Analyst: Harvey's Floods Could Delay 10% of US Fracking
(Bloomberg) -- As much as 10 percent of U.S. fracking work could be delayed after Hurricane Harvey ripped through southeast Texas, home to one of the nation’s busiest oilfields, according to Raymond James & Associates.
More than half of the rigs running in the Eagle Ford Shale are estimated to have suspended drilling because of the storm, Marshall Adkins, an analyst at Raymond James, wrote Thursday in a note to clients. The muddy conditions left in Harvey’s wake will add stress to the fracking services sector that has consistently lagged the faster drilling crews.
Given its location in far southeastern Texas, the Eagle Ford was the only major American shale formation in the cross hairs of Harvey when it slammed ashore as a Category 4 hurricane last week. Major explorers including EOG Resources Inc. and Marathon Oil Corp. halted drilling and evacuated crews in anticipation of the storm, crimping as much as 57 percent of daily production, according to the Texas Railroad Commission.
“Given that much of oil and gas activity occurs in areas only accessible via dirt roads, the heavy rainfall usually makes the movement of trucks and supplies much more difficult,” Adkins wrote. “The trucking and rail of sand, chemicals, and personnel to the well site will all take more time given the likely nasty condition of many Eagle Ford access roads.”
The Eagle Ford was the only shale basin of the big four to drop activity last week, as some in the industry start to look at shale as a more expensive option compared to other places.
The temporary drop in the rig count by as much as 45 rigs due to flooding could be a catalyst for higher oil prices, Adkins wrote.
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