Halliburton Co. and Baker-Hughes Inc. are each answering questions from the Department of Justice regarding suppression of competition allegations.
"The Antitrust Division is investigating the possibility of anticompetitive practices involving pressure pumping services performed on oil and gas wells," said Gina Talamona, a Justice Department spokeswoman.
Pressure pumping is the process of injecting water and other materials into a well to break apart shale and other rock formations, releasing oil and gas. According to data from Barclay's, the pressure pumping industry has ballooned from an $8 billion business ten years ago to a $46.6 billion last year.
In 2011, demand for pressure pumping for fracking operations was at its peak, but available equipment supplies ran out quickly, leaving smaller companies unable to compete. This left the window wide open for large companies like Halliburton and Baker-Hughes. Since that time, roughly 50 companies have offered pressure pumping services for frack wells as more equipment is now available.
At Halliburton, "We understand there have been other participants in the industry who have received similar correspondence from the DOJ, and we do not believe that we are being singled out for any particular scrutiny," spokeswoman Beverly Blohm Stafford wrote in an email. "We intend to continue to cooperate with the DOJ's inquiries and requests in these investigations."
Schlumberger Ltd. is among the 'big three' including Baker-Hughes and Halliburton, but declined to comment. Altogether, the marketshare of the big three has diminished from 70% in 2008 to 63% today, but despite the 7% downtick, the Department of Justice Antitrust Division is taking a closer look.
Photo credit: k.landerholm / Foter / CC BY-NC