Shale Technology Could Drive Growth for the Oil Service Industry

A report on the global oil service industry from Barclay’s Capital says the sector will grow this year after passing the low point for activity in the fourth quarter of 2009.  The report predicts an 11 per cent rebound in worldwide spending on exploration and production this year. James West of Barclays expects E&P spending to accelerate in 2011 as the cycle gains momentum:

Technological innovation has unlocked an immense supply of unconventional gas resources, in particular shale gas. Shales currently represent the most prolific source of natural gas in the domestic US market and the increase in shale drilling that began in late 2009 and is set to continue in 2010 . The transfer of shale drilling and completion technology from North America to the international markets could drive growth for the oil service industry.

To try and jumpstart exploration, major European energy giants including StatoilHydro, BP plc., and Total SA have bought interests in oil and gas shale projects in American gas market.  This is especially true for those technologies that are heavily utilized in shale plays such as pressure pumping, proppants, stimulation equipment, and fit for purpose rig technology.  Buying into in hydraulic drilling technology developed by American companies could spare European companies years of development,

StatoilHydro Executive Vice President Rune Bjornson has said that his company, which bought into Chesapeake Energy’s Appalachian Marcellus, wants to bring the new drilling technology to other regions of the world.  "We look at shale gas as a potential game changer."

Souces:  Financial Times, GoMarcellusShale.com