Rock Products

APR 2018

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14 • ROCK products • April 2018 www.rockproducts.com FRAC SAND INSIDER PropTester Inc. and KELRIK LLC announced the release of its 2017 Proppant Market Report. The report is an annual review of the global proppant market in relation to prior years. Proppant demand improved signifi- cantly following the two-year decline experienced in 2015-2016. "The signif- icant rebound is a trend we have seen previously, whereby industry down- turns are followed by intense demand recovery that often establish new his- torical highs," said lead author Brian Olmen, KELRIK LLC. "The amount of proppant supplied grew by 79 percent in 2017 and surpassed 80 million tons (160 billion lb.), a new historical high. The significant rebound is a trend we have seen previously, whereby indus- try downturns are followed by intense demand recovery that often establish new historical highs." The frac sand segment was the primary beneficiary of the upturn as demand improved 82 percent. The sand indus- try consists of more than 70 producing companies operating 140 production facilities with multiple new operations under active development. A majority of the new capacity consists of greenfield projects located in close proximity to active shale plays includ- ing the Permian Basin and Eagle Ford Shale, but sand capacity expansions are occurring throughout the supply base such as in Canada and Wisconsin. In addition to the customary sand, ceramic and resin-coated supplier summaries on over 120 producers, this year's report provides a summary of work being continued by PropTester's Proppant Transport Research Council (PTRC) and the relevance that work has in relation to completion trends involv- ing the use of smaller mesh proppants in unconventional resource development. Companies throughout the industry (operators, service companies, proppant and chemical providers) have dedicated resources to further study proppant behavior inside a fractured formation. Research is ongoing and will continue with the 2018 PTRC, by expanding into chemical technologies centered around proppant-carrying capabilities. "With a vast increase in proppant demand, new technologies are focused on specialty proppants and chemicals," said Don Anschutz, president and CEO of PropTester Inc. "Our goal is to provide third-party research on new and existing technologies to assist the industry with a better understanding of how proppant and chemicals are behaving in today's oil and gas wells. It's important to be actively involved in research and devel- opment projects to allow for accurate reporting purposes and future outlooks in the overall proppant industry." Proppant Market Report subscribers have access to an electronic copy of the confidential report, as well as access to the report at www.proppantmarket- report.com. Frac Sand Market Recovers to Largest Year in History Preferred Proppants LLC commercial operations at its Atascosa, Texas, sand mine and facility, marking another milestone as the company continues its national in-basin sand strategy aimed at reducing the cost of sand and associated logistics for customers in the region. "This opening represents a significant event within our continued, multi-year localization strategy," said Michael O'Neill, founder and CEO of Preferred Sands. "The Atascosa facility, coupled with our second local plant opening in the near term in Monahans, Texas, will ultimately add more than 6 million tons of capacity available to our customers in both the Permian Basin and Eagle Ford Shale. We're excited to continue our record as an innovative first mover and remain committed to being the lowest CLAW (cost-landed-at-well) and highest production-enhancing partner to our customer base in all the areas in which we operate." Preferred's logistically advantaged Atascosa facility includes a wet and dry plant and storage silos, as well as auto- mated, multi-lane, drive-in, drive-out trucking capabilities. The plant will pro- duce high-quality 40/70 and 100 mesh local sand for Eagle Ford operators and will ultimately produce approximately 3 million tpy of finished goods product. The plant is substantially contracted by large, well-known, oil and gas operators and service companies, which will be complemented by some spot sale of product, when available. After closely studying data on proppant performance and comparing coarser Northern White sand and local, finer sand, Preferred led the industry shift away from Northern White. The com- pany closed its Northern White mine in Minnesota in 2015 and sold its Blair and Bloomer, Wis., mines in 2017. Its renewed focus on local sand positions the company to have a unique multi-ba- sin approach. This strategic localization strategy is driven by the company's goal to drive down costs for customers. These events continue a plan put in place nearly three years ago for the company to be the lowest cost-landed- at-well (CLAW) regional and in-basin local provider of frac sand in the most prolific basins in the United States. Preferred Proppants Opens New Texas Plant

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