News / Business

'Half of US fracking firms to die this year'

Thursday, 23 April 2015 2:22 PM [ Last Update: Thursday, 23 April 2015 3:11 PM ]

Half of the 41 fracking companies drilling for shale oil and gas in the US will be dead or sold by year-end.

Half of the 41 fracking companies drilling for shale oil and gas in the US will be dead or sold by year-end amid steep crude price declines, Bloomberg reports.

An executive with Weatherford International Plc said slashed spending by oil companies has put much of the US fracking industry at risk.

There were 61 fracking service providers in the US at the start of last year but customers leave wells uncompleted because of low prices, according to Bloomberg.

Weatherford operates the fifth-largest fracking operation in the US. Its pressure pumping marketing director Rob Fulks says the service company has been forced to cut costs “dramatically” in order to persuade producers not to abandon work.

In February, Weatherford announced plans to cut about 8,000 jobs, or 14% of its workforce, this year in response to the decline in oil prices.

Bigger players such as Halliburton and Baker Hughes are entering into mergers. Others are selling chunks of their assets.

The US "rig count" has fallen from 1,608 in October to 747.

Fracking is the process of drilling and injecting fluid into the ground at a high pressure in order to fracture shale rocks to release gas and oil.

The US government expects oil output from the most productive shale formations to see its first monthly decline in more than four years.

The price for a barrel of crude oil dropped by more than half over the past 10 months, leading to many oil companies to cut their production levels amid falling share prices.

The mainstream media however is trying to put a positive spin on the decline of fracking. It claims that frackers were discovering cleverer ways to extract oil and push down production costs.

If the claim turns out to be true, it will make Saudi Arabia’s plans go awry. The top OPEC producer is reportedly pushing oil prices down in order to drive the shale oil out of the market.

“The risk for the Saudis is that the fight against US shale turns into a destructive stalemate, eroding its foreign reserves,” the British daily The Telegraph wrote.

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