Rock-bottom oil prices have put the brakes on hydraulic fracturing
projects in the United States, while environmental concerns along
with the price drop have prevented them from taking off elsewhere.
The U.S. remains the world’s leader in fracking, which involves
injecting large amounts of fluid into underground shale deposits to
fracture the surrounding rock and release oil and gas into a well.
But even in North Dakota, a leading U.S. state for fracking, the
number of rigs drilling for oil plummeted from 214 in 2012 to just 75
in June 2015, the lowest level in six years. And the number of fracking
service providers in the U.S. fell by two-thirds from the start of 2014
to the end of 2015.
“The hydraulic fracturing services industry has been hit hard,” as oil
exploration and production companies have reduced operations and
sought pricing concessions, says Caldwell Bailey, senior consultant,
IHS Energy, Houston, Texas, USA.
While larger exploration and production organizations can weather
this downturn, mid-tier and smaller companies must be more strategic
and selective about the fracking projects they pursue, Mr. Bailey says.
If the fracking landscape looks dry in the United States, it’s practically barren in other parts of the world. After spending five years
and billions of U.S. dollars to replicate the American shale boom
elsewhere, some of the world’s largest oil companies have decided to
cut their losses. Poor exploration results and lengthy protests from
environmentalists led U.S. energy giant Chevron to end its fracking
endeavors in Romania in early 2015. Put off by the high cost of shale
drilling, Chevron, Exxon Mobil and Royal Dutch Shell have ended
almost all of their fracking initiatives in China, Europe and Russia.
While U.S. wells each cost about US$5 million, the project budget of
a well in China or Poland can climb up to US$25 million. In part as a
result of that, countries with
strong national oil companies,
such as Argentina, China and
Saudi Arabia, look more likely
than private energy organizations to sponsor fracking projects outside the United States.
The number of oil drilling rigs in North
Dakota, USA—down from 214 in 2012
The estimated cost per well of shale drilling
in the United States
A fracking drill
rig in the U.S.