Mon October 17, 2011
Halliburton Earnings Reflect Gas Drilling Boom
In an indication of how aggressively energy companies are pursuing underground natural gas, Halliburton is reporting a record breaking quarter, largely based on growth in its North American operations.
For the first time ever, Halliburton’s operating income in North America exceeded $1 billion. The company said that was mainly because of strong activity in shale rock formations like the Eagle Ford in South Texas and the Bakken region in North Dakota and Montana. Halliburton also cited strong activity in the Permian Basin of West Texas.
North America has been experiencing an onshore drilling boom, as companies race to exploit hydraulic fracturing technology, commonly referred to as “fracking”. It involves pumping large amounts of liquid thousands of feet underground to fracture shale rock formations and release natural gas or oil.
Oil field service companies like Halliburton are “like the people that sold the picks and shovels during the gold rush in California,” Houston-based investment banker Allen Brooks told Bloomberg News in June.
However, the gold rush for natural gas could be ebbing, according to Halliburton CEO Dave Lesar.
“While gas drilling remained basically flat from the second quarter, we continue to believe that there is a risk of decreased gas directed activity,” Lesar said in this morning’s earnings call. “If this demand were to moderate next year, we would expect that the gas rig count could, as well.”
Fracking is an environmentally controversial practice because drilling operations are loud, involve pumping large amounts of undisclosed chemicals deep into the earth, and require vast amounts of water. A University of Texas research team is studying those environmental concerns. You can hear an interview with the UT geologist leading the study here.