American Oil and Gas Reporter - December 2017 - 65

SpecialReport: Well Stimulation & Completion Technology
FIGURE 2
Wells Spudded, Wells Fractured and Stage Counts
50

800

35.3

34.9

34.4

600

28.9

500
20.1

15.5

15.4

16.5

18.1

19.9

22.2

400
300

11.9

Frac Stages

Thousands of Wells

700
40

200

100
0
2011 2012 2013
HZ wells fracced

2014

2015 2016 2017
VT/DR wells fracced

market for frac sand, according to Jacob,
who notes that it was the lone region to
grow proppant demand through the darkest
days of the 2015-16 activity downturn.
To streamline supply-side logistics and
reduce delivered costs, he reports that a
long list of companies is working to make
West Texas a new frac sand supply epicenter by opening mines right in the
backyard of North America's hottest horizontal resource plays.
IHS Markit counts 17 active "brown
sand" mines in operation across the Lone
Star State (mostly in East and South
Texas), but has identified a roughly equal
number of new in-basin mines that have
been announced within the greater Permian's Central Basin Platform that separates the Delaware and Midland subbasins. Incidentally, some of the West
Texas mine sites are owned and operated
by the same companies mining northern
white in the Great Lakes/Upper Midwest.
"Realistically, we do not expect all
the announced in-basin capacity to come
on line, but a lot of it will, and soon,"
Jacob posits. "It will have a big impact
on the proppant supply chain in all parts
of the country."
Activity Indicators
Looking at activity trends as tracked
by IHS Markit, it is easy to see why
proppant suppliers are eager to expand
capacities. Driven by activity in West
Texas, Jacob says IHS Markit predicts
that U.S. drilling and completion activity
will build on the momentum of 2017,
when the number of well spuds jumped
61 percent and the number of horizontal
wells hydraulically fractured soared by
57 percent year over year (Figure 2).
Over the coming 12 months, IHS
Markit estimates that operators will regulate the drilling pace to allow completions
to get caught up, projecting the number

2018

2019 2020
Wells spud

2021

0
2022
Frac stages

of new wells to decline modestly and the
number of horizontal wells fractured to
increase slightly compared with 2017,
Jacob reveals. Longer term, however, he
says IHS Markit forecasts healthy yearover-year growth in the numbers of wells
drilled and fractured, returning annual
horizontal well completion counts for
2019-22 to levels roughly on par with
the 2012-14 timeframe.
"We also see the inventory of drilled
but uncompleted (DUC) wells shrinking
in 2018," Jacob remarks. "There always
will be DUCs because of the nature of
pad drilling and the lag time between
drilling and completing. But the U.S.
frac fleet has struggled to keep up with
the drilling pace through most of 2017.
Lag times are longer and there have been
bottlenecks in frac fleet availability and
proppant supplies. Because of that, a lot
of the DUC buildup is unintentional. Frac
crews should start catching up."
According to Jacob, a total of 1.6 million horsepower in new-build frac capacity

has entered service this year, helping alleviate regional supply-side tightness.
"With the new-build capacity, our latest
projections put the total U.S. land frac
fleet capacity at 17.9 million horsepower.
However, we think 1.9 million of that
total horsepower will remain in cold stack
and not return to service."
For an industry hoping to finally
break into a sustained recovery mode,
consistent activity levels, fewer DUCs
and new investments in fracturing horsepower are all welcome news. However,
Jacob points to two prominent trends
largely defining future well completion
activity in IHS Markit's analysis: The
total numbers of frac stages in horizontal
wells, and proppant volumes pumped
per well, which surged by 76 percent
and 28 percent, respectively, through
the first part of 2017.
"We project that the number of frac
stages pumped will hit an all-time high
for any calendar year by mid-2018, and
keep growing through 2020," Jacob says.
"Given the longer laterals and increased
stage counts, it is no surprise that the average proppant mass per horizontal well
also is increasing, driving a 103-percent
jump in frac sand demand in 2017. We
see proppant demand continuing to grow
at a 12-13 percent compound annual rate
through 2020."
Jacob credits EOG Resources Inc.'s
Eagle Ford team with pioneering the
slickwater frac designs with high proppant
concentrations quickly that have become
the de facto standard in shale plays.
"There is always a set of operators at the
forefront, and then everyone else eventually
follows. We think part of the exponential

These trucks are loading at the ﬁrst in-basin sand mine serving the Permian Basin. HiCrush, the mine's operator, says the Kermit, Tx., facility can produce as much as 3 million
tons of high-quality ﬁne mesh sand a year.

DECEMBER 2017 65

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