The US shale oil industry is slowing as logistical challenges including labor costs and a lack of adequate pipeline capacity pile up, the chief executives of some of the largest production and oilfield services companies have warned this week. The evidence is accumulating that the boom in the industry that began two years ago is cooling off, particularly in what has been its incandescent center, the Permian Basin of western Texas and eastern New Mexico.
At a Barclays conference in New York this week, the chief executives of Schlumberger and Halliburton, the world’s largest and third-largest listed oilfield services companies, both highlighted a slowdown in the number of new wells being brought into production. Jeff Miller, chief executive of Halliburton, talked about a “decrease in customer urgency” that had put pressure on the prices the company could charge in several parts of the US. Along with project delays in the Middle East, he added, the slowdown would cut 8-10 cents from Halliburton’s third-quarter earnings per share, which had been expected to be about 52 cents.
Halliburton’s shares closed almost 6 percent lower after Mr. Miller’s statement on Wednesday. Paal Kibsgaard, his counterpart at Schlumberger, similarly warned that the North American market for hydraulic fracturing had “already softened significantly more than we expected” in the third quarter. The Permian Basin, in particular, he said, faced challenges that he expected to “have a dampening effect on production growth, wellhead prices and investment levels in the coming year”.