By Braden Reddall
July 25 Halliburton Co, the largest
provider of pressure pumping services used in hydraulic
fracturing, said on Thursday it had also been contacted by the
U.S. government regarding potential antitrust issues in the
pressure pumping market.
Halliburton said it had received an information request from
the Department of Justice. In a quarterly filing on Wednesday,
rival Baker Hughes Inc disclosed the receipt of a civil
investigative demand from the DOJ on May 30.
"We understand there have been other participants in the
industry who have received similar correspondence from the DOJ,
and we do not believe that we are being singled out for any
particular scrutiny," Halliburton said in a statement.
Halliburton, without disclosing what the government was
seeking, said it was cooperating with the investigation.
DOJ spokeswoman Gina Talamona confirmed on Thursday that the
antitrust division was investigating possible "anticompetitive
practices" in pressure pumping services for oil and gas wells.
Stephen Ellis, oil services analyst at Morningstar, pointed
out that the market share of the big three in pressure pumping -
Halliburton, Schlumberger and Baker Hughes - had fallen
to 63 percent last year from 85 percent a decade before.
Their market share stabilized with the roll-out of
integrated service packages following consolidation a few years
ago that included Schlumberger buying drillbit specialist Smith
and Baker buying pumping company BJ Services. So Ellis wondered
if the DOJ inquiry revolved around the bundling of services.
Baker Hughes said the request for documents and information
covered the two years prior to May 30. The year 2011 was a
significant year for the pressure pumping market, during which
capacity in North America expanded by an estimated 50 percent.
That has left the market severely oversupplied with pumps
for the past year and a half amid a prolonged slump in natural
gas prices. The drop in gas prices led to a sharp drop in
gas-directed drilling to an 18-year low in June.
The equipment glut even forced FTS International, owner of
North America's fourth-largest pressure pumping fleet, to
withdraw an initial public offering last year.
Schlumberger declined to comment when asked if it had been
contacted by the DOJ.