FTS International (FTSI) – one of the largest well completion service companies in North America – has entered into a 15-year joint venture agreement with the Chinese, state-owned giant Sinopec Group (Sinopec).
This joint venture collaboration is the culmination of a multi-year effort by both companies to bring FTSI’s hydraulic stimulation capabilities and expertise to China. Upon incorporation in China, the joint venture company, SinoFTS Petroleum Services Ltd. (SinoFTS), will be owned 55% by Sinopec and 45% by FTSI. SinoFTS is the first oilfield services collaboration of its kind between a non-Chinese well completion company and a Chinese national oil company. SinoFTS will serve both Sinopec and other exploration and production companies throughout China.
As Sinopec leads the development of China’s unconventional oil and gas resources, estimated as the world’s largest, this joint venture will create a China-centric well completion company with industry-leading capabilities. The joint venture marks a major milestone in the development of China’s shale resources, the collaboration between Chinese and U.S. companies, and FTSI’s international expansion plans.
SinoFTS will use new equipment that FTSI will custom-manufacture in the United States, featuring the latest innovations and adapted to the specific requirements of the Chinese environment.
FTSI will leverage insight from its own vertically integrated U.S. operations to evaluate a similar vertical integration model at SinoFTS. As the largest pressure pumping company created during the U.S. shale renaissance, FTSI is well positioned to collaborate with Sinopec to develop China’s onshore pressure pumping industry.
The collaborative endeavour will initially focus on the Sichuan basin, China’s most promising shale play, providing services under a long-term, dedicated contract. Operations for the initial fleet are expected to commence in 2015, and further deployments of pressure pumping fleets are expected in basins throughout China. SinoFTS will be head-quartered in Beijing and managed by industry experts from both FTSI and Sinopec.
FTSI Chief Executive Officer Greg Lanham commented, “We are very excited to begin this joint venture with such an esteemed partner. China has vast untapped shale gas resources, and we’re eager to play a role in their development. Just as FTSI was born out of the emergence of the U.S. unconventional energy industry, we expect that SinoFTS will enhance the development of China’s domestic energy renaissance. Sinopec will be a key strategic partner for us, and we see a long, successful venture ahead, working together in a country poised to develop as the world’s largest unconventional oil and gas producer.”
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