SAN ANTONIO -- The incredible growth of the Eagle Ford shale over the course of four years left many scrambling to keep up with the frenetic pace of activity in the area. Recent events have impacted the availability of services and supplies, giving service providers and suppliers an opportunity to catch their breath.

“Measuring from 2010 to May 2012, we had a rig count growth of 118%,” said Christopher Robart, principal for PacWest Consulting Partners, in his remarks at the recent DUG Eagle Ford Conference. “It put a lot of stress on the supply chain and the ability of the individual service providers, and the various product and consumables suppliers, to actually keep up with the activity.”

However, he noted in his update on the upstream supply chain and constraints in the Eagle Ford that most of the massive constraints and bottlenecks on the upstream side have been dealt with and the focus is now on optimizing operations.

“On the frac services side, we’ve been in an oversupply situation in the Eagle Ford market, probably starting in early 2012,” he said. He clarified that there is still a significant amount of drilling and completion activity happening both in the Eagle Ford and across the U.S. in general, while incremental demand for frac services is down.

“We see frac demand falling by about 8% across 2012, and that’s comparing average demand in 2011 Q4 against average demand in 2012 Q4. We see a slight increase, a slight uptick in that demand, in 2013 by about 1%.”

This falling demand has impacted pricing. “We’ve got reports on average frac pricing in the U.S. being $120,000 to $150,000 per stage, and that obviously varies depending on who the operator is and who that service provider is. But we do see it to continue to fall through 2012 and through 2013,” he said. “We’re not sure when that balance is going to hit, but somewhere, maybe mid- to late 2013 is really where we foresee that happening."

Tight supplies of frac sand, guar gum and water have contributed a unique set of challenges. “On the proppant side, there were some huge constraints in the 20/40 and the 30/50 grain size for a couple years, but now those constraints are pretty much worked out,” he said. “There’s a huge amount of capacity that has hit the market and will continue to hit the market over the next year to two years. So we see abundant supply on that end.”

In addition to the increased frac sand capacity, Robart notes that they have seen a “significant and relatively consistent increase in the use of ceramics in the Eagle Ford and also in the use of resin-coated sand.”

The smaller than expected harvest of guar in 2011 severely impacted the oilfield supplies market. “Prices (for guar) were on a bit of a rollercoaster over the last year or so. They hit a high around $25 per kilogram in May,” he said. “Now prices have fallen to, according to the price quotes we are getting out of India, around $3 per kilogram.”

Robart presented two scenarios for guar gum prices in the coming years. Assuming a large planting scenario, where there might be as much as 100% more acreage planted, prices for guar should remain near $3 per kilogram. A moderate planting increase of 10% to 20% could result in guar prices that range from $6 to $7 per kilogram.

In regards to water, Robart acknowledged that the drought created constraints in sourcing water. However, he did not see any major problems in the future. “It is obviously a challenge that people will have to monitor to ensure they’re getting water, but in general, due to some plentiful ground water sources and a decent amount of surface water available, people have been able to get the water they need to run the fracs and perform their operations.”