Eric Long, president and CEO of USA Compression Partners (USAC), sees steady demand for new compression for a year and perhaps longer.
He said lead times for the major components of packages had been more than 12 months but have dropped to about nine months. Long said although fabricators are running relatively full through the first quarter of 2020, after that “There appears to be a fair amount of fabrication capacity available.”
Meanwhile, Long said new pipeline projects could increase gas flows from some major producing areas by mid-2020, improving netbacks to producers and boosting compression activity.
Long’s observations came as USAC disclosed its first quarter earnings. Net income was US$6.6 million for the period, compared to US$10.1 million in the fourth quarter of 2018. Revenues were US$170.7 million, compared to US$171.9 million in the fourth quarter.
USAC added 31,000 hp (23 MW) in the first quarter, bringing its active fleet to just under 3.3 million (2461 MW). Total fleet horsepower was unchanged at 3.6 million (2685 MW). The company will add 103,000 hp (77 MW) by next Jan. 1, mostly units 2500 hp (1.8 MW) and larger.
For many years, contract compression firms like USAC have operated 20% of U.S. compression while owner-operators (production companies, midstreams, and long lines) had the rest.
Long said the contractors may be able to expand their market share in the next decade as customers reevaluate their capital allocation and reconsider whether compression should be one of their core competencies.
“We’re starting to see moves by some people who historically have acquired, owned and operated (their compression) assets looking to outsource,” he said.