Shortening the Fracking Sand Supply Chain
Silica sand is the premium grade quartz-rich sand required for use as a fracking “proppant” in the oil and gas industries, featuring elegant round grains durable enough to prop open the fractures and create a porous path to unleash the huge reserves of oil locked in layers of shale. For years, the state of Wisconsin was dominant in the fracking sand sector, producing 75% of the high-grade silica sand to feed well stimulation demands by the oil and gas industry, but now the silica sector is undergoing a paradigm shift.
As hydraulic fracturing ushered in the productive technique of “turning wells horizontally” to maximize output, and oil-bearing shale became a viable exploitable resource, demand for fracking sand skyrocketed into a 10 billion dollar industry. The hydraulic fracturing technique opened the doors to new regions of oil-bearing shale exploration, most notably the Permian Basin of the US southwest, triggering a massive shift in the geography and logistics of the silica sand market.
The oil industry now faced a long extended supply chain to move enormous volumes of silica sand from resource-rich Wisconsin to the most active oil-bearing shale region in the country, the Permian Basin in West Texas and eastern New Mexico. The Permian Basin accounts for 50% of the national demand for silica sand, providing more than sufficient incentive to launch 15 new silica sand mines in the region.
With the shortened supply chain, energy companies can get the fracking sand they need locally at a fraction of the cost of shipping precious “northern white” from Wisconsin. Silica sand suppliers in that state are now turning their focus to building new customer bases in western Canada, North and South Dakota, Utah, Wyoming and Colorado according to a recent report from Wisconsin Public Radio.
Also, with the enthusiastic influx of new silica sand operations right in the Permian Basin and an untimely drop in oil prices, silica sand prices have taken a hit in recent years, despite record demand.
But this correction could be good news for the sector in the long run. With a more cost-effective local supply chain, fracking operations are optimized, and the busiest oil-bearing shale region in the country is poised to get even busier.
Accelerating the Pace of Permian Production
Exxon-Mobile announced in March 2019 that it was increasing “unconventional production” in the Permian by 80% with a goal of 1 MMbpd (million barrels per day) by 2024. The energy giant is riding a wave of success after production doubled in 2018 and plans to increase spending with a growth strategy designed to “generate double-digit returns at low prices” according to a report at World Oil.
Even if oil prices come in at just $35 per barrel, Permian production can still post a return of 10%. Exxon-Mobile operates 48 rigs in the region. With just one well requiring thousands of tons for a hydraulic fracturing job, “frac sand” has a very secure future as an industrial commodity.
Silica Sand Opportunities and More at Resource Erectors
We’ve got opportunities for professionals in the silica sand sector at locations ranging from Texas to Canada. High-level sales professionals can take advantage of an exciting time in the silica sand job market as the top companies position themselves with new potential customers and long term fracking sand contract opportunities.
Wet and dry silica sand processing plants need experienced, hands-on leaders to meet growing demands. At Resource Erectors, we’ve made it our mission to match the industry-leading companies in minerals, mining, and materials processing with the top talent they need to succeed.
When you’re ready to build your dream team or make a strategic move up the career ladder, please don’t hesitate to contact us.
