companies start ramping up production again.

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Private operators may feel the squeeze first. These companies tend to ramp up drilling and fracking when oil and gas prices rise. If equipment becomes harder to secure, projects could stall, said Primary Vision CEO Matt Johnson.

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“It could take an independent guy and push him into a non-operational scenario, and then potentially put himself into an acquisition because he doesn’t have the availability or means to hire that pressure pumper or the equipment isn’t available, or they don’t want to get in a contract,” Johnson said.

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The heavy-duty frack pumps have been a ubiquitous symbol of the shale patch for decades — a necessary piece of equipment used to pump water, sand and chemicals underground to blast open tight, oil-bearing rock so the crude can flow.

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Of roughly 18 million horsepower of US fracking capacity, about 8 million represents idle inventory held in reserve and available for reactivation should market demand shift, Johnson said. As much as a quarter of that inventory will be exported over the next year or two, he added.

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Countries including Saudi Arabia and the United Arab Emirates may deploy more sophisticated fracking machinery for the first time to boost natural gas production, with diesel-fueled equipment in high demand, according to Barclays Capital Inc. analyst Dave Anderson.