Proppant Insights: The Battle for Frac Sand Market Share
The last quarter brought about activity across frac sand suppliers as providers continued moving towards the Permian Basin. For the last three quarters, Permian leads proppant demand. Due to the reporting lag in completions, expect the Q2 numbers to increase by another 10-20%.
Since 2015 Q4, E&P companies in the Permian have consumed approximately 11 billion pounds of frac sand. Recent well reports show 1,200 – 1,500 pounds of proppant per lateral foot in the Delaware. A few E&P’s are pumping nearly 3,000 pounds of proppant per lateral foot in the Delaware.
Q2 Frac Sand Highlights
As reported by several frac sand suppliers, Q1 proppant sales showed few positive signs. However, in April and May proppant demand increased with E&P’s optimism. Hi-Crush, U.S. Silica, and Unimin made headlines with acquisitions and hirings. Hi-Crush acquired frac sand facility in Blair, Wisconsin from a related entity adding 2.86 milliion tons of frac sand capacity per year.
U.S. Silica acquired Sandbox Logistics on the company’s vision of managing the entire frac sand supply chain, from mine to well site. According to U.S. Silica’s president, Bryan Shinn, “Sandbox’s proprietary delivery solution is critical to addressing the growing logistical challenges our customers face as E&P operators continue to increase the amount of proppant they use per well.”
The NBR Sand acquisition by U.S. Silica provides additional capacity in-basin near Eagle Ford, Haynesville, and Barnett. The east Texas NBR Sand facility, near Tyler, is located near UP and KCS rail with access to the Barnett, Haynesville, Eagle Ford, and Permian.
What’s next for suppliers?
Signs are positive for frac sand suppliers. Compared to other drilling and completion suppliers, demand for frac sand remains strong. E&P’s report longer laterals and increased frac sand per lateral foot improve well performance. The individual well results show this trend, too. Additionally, the 1,523 drilled uncompleted wells (DUCs) in the Permian and 773 DUCs in the Eagle Ford (as of August 2016) will provide an uptick in proppant demand as E&P’s bring those wells online.