Low-cost fracking offers boon to oil producers, headaches for suppliers
Source: Reuters
BUSINESS NEWS SEPTEMBER 12, 2019 / 6:34 AM / UPDATED 4 HOURS AGO
Low-cost fracking offers boon to oil producers, headaches for suppliers
Liz Hampton
7 MIN READ
SMILEY, Texas (Reuters) - At a dusty drilling site east of San Antonio, shale producer EOG Resources Inc recently completed its latest well using a new technology developed by a small services firm that promises to slash the cost of each by $200,000.
The technology, called electric fracking and powered by natural gas from EOG’s own wells instead of costly diesel fuel, shows how shale producers keep finding new ways to cut costs in the face of pressures to improve their returns.
E-frac, as the new technology is called, is being adopted by EOG, Royal Dutch Shell Plc, Exxon Mobil Corp and others because of its potential to lower costs, reduce air pollution and operate much quieter than conventional diesel-powered frac fleets. Investment bank Tudor, Pickering Holt & Co analyst George O’Leary estimates e-fracs could lop off up to $350,000 from the cost of shale wells that run $6 million to $8 million apiece.
But these systems can cost oilfield service companies up to twice as much to build compared to conventional frac fleets. A rapid uptake could worsen the economics for a sector already cutting staff and idling equipment as oil producers pare their spending. That leaves this potentially breakthrough technology to small providers without the means to fully exploit it.
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“Every week that goes by I get more and more negative about e-frac due to the harsh imbalance between the benefits achieved by the oil company and the costs incurred by the service company,” said Richard Spears, a consultant to top oilfield services suppliers.
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Read more: https://www.reuters.com/article/us-usa-oil-electric-fracturing-focus/low-cost-fracking-offers-boon-to-oil-producers-headaches-for-suppliers-idUSKCN1VX112
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