Fracking drives growth in sand mining
DEMAND is exploding for the huge amounts of sand used in fracking, creating a windfall for miners but it’s leading to worries about the health impacts of breathing silica dust.
DRILLERS are expected to use nearly 95 billion pounds (43 billion kg) of “frac sand” in 2014, in the US alone. That’s up 30 per cent from 2013, according to energy specialists at PacWest Consulting Partners, who expect the market to keep growing as drillers increasingly accept that using more sand increases the oil and gas production from each well.
The demand could mean more mines opening, according to a new report.
Meanwhile, the sand-mining industry is roaring, with the stock for Emerge Energy Services, based in Southlake, Texas, surging 400 per cent since the company went public a year and a half ago.
Dropping oil prices could dampen fracking investment and, therefore sand mining, if they continue for too long, but analysts aren’t betting on it.
“As (oil and gas companies) seek to optimise well results, they are using significantly more frac sand per well,” said a recent Morgan Stanley Research report.
“We believe the industry now sits on the verge of a prolonged frac sand supply shortage.”
Companies are trying to fill the gap. US Silica just announced plans to add 3.8 million tons of frac sand mine and plant capacity in Wisconsin and Missouri. The company also bought a central Texas mining company that recently had expanded its production.
“Based on conversations with our customers, we believe that a steep change is occurring with regard to the volumes of sand being used per well, which translates into significant demand for our products,” said US Silica chief
executive Bryan Shinn.
Sand is vital to hydraulic fracturing, known as fracking, in which huge amounts of water and chemicals are pumped at high pressure underground to break shale rock and release the oil and natural gas inside.
The sand is used to prop open the paper-thin cracks that fracking makes in the shale. That allows the oil and gas to pass through and up the well to the surface.
In the past year or so, drillers have discovered that using much more sand than they had been using results in more oil and gas produced from the well.
A single fracked well can now use as much as 10,000 tons of sand.