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Ohio Utica Shale

U.S. Justice Department investigating fracking market

By Bob Downing Published: July 25, 2013

From Bloomberg News:

Baker Hughes, the world’s third-largest provider of hydraulic-fracturing services, said the U.S. Justice Department is seeking documents for an antitrust investigation related to the fracturing market.

The company received a Civil Investigative Demand, or CID, from the department on May 30 and is working to provide the requested documents and information on its pressure-pumping services, Houston-based Baker Hughes said in a regulatory filing this week. The request covers two years of information from May 29, 2011 through the date of the demand, according to the company.

The pressure-pumping technique known as fracking involves blasting water mixed with sand and chemicals underground to free trapped hydrocarbons from shale formations. The U.S. fracturing market, the world’s largest, peaked in the second half of 2011 as prices soared with surging demand from the shale boom.

As more equipment and competitors poured into the market, as much as a 29 percent oversupply of equipment developed by the fourth quarter of last year, according to PacWest Consulting Partners LLC, a Houston-based industry adviser. The oversupply intensified as natural gas prices slumped amid a supply glut and demand for work dropped, the consultant said.

“With 54 frack players in the U.S. market, probably half of which are new entrants in the last 5 years, the idea of a non-competitive market is absurd,” Alex Robart, principal at PacWest, said this week.

Prices charged for U.S. fracturingservices slid 14 percent in 2012 and are expected to fall another 6 percent this year, according to PacWest.

The investigation is a surprise, Jud Bailey, an analyst at International Strategy & Investment Group in Houston, said. He expressed doubt about investigators’ ability to prove antitrust activity.

“It doesn’t seem to hold much water,” said Bailey, who rates the shares the equivalent of a buy and owns none.

Baker Hughes said it can’t predict what action, if any, might be taken in the future by the Justice Department or other government authorities because of the investigation.

Christine Mathers, a Baker Hughes spokeswoman, said in an e-mail she wasn’t able to immediately comment. Joao Felix, a spokesman, declined to comment on whether Schlumberger Ltd., the largest oilfield-services provider, received a Civil Investigative Demand.

Halliburton Co., the second-largest services provider, didn’t respond to phone calls and e-mails seeking comment.

Gina Talamona, a Justice Department spokeswoman, didn’t immediately respond to e-mail and phone messages seeking comment on the probe.



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Ohio Department of Natural Resources' Division of Oil and Gas Resources Management State agency Web site.

ODNR Division of Oil and Gas Resources Management. State drilling permits. List is updated weekly.

ODNR Division of Geological Survey.

Ohio Environmental Protection Agency.

Ohio State University Extension.

Ohio Farm Bureau.

Ohio Oil and Gas Association, a Granville-based group that represents 1,500 Ohio energy-related companies.

Ohio Oil & Gas Energy Education Program.

Energy In Depth, a trade group.

Marcellus and Utica Shale Resource Center by Ohio law firm Bricker & Eckler.

Utica Shale, a compilation of Utica shale activities.

Landman Report Card, a site that looks at companies involved in gas and oil leases.FracFocus, a compilation of chemicals used in fracking individual wells as reported voluntarily by some drillers.

Chesapeake Energy Corp,the Oklahoma-based firm is the No. 1 driller in Ohio.

Rig Count Interactive Map by Baker Hughes, an energy services company.

Shale Sheet Fracking, a Youngstown Vindicator blog.

National Geographic's The Great Shale Rush.

The Ohio Environmental Council, a statewide eco-group based in Columbus.

Buckeye Forest Council.

Earthjustice, a national eco-group.

Stop Fracking Ohio.

People's Oil and Gas Collaborative-Ohio, a grass-roots group in Northeast Ohio.

Concerned Citizens of Medina County, a grass-roots group.

No Frack Ohio, a Columbus-based grass-roots group.

Fracking: Gas Drilling's Environmental Threat by ProPublica, an online journalism site.

Penn State Marcellus Center.

Pipeline, blog from Pittsburgh Post-Gazette on Marcellus shale drilling.

Allegheny Front, environmental public radio for Western Pennsylvania.