Oil field services companies have been hit just as badly as the explorers and producers by the COVID-19 pandemic.

The three largest providers – Schlumberger, Halliburton and Baker Hughes – alone have written down some $US45bn ($62.33bn)

Morgan Stanley said the industry appeared to be in a significant capacity reduction and repair phase that it believed would not quickly reverse.

“From a supply-side perspective, we think this effectively marks the bottom of the cycle,” the American investment bank said.

And its not hard to see why with the Frac Spread Count, a measure of the fracking equipment and crews provided by Primary Vision, falling to 80 last week, down from 400 this time last year.

Oil field services companies are no strangers to the pressure they are facing now.

In the last downturn following the oil price crash in 2014, US operators looking to pinch pennies sought aggressive discounts of up to 30 per cent from service providers.

However, there are always exceptions to the rule.

Engineering products and solutions provider Synertec (ASX:SOP) recently provided a $1m loan facility to Sichuan GreenTech Environmental (Greentech) to fund expanded pilot programs with two Chinese state oil and gas companies.

The programs revolve around Greentech’s environmentally friendly and cost-effective solution for processing oil and gas drilling wastewater and toxic sludge.

Here’s the exciting bit.

Drilling mud – often a water-based product – is constantly pumped to the drill bit to provide lubrication and to remove waste from the ground.

This produces a lot of sludge with each rig outputting between 5,000 and 10,000 tons per annum.

The scale of this becomes apparent when you consider that Chinese state oil companies are deploying large numbers of rigs to drill shale gas wells.

While disposing the sludge in landfill or composts are the primary methods used in China, the Chinese government has been increasingly enforcing environmentally friendly methods of processing drill sludge waste.

This presents a massive opportunity for Greentech’s solution, which promises to process water-based sludges into non-polluting, high-strength building materials.