Fracking companies struggle with oversupply, lowered demand

Hydraulic fracturing companies are reeling as prices for their services slide, leading to crew layoffs and idle equipment in once booming shale gas fields. The Houston Chronicle reports price tags on so-called fracking jobs have dropped as much as 20% from their peak, pinching profits for businesses that ramped up their fleets during the boom, companies say. The technology for getting natural gas out of dense shale rock has been instrumental in reviving fossil fuel production in the United States, even as it has raised environmental concerns in some quarters. Pressure pumping, the key component of the hydraulic fracturing process, flushes high-pressure mixtures of water, sand and chemicals thousands of feet underground to fracture the rock. But the industry’s success has become its greatest challenge. As shale gas production exploded in recent years, a flurry of small fracturing companies launched, and the biggest players in the business rapidly expanded their crews. “There was this wave of supply coming on, too much supply,” says Dennis Smith, director of corporate development for oil field services company Nabors Industries. “It created, overnight, a big excess of pumping capacity.” In addition to that oversupply, demand for hydraulic fracturing in shale gas fields has been waning. Read the full story here.