By Alison Sider
The U.S. Department of Justice has started an antitrust
investigation of the pressure-pumping business, a key component of
the oil-and-gas industry practice of hydraulic fracturing, Baker
Hughes Inc. (BHI) said in a filing with the Securities and Exchange
Commission Wednesday.
Baker Hughes said it received a Civil Investigation Demand from
the Justice Department under the Antitrust Civil Process Act. The
request sought information relating to the U.S. pressure-pumping
market beginning May 29, 2011.
Pressure pumping, the process of injecting water and other
materials into a well to break apart rock formations and unleash
oil and gas, is the main step in the hydraulic-fracturing process.
That technique, coupled with other advances in drilling, helped
spur a boom in U.S. oil and natural-gas production.
In the early days of the shale boom, demand for pressure pumping
work outstripped supply of equipment available to do it, and
oilfield services companies struggled to keep up.
But as demand grew, new companies entered into the business and
others expanded their capacity. The surge in activity, coupled with
lower prices for natural gas, has led to excess pressure-pumping
capacity in recent quarters and lower prices for the work.
Though their market share has declined in recent years, three
companies still dominate the pressure-pumping market in North
America: Halliburton Co. (HAL), the top provider of
pressure-pumping services in the U.S., Schlumberger Ltd. (SLB), and
Baker Hughes. The three companies accounted for some 63% of the
North American pressure-pumping market in 2012, according to
Barclays.
Baker Hughes didn't provide additional details about the scope
of the investigation or the information requested by the federal
agency.
"We are working with the DOJ to provide the requested documents
and information," Baker Hughes said in the filing. We are not able
to predict what action, if any, might be taken in the future by the
DOJ or other governmental authorities as a result of the
investigation.
Spokesmen for Halliburton and Schlumberger also couldn't be
reached immediately.
Write to Alison Sider at alison.sider@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires