U.S. Justice Department examining market for fracking services
BY ALISON SIDER
The United States Department of Justice has started an antitrust investigation of the pressure pumping business, a key component of the oil and gas industry practice of hydraulic fracturing, Baker Hughes said in a filing with the Securities and Exchange Commission.
Baker Hughes said it received a Civil Investigation demand from the Justice Department under the Antitrust Civil Process Act. The request sought information relating to the United States pressure pumping market beginning May 29, 2011.
Pressure pumping, the process of injecting water and other materials into a well to break apart rock formations and unleash oil and gas, is the main step in the hydraulic fracturing process. That technique, coupled with other advances in drilling, helped spur a boom in United States oil and natural gas production.
In the early days of the shale boom, demand for pressure pumping work outstripped supply of equipment available to do it, and oilfield services companies struggled to keep up.
But as demand grew, new companies entered into the business and others expanded their capacity. The surge in activity, coupled with lower prices for natural gas, has led to excess pressure pumping capacity in recent quarters and lower prices for the work.
Though their market share has declined in recent years, three companies still dominate the pressure pumping market in North America: Halliburton, the top provider of pressure pumping services in the United States, Schlumberger and Baker Hughes. The three companies accounted for some 63% of the North American pressure pumping market in 2012, according to Barclays.
Baker Hughes didn't provide additional details about the scope of the investigation or the information requested by the federal agency.
Spokesmen for Halliburton and Schlumberger also couldn't be reached immediately.
Dow Jones Newswires