• 4 days Retail On Pace For Most Bankruptcies And Store Closures Ever In One Year: BDO
  • 10 minutes America Could Go Fully Electric Right Now
  • 6 hours Majors Oil COs diversify into Renewables ? What synergies forget have with Solar Panels and Wind Tirbines ? None !
  • 16 hours Something wicked this way comes
  • 4 hours America's Frontline Doctors - Safely Start Living Again!
  • 6 hours France Sees 10.6% EV Market Share In September — 4× Growth Year On Year
  • 23 hours A sneak peak into the US election
  • 6 hours Conoco Pledges ‘Net-Zero’ Emissions in Break With U.S. Rivals
  • 13 hours Permian in for Prosperous and Bright Future
  • 2 days covid. stop the carriers and thus stop the virus.
  • 16 hours Tesla Model 3 Is September's Top Selling Car of All Vehicles in Switzerland
  • 1 day California’s Electric Vehicle Dream Has A Major Problem: No
  • 2 days "COVID Kills Another Oil Rally" by Tom Kool 10/16/2020
  • 2 days Vote Biden for Higher Oil Prices
  • 2 days Ethanol present in gasoline
  • 2 days Is the coal industry on the way out?
  • 2 days Tucker Carlson responds to CDC after agency critiques commentary about mask-wearing
Oil Markets Are In For A Second Round Of Trouble

Oil Markets Are In For A Second Round Of Trouble

New lockdown measures and curfews…

Has The Gold Rally Run Out Of Steam?

Has The Gold Rally Run Out Of Steam?

Gold has had a tremendous…

Alberta Unimpressed By Canadian Plastics Ban

Alberta Unimpressed By Canadian Plastics Ban

Canada’s federal government has confirmed…

Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

More Info

Premium Content

Shale’s Efficiency Drive And The Coming Frac Sand Boom

Preoccupied with oil prices, API and EIA production reports and rig counts, most U.S. oil industry watchers miss one quiet segment of this industry that is actually thriving and will, in all likelihood, continue to thrive in the near future. This segment is sand mining.

Hydraulic fracturing involves injecting highly pressurized water into a well and then pouring sand into it in order to keep the tiny fractures created by the water blast open, and then widening them so that more crude oozes from the shale rock. When oil companies talk about constantly improving the efficiency of their wells, one common theme is increasing the amount of sand they pour into them. More sand makes for more oil, at no great cost increase.

As energy analyst and industry veteran Robert Rapier notes in an article for Investing Daily, sand miners supplying shale boomers suffered badly when prices tanked. Now, however, they are experiencing a veritable renaissance as the outlook for oil is turning rosy, and a rising amount of rigs are being put back at work.

The latest indication that things are definitely looking up for U.S. frac sand miners was an announcement from the largest public one among them, U.S. Silica, that it will buy smaller sector player NBR Sand for $210 million. Texas-based NBR operates one sand mine and a processing facility with a capacity for 2 million tons of frac sand annually.

The move, as Bloomberg writes, also highlights the emerging importance of lower-price brown sand, which is the kind of sand NBR mines. For most of the shale revolution, producers have relied on white sand, mined in Minnesota and Wisconsin, because it is stronger. However, it is now turning out that brown sand, such as the one mined in Texas, for instance, is not just cheaper—by about 25 percent—but performs just as well as white sand in its main job, which is keeping cracks in the rock open. Related: What Will You Do When The Lights Go Out? The Inevitable Failure Of The US Grid

According to U.S. Silica, brown sand currently accounts for over 40 percent of all frac sand used across the shale patch. In 2014, brown sand accounted for just 16 percent of the total. It seems that the price rout has taught shale boomers a valuable lesson about cost-saving. According to analysts quoted by Bloomberg, if oil prices manage to pass $60 a barrel, sand demand will jump above its current record of 64 million tons (booked in 2014) inside two years. There’s just one problem with this optimistic—and that’s the word “if”. Nobody seems to know if oil prices will regain so much ground in the foreseeable future.

Meanwhile, however, frac sand miners are not sitting idle. They are spending millions on improving their own efficiency as they turn their attention to new markets. Higher-cost shale fields are getting unattractive but low-cost extraction in, for example, the Permian, is garnering significant investment. The market for frac sand is shifting, and this shift will ensure growing demand even at WTI prices below $60.

The sand mining industry in the U.S. is very fragmented, with lots of small producers. Growing demand will intensify competition in an already very competitive sector, which will ultimately benefit E&Ps in no small way. On the whole, good news for sand miners is good news for shale boomers.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




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