Geologists Looking For Fracking Sand Source In North Dakota -- Fracking Sand Costs -- Transportation -- August 26, 2018

Cost of sand / transportation:

• Wisconsin sand producers seek transportation relief; Transport Topics, July 30, 2018
• the cost of mining frack sand in Illinois, June 10, 2018: $110 / ton; $40 of the $110 is "pure profit"
• $40 / ton, WSJ, March 23, 2017
• Permian, $350K of sand / well; SeekingAlpha, March 7, 2017
• Hi-Crush buys Permian Basin Sand, March 1, 2017
• $30 - $40 / ton; John Kemp, February 22, 2017
• Hi-Crush: $64 / ton -- 2016
• cost of shipping from mid-Wisconsin to northeast Colorado, $175 / ton; reader; August 26, 2014 
• this article,  Wisconsin sand producers seek transportation relief; Transport Topics, July 30, 2018:
• complaining about lack of rail competition
• nominal rail cost has doubled since 2001
• a lot of complaining, but no cost / ton / distance provided

So, in round numbers, maybe:

• $60 / ton for fracking sand (up from $20 / ton at the beginning of the Bakken boom)
• $150 / ton for shipping by truck (?)

But here's the best analysis, perhaps, from a PDF that I cannot link, a PLG presentation at JPMorgan, January 11, 2018:

Notice the cost to get the sand the last mile!

Now the article sent to me be a reader, data points:

• operators looking for "local" source of fracking sand to cut down on shipping costs
• operators using an average of 2,500 to 5,000 tons / well
• from the article:

Fred Anderson, geologist with the North Dakota Geological Survey, authored a study in 2011 that said North Dakota sand sources approach oil industry standards for use in fracking but are lower in overall quality than other U.S. sources.

There's a renewed interest in that research, however, as demand for sand increases and companies experiment with lower-cost options.

"They're accepting sands that we probably never would have accepted 10 to 15 years ago," said Monte Besler, owner of FRACN8R Consulting in Williston.

For CLR, twenty million lbs of sand = 10,000 tons

• product at $60/ton = $600,000
• transportation at $150/ton = $1.5 million
• sand + transportation: upwards of $2 million 

At a more conservative 5,000 tons, the cost can come down to $1 million (sand + transportation).

Idle Chatter On Costs Of Completed Wells In The Bakken -- September 20, 2014

About a week or so ago, a reader sent me an e-mail regarding the high cost of a CLR well in the Bakken. I replied at the time:

It probably was an expensive well. The operators all say they are bringing prices of completed wells down, to the neighborhood of $7 - $8 million but I don't put much faith in those estimates. The biggest problem is figuring out what is being paid for; too many things that can be hidden in numbers like that. I think we will continue to  see "cost containment" in the corporate presentations, but with a) huge proppant volume; and, b) slickwater adding 35% to the average EUR in the Basin, I think the emphasis is going to be on raising EURs this year and next (despite the cost) and then get back to trying to contain costs. Operators will see savings in pad drilling and leasing costs, offsetting completing/fracking costs.

I wrote that on September 18, 2014. Tonight, while reviewing the most recent CLR presentation, my thoughts were confirmed. Slide #50 of the presentation shows the cost of completed CLR wells. Between 2012 and early 2014, operators were talking about decreasing the cost of completed wells. CLR was reporting the following:

• 2012: $9.2 million
• 2013: $8.0 million
• 1H14: $7.8 million
• But then, starting earlier this year, the price of completed CLR wells increased from $7.8 million to $10 million, due to higher proppant volumes and slickwater. 

It looks like we're back to $10 million wells. Remember, these are long laterals. I believe wells were costing in the neighborhood of $4 - $6 million for short laterals when the boom first began in the Bakken. In other words, the costs of completed wells is still in the same ballpark as when the boom began, but the wells are much, much better, and the time from spud to first production has decreased significantly.

Whiting has differentiated itself in the Bakken as the "low cost operator' in its corporate presentations. It will be interesting to see if that continues to be a bullet in their presentations once they acquire KOG, with their very expensive wells.

Transportation Costs For Fracking Sand From Wisconsin -- August 26, 2014

From a reliable source, data points, regarding shipping fracking sand to the midwest from Wisconsin, from one dispatcher:

• a slow week: 60 semi-loads
• a busy week: 120 semi-loads
• delivery cost from mid-Wisconsin to northeast Colorado: $175/ton
• shipping by truck because NO available trains 

The number of semi-loads is irrelevant to the degree of activity in the Bakken; the number of semi-loads is relevant because it provides a large enough denominator/data base to suggest the price of shipping is not an outlier for this dispatcher.

That is the cost to a central delivery and storage point. Additional costs will be incurred for picking up the sand at the terminal and delivering it to the drilling site.

A typical Bakken well uses 4 million lbs of sand, or 2,000 tons = $350,000 for long-haul transportation.

Companies are trying to get average cost of well down from $8 million to $7.5 million, ball-park figures; they vary dramatically, but that gives newbies an idea of cost of drilling/completing a Bakken well. The range is probably $6 million to $13 million/well. This does not include the less expensive wells near the Canadian border. I have no idea what they cost.

Disclaimer: this is all "idle chatter." I cannot vouch for accuracy but it's what I'm hearing, and what I've read. It could be wrong. In fact, some of it probably is. Mostly because folks will disagree on what a "typical" Bakken well is.

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Global Warming

Coldest August night on record in Ireland.

Breaks record for the entire month of August.

A new record for the coldest August night was set on the night of 23rd/24th August for Northern Ireland.

The Met Office said temperatures plunged to a bone-chilling -1.9C (28.6F) at Katesbridge, Co Down, beating the previous record of -1.1C at Loughermore Forest in 1964.

Note: This wasn’t just the coldest in Katesbridge, it was the coldest on record across all of Northern Ireland.

At some point ... 

But back in the day, when there really was global warming, it was a hot August night.

Brother Love's Traveling Salvation Show, Neil Diamond
This was nowhere near my favorite Neil Diamond song but it connects with that concert. It was always Neil Diamond for me on the radio driving between Blacktail Dam and Williston, back in 1969.

Update on Schlumberger Fracking Technology: Hiway

Link here.

I talked about Schlumberger Hiway fracking a long time ago.  That posting has been one of my most visited sites; this should be of interest to those looking for an update.

So how does Hiway work?

Hodenfield, who grew up in North Dakota where the Bakken field is at the centre of the U.S. shale gas boom, brightens at the opportunity to explain a process that adds a proprietary fiber to the traditional sand and fluid mix, and uses a "pulsing" system to send globs of the fiber in between each injection.

The dissolvable fiber globs create more effective channels for the gas to flow, and the pulsing rhythm can be made to match the geological structure of the rock, also pushing the sand deeper into the cracks and resulting in more effective openings that conduct gas better for every liter pumped in.
Hiway is not the only new technique on the scene as oil companies look to use fracking to reach more lucrative oil as well as gas.

Schlumberger and other innovators are also using sophisticated seismic techniques, combined with data from pilot wells, to reduce the number of fracks along a drill pipe and target only the "sweet spots" in the field.

This is one of the better articles on fracking I have seen in a long, long time, updating the technology now being used, in a language I can understand.

Go to the link; there's a lot more information there.

A huge "thank you" to a reader for sending me this link.

Now I Know Why "We" Are in Pakistan -- That's Where "We" Get Guar Gum -- Why I Love To Blog: Reason # 3,498 -- All About The Bakken and Pakistan, North Dakota, USA

Update

August 3, 2012: Fears of guar shortage overblown; not a problem.

June 6, 2012: Halliburton warns on 2Q12; margins will be hurt by higher cost of guar gum.  Link to Rigzone.

January 18, 2012: funny how things work out. I posted the note below a couple days ago, really not expecting to update it so quickly. One of the "things" I noted below was the urban myth about drug-containing coffins coming back from the Vietnam War -- and then suggesting stranger things have happened.

Today, taking up almost the entire front page of the Boston Globe is the story of the Massachusetts-prison-escapee-turned-Liberian-president Charles Taylor. It turns out that the "urban legend" that Chuck was working for the CIA (or similar agencies) wasn't all that far-fetched.

Original Post

Link here.

Data points:

• Fracking uses a lot of guar gum.
• Fracking has boosted the price of guar gum from 50 cents to $3.00/pound.
• Guar gum is used throughout the food industry; particularly notably, the ice cream industry.
• Guar gum comes from drone-infested Pakistan and non-drone-infested India. 
• The EPA will re-define guar gum as "diesel."

Greg started sending me e-mails regarding guar gum earlier this month. I got the above link from "anon 1" today.

That fifth data point was a joke. I made that up about the EPA redefining guar gum as "diesel" although I don't put it past them.

Two comments:

a) Now I know what the US and the Taliban are fighting over: gum.
b) This reminds me, in a very peculiar way, of the movie, American Gangster, which continues to haunt me and will haunt me for a very long time. 

*******************

As long as I mentioned American Gangster, I might as well cross over into the dark side. I don't recommend anyone read below the asterisks. This has nothing to do with the Bakken.  It's simply for my archives. 

I don't recommend anyone reading any farther (further?) because it can't possibly make sense to anyone other than to me, connecting dots that reside somewhere in my paleomammalian brain.

[During the day, my mind does these things to me; after midnight it's something entirely different.]

I am reading Caroline Alexander's book on the Trojan War. She references WWI and the Vietnam war (I haven't finished the book yet, so I don't know if she references the "wars" in Iraq, but she might as well).

The movie left me with haunting visions of heroin-filled coffins coming back from Vietnam, an urban myth but not far-fetched. The fog of war. Cynical NCOs. Clever NCOs. Opportunistic NCOs.

And maybe not an urban myth. It's easy to say "not possible." But it's harder to answer, "then how."

The Trojan War was ten (10) years long, Homer says. (The Iliad covers but two-weeks of that war.)
The Vietnam war was a ten-year war for the US (~ 1964 - 1975) and a 20-year war for the Vietnamese (~1955 - 1975). The Iraq war(s), certainly, as long. I can't remember if it was Caroline that pointed it out, or someone else: take any 100-year period in the last 5,000 years and one will discover that a major war was occurring somewhere on earth in 94 of those 100 years.

Ten years is a long time for lifers to get cynical. A lot of time for thinking. It's the kind of story the government would quickly label an urban myth. 

[Well, this is interesting. I'm on the second floor of the Starbucks overlooking Harvard Square. Moments ago a black-and-white drove up on the brick-laid pedestrian/kiosk/subway adit. Car running. Not blocking, but certainly impeding the entrance/exit to the subway. Now a "transit policeman" with coffee cup in hand, having pulled up in his blue-and-white, is now approaching the former. Well, whatever it was, it's over. The black-and-white has driven off; the transit policeman has gone below. With coffee cup in hand.]
Crime Story, Del Shannon
And so it goes.

The paleomammalian brain is filled with more trivia and emotion, only to be stomped by the neopallium. The blue-and-white is still there.

Drilling/Completion Costs of a Typical Bakken Well -- The Bakken, North Dakota, USA

When I posted information on an incredible Dakota-3 well, I forgot to include the cost of the well.

The data for this well is found here.

• 18922, 472, Dakota-3 (WMB), Dakota-3 Skunk Creek 1-12H, (South Fork field), 19,354 bbls in first 14 days; s9/10; t6/11; F; cum 132k 11/11 

The cost for this well:
Cost of well, according to the "well completion summary":

• AFE budgeted: $6,487,650.00
• Actual: drilling, $3,610,264.00; completion (fracking), $3,685,033.65. Total: $7,295,297,65.

This is not an old well; this is not old data. This well was completed about six months ago. Note the cost of this long lateral.

Some data points:

• short laterals used to cost upwards of $5 million; this is a long lateral at $7 million
• the hand-wringing of Newfield in the 3Q11 conference call, saying "we" had seen the last of $10 million wells (meaning, wells would cost more than $10 million going forward)
• as a rule of thumb, some folks say that completing (fracking) a well represents about half the total cost of a Bakken well; look how true that is in this case
• cost per fracking stage is said to be about $100,000; this was $3.7 million/17 stages --> $220,000/stage; going forward I will use $200,000 per stage
• Schlumberger has said that fracking costs will go down; actually they said that there will be pricing pressure on fracking that will affect their bottom line in 2012
• if folks keep number of fracking stages at 20 or below, they might be able to keep total costs below that Newfield $10 million figure, and the just is still out whether one has to go to 20 stages at this point, or whether one can re-frac later on, with more stages (I don't know if that's even possible)