Fort Worth-based FTS International, one of the nation’s largest hydraulic fracturing service providers, said Tuesday that it has signed a 15-year joint venture agreement with Sinopec Group to apply its expertise in China.
The venture, SinoFTS Petroleum Services Ltd., will supply fracturing services to Sinopec and other Chinese producers. State-owned Sinopec (China Petroleum & Chemical Corp.) is based in Beijing and is one of the world’s largest companies, with about $460 billion in revenue in 2013.
According to Tuesday’s announcement, “SinoFTS will use new equipment that FTSI will custom-manufacture in the United States.” FTS spokeswoman Pam Percival said the deal “will definitely create more manufacturing work for FTSI employees here in Texas,” although it’s too early to say whether it will require additional staff.
FTS has a large machine shop in southeast Fort Worth and a big manufacturing and maintenance facility in Aledo. Together, those locations employ about 881 of its 3,566 total workers.
Percival said FTS also expects to train Chinese nationals working for the joint venture and for FTS employees to be stationed in China for both short- and long-term assignments.
FTS had pursued a Chinese venture for more than two years. It previously struck deals in the Middle East and Brazil.
“China has vast untapped shale gas resources, and we’re eager to play a role in their development,” CEO Greg Lanham said in a prepared release. He called Sinopec “a key strategic partner for us” in a country “poised to develop as the world’s largest unconventional oil and gas producer.”
On Tuesday, the International Energy Agency said it expects China to meet much of its growing natural gas demand with new domestic supplies within five years. Last year, China produced about 4 trillion cubic feet of natural gas, a fraction of U.S. production of about 24 trillion cubic feet.
Along with its economic growth and attendant energy demand, China faces pressure to cut its infamous air pollution, a product of coal-fired electricity plants. IEA forecast that China’s natural gas demand will nearly double by 2019, and the agency estimates that half its new supply will come from its own unconventional resources.
IEA, based in Paris, is an independent organization whose members are 29 oil-importing nations, mostly in Europe but also including the United States and Japan.
FTS, formerly called Frac Tech, was formed in Cisco in 2002 and moved its headquarters to Fort Worth in 2011. Today, it is one of the top four fracking companies in the U.S. It also provides oil and gas producers with wireline and water management services.
FTS is privately held. Its largest owner is Temasek, Singapore’s sovereign wealth fund. Chesapeake Energy owns about 30 percent.
Operations at SinoFTS are expected to begin in 2015. Ownership of the venture will be 55 percent Sinopec and 45 percent FTS.
In November 2012, FTS announced its Brazilian joint venture with PETRA Energia S.A., a private exploration and production company based in Rio de Janeiro. The previous May, it announced a similar venture in Saudi Arabia and Oman.