American Oil and Gas Reporter - December 2017 - 62

SpecialReport: Well Stimulation & Completion Technology

Permian Driving Frac Sand Supply Shift
By Tim Beims
and Colter Cookson
On a hydraulic fracturing job site, the
sand king is a critical piece of machinery
at the heart of the stimulation operation.
It "feeds the beast" by taking proppant
from an endless cavalcade of trucks so
that it can be conveyed to blenders and
mixed with fluid for pumping down hole.
It is the final link in a long and winding
proppant supply chain that typically originates in Upper Midwest states with no
oil or gas reserves, but massive deposits
of a resource essential to producing unconventional formations: high-purity silica
sand that keeps induced fractures propped
open and hydrocarbons flowing from
low-permeability rocks.
Wisconsin's 44 active mines account
for nearly half the nation's total installed
frac sand capacity, according to Thomas
P. Jacob, a senior research analyst in IHS
Markit's upstream research division. In
the realm of frac sand mining, the Badger
State is undisputed king. The quartz-rich
northern white sand sourced within its
borders-and to a much lesser degree,
neighboring Minnesota and Illinois-has
long demanded a premium price in shale
plays. "Its physical properties make northern
white ideal for well stimulation," he says.
At any point in time, odds are that
unit trains being loaded with the "good
stuff" at central Wisconsin mining facilities
are destined to ride the rails for the long
haul south to the Permian Basin-far and
away the biggest frac sand consuming
market.
Industry metrics indicate that Permian
proppant intensities now are averaging on
the order of 1,900 pounds (nearly 1 ton),
but are as high as 5,000 pounds (2.5 tons)
per lateral foot. A run-of-the-mill Wolfcamp
horizontal consumes 12 million-14.5 million
pounds (6,000-7,250 tons) of proppant,
requiring a logistics infrastructure on the
scale of 300 truckloads to service a single
well. Given the efficiencies of multiwell
pad operations, a single frac crew can
place down hole 6 million pounds or more
of sand a day, emptying 130 dry bulk
trailers every 24 hours.
Production also is upsized, with operators reporting initial daily production
rates as great as 5,300 barrels of oil equivalent from Wolfcamp wells. "A horizontal
well in 2017 is not what a horizontal well
62 THE AMERICAN OIL & GAS REPORTER

was in 2014," Jacob states. "Well productivities are much higher. A lot of that has
to do with do with high-grading. Companies have been targeting their best acreage
in the best parts of the plays. But it also
has to do with process and technological
innovations made out of necessity to get
the most out of every well."
The most apparent innovations are related to lateral length and completion design. "There is a clear positive correlation
between proppant volume and well productivity," Jacob says, noting that U.S.
proppant consumption set a record this
year, and is expected to blow right past
that historic peak next year. Longer
laterals, denser frac stage spacing/higher
stage counts, and increased proppant intensities per stage are driving proppant
consumption growth and resulting in what
he describes as "a lot longer and bigger
wells in the best parts of the plays."
King Of Demand
These trends are particularly evident
in the stacked tight oil plays in the
Delaware and Midland sub-basins, Jacob
observes, distinguishing the Permian as
the reigning king of frac sand demand.
By IHS Markit estimates, he says West
Texas accounts for 37 percent of all U.S.
proppant demand, putting away more
sand every day than the next two largest
consuming basins-the Eagle Ford and
Marcellus/Utica-combined.

The logistical catch is that Google
Maps shows that 1,313 miles lie between
Chippewa County, Wi., and Midland
County, Tx. A cardinal rule in logistics
management is that the supply chain
grows increasingly complicated the longer
it stretches, the more volume it must deliver, and the faster it must move. So
how much demand pull is at the end of
the line in the West Texas, and how
quickly are Permian horizontals churning
through frac sand supplies?
Given increasing well sizes and proppant densities, IHS Markit estimates that
Delaware and Midland basin operators
will consume 50 billion pounds of proppant this year-doubling 2016's total and
quadrupling 2014's gross amount (Figure
1). That breaks down to 137 million
pounds (68,500 tons), or the equivalent
of more than 600 railcars (four standard
150-car unit trains) worth of sand every
day of the year.
Looking forward, Jacob says Permian
demand is expected to maintain its upward
climb, reaching 119 billion pounds by
2022 to account for 40 percent of the
total projected amount for all U.S. shale
plays. At that forecasted level of consumption, Permian operators would be
pumping proppant at a daily rate of 326
million pounds (163,000 tons, or enough
to fill 1,500 railcars/10 unit trains).
In short, the Permian has been-and is
forecast to remain-the ultimate growth

FIGURE 1
Regional Demand Forecast for Frac Sand (Billions of Pounds)
299.1

320
280
240
200
160
109.5

120
80
40
0

78.3
5.5

5.0
12.3
22.7
8.8

2013
Delaware
Bakken

8.0

7.1
20.5
30.0
13.5

2014

99.1
7.1
6.1
18.6

79.8
4.0

23.8
14.5
7.0

4.4
12.1
15.1
15.7
9.0

2015

2016

Midland
Anadarko

148.4
7.3
10.9
12.7
8.8
22.6
26.2
26.7

164.8
8.5
11.5
13.7
9.1
29.8
23.5
32.0

186.5
9.1
15.2
14.5
10.9
33.8

24.0
37.0

220.6
10.3
18.7
16.5
12.4
34.8
30.0
49.4

259.5
11.2
23.4
19.8
15.5
36.5
36.0
60.6

12.3
32.0
26.4
20.4
37.0
41.9
67.2

22.4

27.2

32.9

38.5

45.5

49.2

2017

2018

2019

2020

2021

2022

Other Permian
DJ

Eagle Ford
Barnett

Appalachian
Fayetteville

American Oil and Gas Reporter - December 2017

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