Every Friday a spotlight is shown on the nation’s drilling activity as oilfield services company Baker Hughes releases its weekly rig count, but Primary Vision Network sees tracking the nation’s frac spread as a way to better understand activity levels, complementing the rig count.
Story Credit: Mella McEwen is the Oil Editor for the Midland Reporter-Telegram
“We want the frac spread count to be a better correlation to production levels,” said Matt Johnson, Primary Vision’s chief executive officer.
Speaking with the Reporter-Telegram by telephone, Johnson said the current count is 275 across the country.
“One of the things we push is there’s not a lot of equipment on the sidelines,” he said. “Of the 275 frac spreads, there’s maybe 25 to 30 additional sets of equipment on the sidelines.”
He estimated frac spreads could rise to 310 to 320 before hitting the constraints caused by labor and equipment shortages.
“The supply chain – ordering pumps takes six to 12 months, and ordering replacement parts is a problem,” he said. Then there’s the question of getting the capital to pay for that equipment. Inflation has hit the industry as it has every other industry – and consumers, he added.
Operators are getting “crafty” as they seek to increase production from their wells, he said, pointing to refracs of existing wells as one method.
During the industry slowdown that preceded the pandemic and during the pandemic, a number of experienced people left the business, vowing never to return, he pointed out. Some will, lured by the good salaries, but others won’t, believing they’ve found a better quality of life in other industries, Johnson said.
To fill jobs, he said companies will have to turn to incentives like higher wages, sign-on bonuses and bonuses for meeting corporate targets. The influx of new employees raises risks for pressure-pumping companies as those new hires will make mistakes until they become more skilled, he said.
Johnson cited one pressure-pumping executive telling him the industry is ‘drinking from a firehose’ as they work to meet the demand for their services.
As pressure-pumping companies face those internal challenges, they also face external challenges from public concerns about the environmental impact of their work and from investors focused on their ESG – Environment, Social and Governance – initiatives.
Read More: Fracking Is Going Electric and Not Everyone Is Impressed
“Operators do a good job” with their environmental footprint, said Johnson. “Yes, some need to do better, and some do skirt the law but companies like Exxon and Chevron have done an excellent job with their ESG initiatives.”
Some pressure pumping companies have turned to electrification to improve their environmental footprint, but Johnson said only about 20 spreads are electric and he doesn’t see that rising past 30 in the near future. At present, he said, only about 8 percent of the nation’s frac spreads utilize purely electricity-driven equipment.
Johnson is optimistic the challenges will be met.
“Human nature evolves, and we make things better,” he said. “We will come up with solutions.”
