Rock Products

JUL 2019

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54 • ROCKproducts • July 2019 www.rockproducts.com FRAC SAND INSIDER Demand for frac sand in the United States is predicted to grow by 10% in 2019 and 17% in 2020, according to Rystad Energy. Frac sand supply, on the other hand, is forecast to increase by 10% in 2019 and then decrease by 2% in 2020 as more Northern White Sand will come off the market. The Eagle Ford Basin in south Texas will play a pivotal role for sand price developments going forward, said the energy research and business intelli- gence company. Contracted prices of high-quality Northern White Sand will likely fluctu- ate between $20 and $25 per ton at the mine gate in the medium to long-term, according to Rystad Energy's latest Proppant Market Report. Rystad Energy does not expect in-basin sand prices in the Permian to increase in the forecast period as incremen- tal capacity additions at these mines are not as capital-intensive as at new greenfield mines. Frac sand, which is used in the hydraulic fracturing process, is a key cost driver for shale well drillers. Prices have been under pressure for some time thanks to oversupply in the market. However, Northern White Sand prices increased over the past two months on the spot market and are currently above $30 per ton. The price increase has been caused by temporary effects, and most will be resolved shortly, according to Rystad Energy. Looking ahead, the Eagle Ford Basin in south Texas will be the key market to watch in the industry. "Adoption rates for in-basin sand in Eagle Ford will determine the future for Northern White Sand. Lower qual- ity in-basin sand found in Eagle Ford may not be widely adopted due to higher downhole pressures found in that basin," said Thomas Jacob, Senior Analyst at Rystad Energy. Around 60% of activity in Eagle Ford occurs at average treatment pressures greater than 8,000 psi. This would suggest lower adoption rates in the basin, which is good news for North- ern White Sand. "In-basin sand mines in Eagle Ford have struggled to reach desired utilization levels in recent months, but we expect this issue to be solved in the near term," Jacob added. Frac sand demand is forecast to reach 181 million tons in 2024, represent- ing 8% annual growth from 2019 to 2024 (compound annual growth rate, CAGR). The Permian is expected to grow from 55 to 85 million tons in the same time period. Frac sand supply is set to reach 239 million tons in 2024. Rystad Energy expects 35% to 40% of Northern White Sand supply to come off the market by the end of 2020. Rystad Energy Predicts Frac Sand Market Communities would be prohibited from regulating air and water pollution and blasting at quarries, sand mines, and gravel pits under a plan approved by the legislature's GOP-controlled Joint Finance Committee, according to Urban Milwaukee. The committee approved the plan early last month during consideration of Gov. Tony Evers's proposed 2019-2021 state budget. There are more than 100 frac sand operations licensed or operating in Wisconsin. About two-dozen of them contrib- uted about $208,900 to legislative and statewide candidates between January 2010 and July 2018. Current legislators received $96,615 of those contributions, and Republican lawmakers, who control the Assembly and Senate, accepted $68,840 of those contributions. Topping the list of legislative fundraising and candidate campaign committees that received frac sand industry contri- butions were the Assembly Democratic Campaign Committee, $9,000; Committee to Elect a Republican Senate, $8,550; Democratic Senate Minority Leader Jennifer Shilling of La Crosse, $5,150; Republican Assembly Campaign Committee, $4,500; and GOP Rep. Joan Ballweg of Markesan, $4,250. The frac sand industry's top contributors between January 2010 and July 2018 were owners or employees of Mathy Con- struction, including Steven and LeeAnn Mathy of La Crosse, $33,850; Scott Mathy of Onalaska, $22,150; and William Atterholt of New Richmond, a Mathy vice president, $16,175. After the committee finishes its work the proposed two-year budget goes to the GOP-controlled legislature for consider- ation and then back to Evers, who can veto portions of it, for final approval. Wisconsin May Prohibit Cities from Regulating Air, Water, Blasting

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