Oil field services firm Carbo Ceramics closed another proppant plant as demand for its products dries up amid waning oil field activity.
The Houston-based company said it will idle the plant in Millen, Georgia until the market rebounds.
“This decision does not come easily, especially given the direct impact on our employees and their families, to whom we owe much of our success over the last 36 years,” CEO Gary Kolstad said in a statement.
The company declined to say how many employees will be affected by the decision.
Ceramic proppants are used during the hydraulic fracturing process to prop open the fissures created when companies blast water and chemicals underground to release the tiny droplets of oil and gas locked away in dense rock formations. While some drillers use sand, others use man-made proppants made from sand coated in resin or bauxite crushed into a powder and then molded into beads at high heat. Carbo Ceramics manufactures ceramic proppant used in all major U.S. shale plays, including South Texas’ Eagle Ford and West Texas’ Permian Basin.
This is the third proppant manufacturing facility closed by Carbo Ceramics in the past year. The company began slowing production early in the year after a collapse in oil prices forced slowdowns in oil patches across the United States, but as demand for ceramic proppant continued to diminish, Carbo Ceramics shuttered a plant in China in January and another in McIntyre, Georgia in March.
Those two plants were mothballed, which means they will likely remain closed for longer than a year, Mark Thomas, the company’s director of investor relations, said in an email to Fuel Fix. The Millen plant has been idled, which means it could reopen in less than a year, he said.
With oil prices continuing to sag and the rig count declining once more last week, Kolstad said the company will continue to focus on managing cash and inventory levels at its remaining plants.
Carbo Ceramics has been hard hit by the global crude slump, with shares of its stock tumbling from more than $100 a year ago to $23.67 on Thursday.