Sand is a big issue in horizontal drilling.
And analysts are predicting it’s soon going to be a bigger one.
Drillers shoot millions of gallons of water into horizontal wells to fracture the rock and free the hydrocarbons. To keep those fractures open, they add “proppant” — sand. The industry has already engaged in serious debate about what kind of sand works best, and in serious fights for control of sand mines.
Now analysts at the investment firm Tudor Pickering Holt say they are “increasingly convinced” that U.S. drillers are going to use more sand in the near future … a lot more sand.
Sand use has already exploded, rising from 3 million pounds per well in 2013 to 5 million in 2014 to 8 million pounds per well now.
But after digging through second-quarter earnings transcripts and making road trips to visit exploration and production companies, the analysts at Tudor Pickering say they expect annual sand use in horizontal wells to climb to more than 11 million pounds each as the market returns.
As evidence, the firm cites strategy used by top energy companies in the Permian’s Delaware and Midland areas: “Average” drillers packed wells there with 7 million to 8 million pounds of sand, while “leading edge” work aimed to use more like 15 million to 20 million pounds. Meanwhile, in Haynesville, drillers were using 30 million to 50 million pounds per well, the firm said.
And that means companies are going to have an increasingly hard time finding cheap sand and getting it delivered to their wells in hundreds of trucks and train cars. The ensuing chaos, they said, will be a “logistical nightmare.”
To the strong logistics companies, they concluded, go the spoils.