• 11 hours Iraq Begins To Rebuild Largest Refinery
  • 15 hours Canadian Producers Struggle To Find Transport Oil Cargo
  • 17 hours Venezuela’s PDVSA Makes $539M Interest Payments On Bonds
  • 18 hours China's CNPC Considers Taking Over South Pars Gas Field
  • 20 hours BP To Invest $200 Million In Solar
  • 21 hours Tesla Opens New Showroom In NYC
  • 22 hours Petrobras CEO Hints At New Partner In Oil-Rich Campos Basin
  • 24 hours Venezuela Sells Oil Refinery Stake To Cuba
  • 1 day Tesla Is “Headed For A Brick Wall”
  • 1 day Norwegian Pension Fund Set to Divest From Oil Sands and Coal Ventures
  • 2 days IEA: “2018 Might Not Be Quite So Happy For OPEC Producers”
  • 2 days Goldman Bullish On Oil Markets
  • 2 days OPEC Member Nigeria To Issue Africa’s First Sovereign Green Bond
  • 2 days Nigeria To Spend $1B Of Oil Money Fighting Boko Haram
  • 2 days Syria Aims To Begin Offshore Gas Exploration In 2019
  • 2 days Australian Watchdog Blocks BP Fuel Station Acquisition
  • 2 days Colombia Boosts Oil & Gas Investment
  • 2 days Environmentalists Rev Up Anti-Keystone XL Angst Amongst Landowners
  • 3 days Venezuelan Default Swap Bonds At 19.25 Cents On The Dollar
  • 3 days Aramco On The Hunt For IPO Global Coordinators
  • 3 days ADNOC Distribution Jumps 16% At Market Debut In UAE
  • 3 days India Feels the Pinch As Oil Prices Rise
  • 3 days Aramco Announces $40 Billion Investment Program
  • 3 days Top Insurer Axa To Exit Oil Sands
  • 4 days API Reports Huge Crude Draw
  • 4 days Venezuela “Can’t Even Write A Check For $21.5M Dollars.”
  • 4 days EIA Lowers 2018 Oil Demand Growth Estimates By 40,000 Bpd
  • 4 days Trump Set To Open Atlantic Coast To Oil, Gas Drilling
  • 4 days Norway’s Oil And Gas Investment To Drop For Fourth Consecutive Year
  • 4 days Saudis Plan To Hike Gasoline Prices By 80% In January
  • 4 days Exxon To Start Reporting On Climate Change Effect
  • 4 days US Geological Survey To Reevaluate Bakken Oil Reserves
  • 5 days Brazil Cuts Local Content Requirements to Attract Oil Investors
  • 5 days Forties Pipeline Could Remain Shuttered For Weeks
  • 5 days Desjardins Ends Energy Loan Moratorium
  • 5 days ADNOC Distribution IPO Valuation Could Be Lesson For Aramco
  • 5 days Russia May Turn To Cryptocurrencies For Oil Trade
  • 5 days Iraq-Iran Oil Swap Deal To Run For 1 Year
  • 7 days Venezuelan Crude Exports To U.S. Fall To 15-year Lows
  • 8 days Mexico Blames Brazil For Failing Auction

Breaking News:

Iraq Begins To Rebuild Largest Refinery

Alt Text

Cyberattacks: The Biggest Threat To OPEC

As OPEC countries adopt automation…

Alt Text

Two Factors Driving Electric Aircraft

Two factors are driving the…

Follow The Sand To The Real Fracking Boom

Follow The Sand To The Real Fracking Boom

When it takes up to four million pounds of sand to frack a single well, it’s no wonder that demand is outpacing supply and frack sand producers are becoming the biggest behind-the-scenes beneficiaries of the American oil and gas boom.

Demand is exploding for “frac sand”--a durable, high-purity quartz sand used to help produce petroleum fluids and prop up man-made fractures in shale rock formations through which oil and gas flows—turning this segment into the top driver of value in the shale revolution.

“One of the major players in Eagle Ford is saying they’re short 6 million tons of 100 mesh alone in 2014 and they don’t know where to get it. And that’s just one player,” Rasool Mohammad, President and CEO of Select Sands Corporation told Oilprice.com.

Frack sand exponentially increases the return on investment for a well, and oil and gas companies are expected to use some 95 billion pounds of frack sand this year, up nearly 30% from 2013 and up 50% from forecasts made just last year.

Pushing demand up is the trend for wider, shorter fracs, which require twice as much sand. The practice of downspacing—or decreasing the space between wells—means a dramatic increase in the amount of frac sand used. The industry has gone from drilling four wells per square mile to up to 16 using shorter, wider fracs. In the process, they have found that the more tightly spaced wells do not reduce production from surrounding wells.

This all puts frac sand in the drivers’ seat of the next phase of the American oil boom, and it’s a commodity that has already seen its price increase up to 20% over the past year alone.

Frac sand is poised for even more significant gains over the immediate term, with long-term contracts locking in a lucrative future as exploration and production companies experiment with using even more sand per well.

Pioneer Natural Resources Inc. (NYSE:PXD) says the output of wells is up to 30% higher when they are blasted with more sand.

Citing RBC Capital Markets, The Wall Street Journal noted that approximately one-fifth of onshore wells are now being fracked with extra sand, while the trend could spread to 80% of all shale wells.

Oilfield services giants such as Halliburton Co. (NYSE:HAL) and Baker Hughes Inc. (NYSE:BHI) are stockpiling sand now, hoping to shield themselves from rising costs of the high-demand product, according to a recent Reuters report. They’re also buying more sand under contract—a trend that will lead to more long-term contracts and a longer-term boost for frac sand producers.

In this environment, the new game is about quality and location.

Frac sand extraction could spread to a dozen US states that have largely untapped sand deposits, but the biggest winners will be the biggest deposits that are positioned closest to major shale plays such as Eagle Ford, the Permian Basin, Barnett, Haynesville and the Tuscaloosa marine shale play.

The state of Wisconsin has been a major frac sand venue, with over 100 sand mines, loading and processing facilities permitted as of 2013, compared to only five sand mines and five processing plants in 2010.

Raw Frac Sand Price

But with the surge in demand for this product, companies are looking a bit closer to shale center to cut down on transportation costs and improve the bottom line.

One of the hottest new frac sand venues is in Arkansas’ Ozark Mountains, which is not only closer by half to the major shale plays, saving at least 25% per ton on transportation costs, but also allows for year-round production that will fill the gap in shortages when winter prevents mining in northern states.

Related: 5 Things You Probably Don’t Know About Fracking

“In the southern US, we can operate year round, so there is no fear of a polar vortex like that which we saw last year with some other producers,” says Mohammad of Select Sands.

Chicago-based consulting company Professional Logistics Group Inc. found in 2012 that transportation represented 58% of the cost of frac sand, while Select Sands, estimates the costs between 66-75% today.

The competition is stiff, but this game is still unfolding, while increased demand is reshaping the playing field.

US Silica Holdings Inc. says demand for its own volumes of sand could double or triple in the next five years, and its three publicly-traded rivals—Emerge Energy Services (NYSE:EMES), Fairmount Santrol (NYSE:FMSA) and Hi-Crush Partners (NYSE:HCLP), have also made strong Wall Street debuts over the past two years.

By. SImon Harlow of Oilprice.com




Back to homepage


Leave a comment
  • Richard W. Goodwin on November 25 2014 said:
    Praxair Inc and DryFrac
    Praxair Inc has applied for a patent using CO2 rather than water in fracturing shale rock. The injected CO2 is capable of delivering 4000 – 8000 psi.
    The following is extracted from Praxair’s publicly available information. Any more detail must be considered confidential pending the patent application approval.
    The CO2 reduces formation and water blockage damage, increasing production and recovery rates of the oil and/or gas well. The DryFrac technology blends the CO2 and sand which is then pumped into the ground by the service company. This technology integrates directly with the service companies’ high pressure p

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News