Indian guar hits Halliburton’s North American profits

Halliburton, the world's second-largest oil field services company behind Schlumberger, yesterday said that the shortage of Indian (Guar) beans, a key part of the hydraulic fracturing fluids, will hit its North American profit margins this quarter.

Houston, Texas-based Halliburton said it expected North American profit margins in to fall from 25 per cent in the first quarter of the year to between 19.5 per cent and 20 per cent in the second quarter, three percentage points more than it predicted in April.

The oil field services giant said shortage of Indian Guar was responsible for a spike in the price of guar gum and that it is looking for alternatives to use in the fracking process.

Guar gum, which is poor man's vegetable in India is also used to make sauces and ice cream, and is a key ingredient of the hydraulic fracturing process used to extract oil and gas from oil shale.

Companies drilling for oil and gas in shale formations use the powder-like gum made from the seeds of guar, or cluster bean to increase the thickness of proppants, materials which are forced into shale fractures to enlarge them so that the oil and gas can be extracted.

The massive boom in US shale oil and gas industry has led to price of guar gum spiralling and now accounts for as much as 30 per cent of the overall fracking price.