The Proppant Picture
The proppant supply and manufacturing industry may be entering its golden age of existence, thanks to shale energy. The demand for raw frack sand, resin-coated sand and ceramics is projected to increase for several years to come. The number of discrete fracture stages and the amount of proppant used per discrete fracture stage per well in the Williston Basin have both increased in the past five years with no signs of stopping. During the same period, lateral lengths have extended from an average of two-miles per well and are now reaching three-miles. In 2013, the U.S. onshore oil market set a record for completed fracturing stages, according to Houston-based energy market intelligence firm PacWest Consulting Partners. “Right now it is an exciting time in the proppant industry,” says Nick Johnson, vice president of marketing at Santrol, the oil and gas arm of Fairmount Minerals. “We are at the beginning of the market, I think.”
The incredible demand for proppant doesn’t mean the industry is solely focused on supply. Suppliers such as Santrol have not only invested in logistics and transloading facilities spread throughout North America to distribute raw sand and other specialized products. They have also emphasized the future, forming research alliances and establishing research centers that will help discover or commercialize high-tech, production enhancing options superior to raw sand. Santrol has created a research lab in Sugarland, Texas that offers the company, and potential clients, a chance to test and refine new Santrol products. Preferred Sands LLC of Radnor, Pa., opened a Houston-based technology center earlier this year. “Innovation—whether through product or process—is critical in our rapidly changing marketplace,” according to Michael O’Neil, company founder and CEO. Saint Gobain Proppants, a global supplier of ceramic proppants, recently formed a collaborative effort with Texas A&M University’s Energy Institute, “to better understand the behavior of proppants in hydraulic fracturing operations,” according to the university. The North Dakota Department of Mineral Resources has completed feasibility research assessing the use of N.D.-sourced material for N.D.-based fracking operations.
Santrol recently began production using a technology for a self-suspending proppant. The technology, and the company’s focus over the past year on commercially proving and stocking the product, demonstrate the industry's willingness to manufacture next-gen proppants while also developing an ever-expanding logistics matrix that can provide every well operator with the specific proppant they need.
Substrate Agnostic Technology
Brian Goldstein’s role for Santrol is very specific. Goldstein is the product director for the company’s self-suspending technology. After purchasing the rights to the technology from a research and development company, he has been working with his team to commercialize a product he calls substrate agnostic. The product was developed to help completion engineers more adequately distribute proppant to the tip of the fracture and help fractures remain more conductive during flowback.
“Historically these engineers have used viscosity agents and different fluids to move proppants accordingly, but there are additional costs and challenges associated with that,” Goldstein says. Those additives include guar gum, cellulose and even diesel-based fluids.
Santrol has developed what it believes is an entirely new class of proppant, a product that creates a buoyancy or suspension quality that once introduced into a fluid system, eliminates the need for additional fluid additives to be brought on site. “It is not a proppant substrate itself. It is a coating technology that gets wrapped around a proppant substrate,” he says. The substrate could be sand, resin-coated sand or a ceramic product of the user’s choosing. “It is substrate agnostic.” Resin-coated sands or ceramic products offer light-weight alternatives to sand, while also providing a more consistent and uniform shape that increases the proppant packs success in a given fracture.
When the wrapped substrate is hydrated in a blending tub prior to going downhole, the substrate will swell. The swelling nature of the polymer wrap creates a large surface area of the substrate, an alteration that reduces the overall density of the proppant and gives the individual substrate a unique suspension capability. “This is really a transport technology, not a technology to improve the substrate itself,” Goldstein says. “It’s not modifying the substrate that is remaining in the fracture.”
The innovation in the product isn’t just about its ability to swell and suspend a substrate for more efficient placement and movement during placement. According to Goldstein, the product doesn’t require specialized or additional equipment on the well site. With the new product, completion engineers are looking to fold the product into their respective frack design theories and systems, he says. The ultimate result of the product is better hydrocarbon recovery. The suspended proppant allows for a better packed fracture that creates better well conductivity.
“I’m very comfortable that we view this as a game changing technology,” he says. “This is top of mind throughout our organization. It is not to downplay any other technology that we have available, but it is very significant of what our attention has been over the last year.”
Commercializing Self-Suspended Proppants
Lab test results of the product and field tests in the Eagle Ford shale have also shown its effectiveness. A South Texas facility is now producing the product and other plants are slated to come online in the first half of 2014. The company has already received serious interest from operators in multiple shale plays, including the Williston Basin. “We are building ahead of demand to address the interest level we are already seeing in the industry,” Goldstein says.
The effort to stock a supply of the product before it hits the market is a direct reflection of the proppant industry’s main hurdle: logistics. Santrol, like many proppant suppliers and manufacturers is sourcing multiple products from multiple locations for multiple end users in a variety of end points. Santrol currently operates five northern white sand mines with locations in Wisconsin, Illinois, Texas and Minnesota. The company has additional resin-coating facilities in Illinois, Oklahoma, Texas, Michigan, Denmark, Mexico and China. Throughout the U.S. and Canada, Santrol alone has 50 proppant terminals, including five in the Williston Basin. “There is some overlap in the products stocked in the Williston Basin,” says Johnson, “but there are also certain products that are stocked at only certain terminals. We try to put products in the area where customers are using it.”
To explain the variance in product type and customer preference, Johnson likes to cite an encounter he had with several completion engineers at an industry-related event. During a conversation on well designs, the engineers started to laugh, Johnson says. “They said you can’t compare and Eagle Ford Well to a Bakken well as they were laughing,” he explains, and then they continued, “you can’t really even compare an Eagle Ford well to an Eagle Ford well.”
Johnson uses the story to illuminate the reasoning for multiple Bakken terminal locations. And, the story shows that the best technology the proppant industry has to offer is still reliant on an equally sound logistics network. Earlier this year, UNIMIN Corp., a proppant supply company, announced it had contracted with Dakota Plains Holdings Inc. to build a proppant supply terminal at Dakota Plains Holdings’ transloading station near New Town, N.D. CN rail has made plans to spend $33 million to upgrade car-loading capacity and train velocity for its Wisconsin infrastructure, a move that will help the rail giant create a more robust supply chain and help it to reach oil and gas shale basins. Both show the constant push to create a better supply chain for the innovative technology that is already in the works.
Author: Luke Geiver
Managing Editor, The Bakken magazine
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