Pressure pumper horsepower will increase in Q2, rebounding from a sluggish end to 2018, according to the new U.S. Horsepower Outlook report, offered by Westwood’s Global Energy Group.
A 9% increase in hydraulic horsepower (Hhp) demand from Q4’18-Q4’19 could lead to a tighter Hhp market and potential undersupply in certain regions, Kallanish Energy learns.
Westwood’s quarterly report provides an outlook for seven key U.S. unconventional basins: the Permian, Eagle Ford, MidCon, DJ-Niobrara, Appalachia (Marcellus and Utica Shale plays combined) Haynesville, and Bakken.
The Westwood report contains historical and forecast views (2014-2022). Looking across all seven basins, more than 4% of frac horsepower was removed from active status in Q4’18, followed by just over 1% in Q1’19, but pressure pumpers are expected to place more than 300,000 Hhp back into the field by Q2’19.
Growing frac horsepower demand in the Haynesville Shale of East Texas and Louisiana, represents more than 35% of total active horsepower growth in Q2’19. The shale play benefits from growing natural gas demand, proximity to the Gulf Coast, and higher proppant loading per completion.
U.S. growth will be hurt by continued active horsepower reductions in the Permian during the first half of the year. The largest basin in the Lower 48 saw a 5% decline in active frac horsepower during Q1’19, but the declines are expected to trough in Q2’19.
The alleviation of the basin’s midstream bottleneck — and the subsequent work down of the growing drilled-but-uncompleted (DUC) backlog — will push frac horsepower demand up 14% in the Permian from Q3’19 to Q4’19, resulting in tighter marketed utilization moving into 2020 as pumpers work to quickly reallocate crews back into the fields, according to Westwood.
“Top pressure pumpers are securing contracts with key accounts, especially the majors that are doubling-down in the Permian,” said Todd Bush, vice president, Commercial, at Westwood Global Energy Group.
“ExxonMobil and Chevron are running 14 total frac crews in the Permian as of Q1’19. Both companies have ambitious plans that requires more horsepower in the Delaware and Midland Basins,” Bush added.
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