January 3, 2018
A surge in demand for frac sand brought company announcements in 2017 of plans to build sand mines in West Texas, but so far, only three sand mines have opened with another six scheduled to open in the next two months, Odessa American reports. All ride on the oil and gas industry in 2018, but the oil industry research firm Infill Thinking is tracking a total of 16 companies that have announced 23 mining sites.
“It’s been the year of announcements and the beginning of construction,” Joseph Triepke, the founder of Infill Thinking, tells the news agency. “We really haven’t seen a whole lot of trucks coming out of the gate yet, but that’s coming.”
The West Texas sand is a finer grade than traditional Midwestern sand and, even though questions remain about how the finer sand will affect wells in the long term, findings by oil companies show that the more fine-grade sand is pumped down a well, the more oil it produces. However, finding enough truck drivers to haul the sand may present a problem, Triepke tells the news agency.
Hi-Crush and Alpine Silica opened mines north of Kermit in 2017, and each have a capacity of producing approximately 3 million tons of sand per year. Aequor opened a third mine in Culberson County with a production capacity of approximately 2.5 million tons per year.
Black Mountain Sand plans to open a sand mine capable of producing 4 million tons per year in January and another one in February, both are in Winkler County. Preferred Sands plans to open a mine capable of producing 3.3 million tons per year in Ector County. U.S. Silica plans to open a plant capable of producing 4 million tons per year in Crane County. High Roller Sand will open another plant of about the same size near Kermit. Vista Sand will open a sand mine capable of producing approximately 3 million tons per year in Winkler County. Halliburton’s area vice president for the Permian Basin Chris Catjanis told reporters that the local sand mines could slash transportation costs by approximately 40 percent, lowering the breakeven cost of an oil well.
Centennial Resource Development executives told investors that they had entered into a contract for local sand that expected to save 5 to 10 percent on total well costs. Two wells using Permian Basin sand outperformed other wells in terms of initial production. “We are pleased with these results, as they are in line with our offset production, while realizing significant cost savings,” Centennial Resource Development COO Sean Smith said in a Nov. 7 earnings call, according to the news agency. “With continued success, we expect to utilize in-basin sand on approximately half of our operated wells in 2018.”