Vern Whitten reminds us of these floods:
The U.S. frack sand market has been turned on its head. Over the past three years, demand for the sand used in hydraulic fracturing has more than doubled, dozens of new “local” sand mines have been popping up within the Permian and other fast-growing plays, and frack sand prices have fallen sharply from their 2017 highs. The big changes don’t end there. Exploration and production companies (E&Ps), who traditionally left sand procurement to the pressure pumping companies that complete their wells, are taking a more hands-on approach. And everyone is super-focused on optimizing their “last-mile” frack sand logistics — the delivery of sand by truck, plus unloading and storage of sand at the well site — with an eye toward minimizing completion costs and maximizing productivity. Today, we begin a blog series on the major upheavals rocking the frack sand world in 2019.
We’ve said it time and again: the Shale Revolution would not have been possible without sand — and lots of it. Way back in 2012, we explained that freeing the vast amounts of oil, gas and natural gas liquids (NGLs) trapped in shale and tight sands requires horizontal drilling to access the long, pancaked layers where trapped hydrocarbons reside, as well as proppants (natural sand, ceramics and resin-coated sand) that, when forced out of the laterals at high pressure (using water and other fluids), fracture openings in the surrounding shale/tight sands. When the pressure is released, the fractures attempt to close but the proppant contained in the fluids keeps them open, making a ready path for oil, gas and NGLs to flow into the well bore.
Then, we discussed how the trend toward much longer laterals and high-intensity well completions caused demand — and prices — for Northern White Sand (NWS) from the Upper Midwest (long the preferred sand type) to soar. That helped spur the development of new, local sand mines in the Permian (and the Eagle Ford, SCOOP/STACK and the Haynesville) to help meet rising frack sand demand and to reduce sand transportation costs by eliminating the cost of long-distance rail shipments and rail-to-truck transloading.
Most recently, we looked at — among other things — the still-rising volumes of sand being used per well, the development of more local sand mines, and the steps that an increasing number of E&Ps were taking to become more involved in sand procurement.The Permian already has transformed its sand sourcing.
Our understanding is that nearly 90% of the frack sand being used right now every day in the Permian is coming from local sand mines — few of which were in operation two years ago. Figure 2 shows the 20 existing sand mines in the Permian region (red boxes) and how their locations relate to the array of drilling rigs now active in the Permian’s Delaware Basin (blue triangles on left side of map) and Midland Basin (blue triangles on right side).