* N.America liquids basins start seeing price pressure in Q1
* Schlumberger shares down 1.2 pct, Baker Hughes off 1.6 pct
* Market leader Halliburton rises, seen as better placed
By Braden Reddall
NEW ORLEANS, March 26 (Reuters) - Schlumberger Ltd, the world's largest oilfield services company, said profits would be hurt by downward pricing pressure for hydraulic fracturing services, which had now reached North American liquids-producing basins as well.
Kibsgaard said in a speech to kick off the Howard Weil Energy Conference in New Orleans on Monday.
Chief Executive Paal Kibsgaard said that on top of the price squeeze, already widely seen in natural gas areas due to weak gas prices, the shift of pressure pumping equipment to liquids-rich basins was reducing utilization while also adding to costs.
"Together these factors will have an impact on our results both in North America, and overall, in this and in the coming quarters,"
The use of hydraulic fracturing, or fracking, around the many U.S. shale basins has boosted natural gas production while stemming (To make headway against: )a decades-long trend of falling U.S. oil production.
"There is some slackening of demand in the gas plays and there has been migration to liquids plays. So there's more supply coming online and it is normal that pricing would come down," said David Vaucher, an analyst with IHS-Cambridge Energy Research Associates in Houston.
Vaucher highlighted the challenge of getting all those materials to so many wells. "Looking at just pressure pumping is a little myopic," he said. "There is upward pressure for all other things that are still required for fracking jobs."
But other supplies remain scarce in general, from rigs to frack crews, water, sand and synthetic proppants used to keep cracks in shale rock open to get the hydrocarbons out.
HALLIBURTON UP
Shares of Schlumberger, which makes most of its money outside North America, fell 1.2 percent to $72.28, while rival Baker Hughes Inc dropped 1.6 percent to $43.03.
Baker Hughes gave a profit warning last week, in addition to a warning in January, about the impact of disruptions from its fracking crew relocations and supply shortages.
But shares of Halliburton, the market leader in North American pressure pumping, rose 0.8 percent on Monday.
"We believe (Halliburton) has a much better developed supply-chain network, and while not immune to near-term frictions, will likely post much better margins than its peers in North America," Sterne Agee Analyst Stephen Gengaro wrote on Monday as he cut profit estimates for Baker Hughes.
Nabors Industries Ltd, the No. 6 in North American pressure pumping, sees an increasingly competitive market in 2012 and a U.S. land rig count "flat to slightly down" in the second half of 2012. But the company said that with 72 percent of its 2012 operating income under contract, the downside was limited.
Nabors also spelled out plans to sell its helicopter business and well service rigs in Canada, some of its offshore rigs, as well as its oil and gas properties. Dahlman Rose's James Crandell expects those sales to raise about $1 billion.
Outside North America, Schlumberger saw steady growth from deepwater activity and exploration, as well as key land markets.
"The medium-term outlook for the oil and gas industry remains positive, driven by the narrow cushion of spare oil capacity and the growing demand for natural gas," Kibsgaard said in his first presentation to the conference after taking over as CEO from Andrew Gould last August.
Barclays believes international growth could offset the near-term weakness in North America. "We think this softness is largely due to transitory issues and some pricing pressure in pressure pumping," analysts at the bank wrote on Monday.
Bernard Duroc-Danner, an economics Ph.D. who runs oilfield services company Weatherford International Ltd , said the pressure pumping market may get even tougher as a result of building decisions made three months ago in response to what were then healthy margins.
"Beyond the 'gas very bad, oil very very good' phenomenon, pressure pumping has dynamics of its own insofar as there is a quite sizeable amount of capacity just waiting to come on the market," Duroc-Danner told the conference.
The industry has attempted to rein in this expansion. Superior Energy Services Inc, for one, cut its pressure pumping capacity growth plan this year by about one-quarter.
This follows the huge ramp-up in the past few years. Dan Pickering, of Tudor, Pickering, Holt, sees available hydraulic horsepower by year-end at 19 million horsepower, or 2-1/2 times more than in 2009. A typical frack job uses up about 50,000 hp. === Jul. 22, 2012 6:44 PM ET Experts: Some fracking critics use bad science By KEVIN BEGOS, Associated Press AIM Share FILE - In this file photo from Nov. 3, 2010, documentary filmmaker Josh Fox speaks at a rally of protestors against Marcellus Shale drilling and hydraulic fracturing in Pittsburgh. Researchers say the claim that fracking has been linked to increased cancer rates in Texas is simply wrong. Fox, an Oscar-nominated filmmaker who uses the claim in a new film, declined to acknowledge the error when told of researchers who say he's doing a disservice to people with cancer by misrepresenting health data. (AP Photo/Keith Srakocic, File) More News Video APNewsBreak: EPA reviews part of power plant rule Jul. 20, 20125:32 PM ET Judge slaps mining company with $2 million penalty Jul. 20, 20123:44 PM ET NM fuel spill threatens Albuquerque water supply Jul. 20, 20126:31 AM ET US insurer won't cover gas drill fracking exposure Jul. 12, 201210:12 PM ET Electric rates not falling along with fuel costs Jul. 11, 20122:54 PM ET
PITTSBURGH (AP) — In the debate over natural gas drilling, the companies are often the ones accused of twisting the facts. But scientists say opponents sometimes mislead the public, too.
Critics of fracking often raise alarms about groundwater pollution, air pollution, and cancer risks, and there are still many uncertainties. But some of the claims have little — or nothing— to back them.
For example, reports that breast cancer rates rose in a region with heavy gas drilling are false, researchers told The Associated Press.
Fears that natural radioactivity in drilling waste could contaminate drinking water aren't being confirmed by monitoring, either.
And concerns about air pollution from the industry often don't acknowledge that natural gas is a far cleaner burning fuel than coal.
"The debate is becoming very emotional. And basically not using science" on either side, said Avner Vengosh, a Duke University professor studying groundwater contamination who has been praised and criticized by both sides.
Shale gas drilling has attracted national attention because advances in technology have unlocked billions of dollars of gas reserves, leading to a boom in production, jobs, and profits, as well as concerns about pollution and public health. Shale is a gas-rich rock formation thousands of feet underground, and the gas is freed through a process called hydraulic fracturing, or fracking, in which large volumes of water, plus sand and chemicals, are injected to break the rock apart.
The Marcellus Shale covers large parts of Pennsylvania, New York, Ohio and West Virginia, while the Barnett Shale is in north Texas. Many other shale deposits have been discovered.
One of the clearest examples of a misleading claim comes from north Texas, where gas drilling began in the Barnett Shale about 10 years ago.
Opponents of fracking say breast cancer rates have spiked exactly where intensive drilling is taking place — and nowhere else in the state. The claim is used in a letter that was sent to New York's Gov. Andrew Cuomo by environmental groups and by Josh Fox, the Oscar-nominated director of "Gasland," a film that criticizes the industry. Fox, who lives in Brooklyn, has a new short film called "The Sky is Pink."
But researchers haven't seen a spike in breast cancer rates in the area, said Simon Craddock Lee, a professor of medical anthropology at the University of Texas Southwestern Medical Center in Dallas.
David Risser, an epidemiologist with the Texas Cancer Registry, said in an email that researchers checked state health data and found no evidence of an increase in the counties where the spike supposedly occurred.
And Susan G. Komen for the Cure, a major cancer advocacy group based in Dallas, said it sees no evidence of a spike, either.
"We don't," said Chandini Portteus, Komen's vice president of research, adding that they sympathize with people's fears and concerns, but "what we do know is a little bit, and what we don't know is a lot" about breast cancer and the environment.
Yet Fox tells viewers in an ominous voice that "In Texas, as throughout the United States, cancer rates fell — except in one place— in the Barnett Shale."
Lee called the claims of an increase "a classic case of the ecological fallacy" because they falsely suggest that breast cancer is linked to just one factor. In fact, diet, lifestyle and access to health care also play key roles.
Fox responded to questions by citing a press release from the Centers for Disease Control and Prevention that doesn't support his claim, and a newspaper story that Risser said is "not based on a careful statistical analysis of the data."
When Fox was told that Texas cancer researchers said rates didn't increase, he replied in an email that the claim of unusually high breast cancer rates was "widely reported" and said there is "more than enough evidence to warrant much deeper study."
Another instance where fears haven't been confirmed by science is the concern that radioactivity in drilling fluids could threaten drinking water supplies.
Critics of fracking note the deep underground water that comes up along with gas has high levels of natural radioactivity. Since much of that water, called flowback, was once being discharged into municipal sewage treatment plants and then rivers in Pennsylvania, there was concern about public water supplies.
But in western Pennsylvania, the Pittsburgh Water and Sewer Authority did extensive tests and didn't find a problem in area rivers. State environmental officials said monitoring at public water supply intakes across the state showed non-detectable levels of radiation, and the two cases that showed anything were at background levels.
Concerns about the potential problem also led to regulatory changes. An analysis by The Associated Press of data from Pennsylvania found that of the 10.1 million barrels of shale wastewater generated in the last half of 2011, about 97 percent was either recycled, sent to deep-injection wells, or sent to a treatment plant that doesn't discharge into waterways.
Critics of fracking also repeat claims of extreme air pollution threats, even as evidence mounts that the natural gas boom is in some ways contributing to cleaner air.
Marcellus air pollution "will cause a massive public health crisis," claims a section of the Marcellus Shale Protest website.
Yet data from the U.S. Energy Information Administration show that the shale gas boom is helping to turn many large power plants away from coal, which emits far more pollution. And the U.S. Environmental Protection Agency passed new rules to force drillers to limit releases of methane from wells and pumping stations.
Some environmental groups now say that natural gas is having a positive effect on air quality.
Earlier this year, the group PennFuture said gas is a much cleaner burning fuel, and it called gas-fired power plants "orders of magnitude cleaner" than coal plants.
Marcellus Shale Protest said in response to a question about its claims that "any possible benefit in electric generation must be weighed against the direct harm from the industrial processes of gas extraction."
One expert said there's an actual psychological process at work that sometimes blinds people to science, on the fracking debate and many others.
"You can literally put facts in front of people, and they will just ignore them," said Mark Lubell, the director of the Center for Environmental Policy and Behavior at the University of California, Davis.
Lubell said the situation, which happens on both sides of a debate, is called "motivated reasoning." Rational people insist on believing things that aren't true, in part because of feedback from other people who share their views, he said.
Vengosh noted the problem of spinning science isn't new, or limited to one side in the gas drilling controversy. For example, industry supporters have claimed that drilling never pollutes water wells, when state regulators have confirmed cases where it has. He says the key point is that science is slow, and research into gas drilling's many possible effects are in the early stages, and much more work remains to be done.
"Everyone takes what they want to see," Vengosh said, adding that he hopes that the fracking debate will become more civilized as scientists obtain more hard data.
Associated Press
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