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Anarchists Block Frac Sand Trains in Washington; Police Chief Complicit

Washington State is a strange place. Yes, the state has given us world-changing companies like Microsoft and Boeing. It’s also changed our coffee drinking habits by giving us Starbucks. But Washington State is also home to some seriously demented and dangerous people. We spotted a story in the Washington (DC) Post that confirms what MDN has been saying for years (not that we need confirming): anarchists are some of the core members of the anti-fossil fuel movement. An anarchist, in case you need a definition, is “a person who rebels against any authority, established order, or ruling power” (Merriam Webster). In other words, lawless. A law unto themselves. Gangs of bullies. Lord of the Flies. You get the picture. The WashPo story, using flowery and laudatory language, reports that a group of anarchists in Washington State have set up a tent village on top of railroad tracks that come out of the Port of Olympia. Ceramic proppants–artificial beads that are used in place of frac sand–are shipped to the Port and from there, loaded onto rail cars and hauled cross country, mostly to the Bakken Shale play in North Dakota, where they are used to frack shale wells. An encampment was set up on Nov. 17 to block those shipments and it’s still there–because local Police Chief Ronnie Roberts (hired to uphold the law), doesn’t like fracking and won’t arrest these whack jobs and eject them. That’s why we say Washington State is a strange place…
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Arkansas Frac Sand Getting Barged to Ohio for Marc/Utica Fracking

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Here’s something you don’t read about every day: frac sand being mined in Arkansas. Usually you read about sand being mined in Wisconsin or Illinois, or maybe in Oklahoma or even Texas. But we’ve never read about sand coming from Arkansas. Here’s something else you don’t read about every day: Sand from Arkansas is about to be barged up the Mississippi River, onto the Ohio River, and unloaded at a dock somewhere in Ohio. The sand, which will come from Select Sands, will be used for fracking Utica and Marcellus Shale wells. How cool is that?! Select Sands is headquartered in Vancouver, British Columbia (Canada), but operates what appears to be their only mining operation (at least the only one we could find) in Arkansas. According to a company announcement, this is the first time the company has used a barge to transport frac sand. Judging from a recent slide deck on the company’s website, it appears to us this may be their very first order from the Marcellus/Utica region…
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Shale Support Holdings Expands M-U Frac Sand Business via Partnership

Shale Support Holdings, which says it is a leading provider of frac sand and logistical solutions to the oil and gas proppant market (headquartered in Texas, with an operations center in Mississippi), is stepping up its presence in the Marcellus/Utica region with a partnership with Tidewater Logistics. The partnership will increase Shale Support’s operations in Ohio, Pennsylvania and West Virginia. Because Shale Support can ship sand direct from Mississippi, which is much closer than most other alternatives, the price for frac sand will be cheaper for customers. Here’s the good news about a new partnership benefiting Marcellus/Utica drillers…
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Twin Eagle Sand Enters Marcellus/Utica with WV Transload Facility

Twin Eagle Resource Management, headquartered in Houston, TX, bills itself as a provider of wholesale energy and midstream services throughout North America. Twin Eagle also serves the upstream (drilling market) via a number of transloading facilities to ship and store frac sand. Currently Twin has five facilities, serving: Central Eagle Ford (Elmendorf, TX), South Eagle Ford (Laredo, TX), Powder River Basin (Douglas, WY), Permian Basin (Big Spring, TX), and DJ Basin (Evans, CO). You can now add a sixth facility–a frac sand transloading facility in Bridgeport, WV, to service the Marcellus/Utica region. Last week Twin Eagle Sand Logistics (Twin Eagle subsidiary) announced a deal to buy an existing frac sand terminal in Bridgeport from Process Transloading Bridgeport. Terms of the deal were not disclosed. “Transloading” is a simple concept. It means you ship the sand in via railroad, or barge, unload it, store it, and then load it onto trucks which haul it to well pads where it gets used to frack shale wells. Let’s give a hearty welcome to the latest entrant into the Marcellus/Utica supply chain! Here are the particulars of the Bridgeport facility…
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CONSOL Hits a Few Snags, Lowers Production Estimates for 2017

As part of a general announcement issued yesterday, CONSOL Energy provided an update on their best guesstimate (called “guidance” in the business) of how much natural gas production the company will achieve in 2017. The latest guidance reveals that production will be LOWER than previously thought. Earlier in the year CONSOL said they should see on the order of 420-440 billion cubic feet equivalent (Bcfe) of natural gas production this year. The number will be more like 405-415 Bcfe. Why the drop? Ceramic beads. When completing a well, a driller fracks the well with small charges, creating cracks (fractures) in the rock. Into those cracks the driller flows water with sand–or alternatively ceramic beads instead of sand. When the water washes out (or gets absorbed into the rock), the sand or ceramic beads stay in place, keeping the rock propped open so gas and oil can escape out into the well. That’s why sand and ceramic beads are called “proppant.” CONSOL, at least for some of its wells, uses ceramic beads. And according to yesterday’s announcement, completion designs using the beads is taking longer than they thought, slowing down progress on completing and bringing wells online. Hence the lower overall output for this year…
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Shale Drillers Using Less Frac Sand as Prices Soar

Necessity is the mother of invention. Over the past year or so we’ve chronicled the dramatic increase in the amount of sand used in fracking. Recently we told you that Chesapeake Energy drilled what we believe to be the highest-producing Marcellus well (so far), with an initial production of 61 million cubic feet per day of gas (see Chesapeake 2Q17: “Rambo” Marcellus Well Produces Record 61 MMcf/d). Chessy’s “Rambo” well used 32 million pounds of frac sand. The trend has been to increase the use of frac sand. The more sand, the better the result. Except now that’s changing. Frac sand prices have been skyrocketing. Sand is some 12% of the cost of drilling and fracking a well. Shale drillers are beginning to innovate ways to achieve the same high yield results, but using less sand. What are they using instead? Some use “chemical diverters” to spread the sand slurry more evenly. Some reduce the distance between fractures–“tight spacing.” The point is shale drillers are doing what they have to do (innovating) to stay profitable and keep drilling. And if that means using less sand in fracking, so be it…
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Railroads See Uptick in Hauling Marcellus/Utica NGLs, Frac Sand

Pipeline projects are facing still opposition from nutty/radical environmentalists who seem to have plenty of money to litigate and attempt to tie up projects for as long as possible. Ultimately, at least in most cases, pipelines prevail and get built. But it does take longer, no doubt about that. In the meantime, railroads have stepped in to take up some of the slack. We’re suckers for a good railroad story. We spotted one about rail giant CSX and how the company has seen an uptick in hauling natural gas liquids in the Marcellus/Utica region. Stuff like propane (LPG, or liquefied petroleum gas). CSX is also seeing an uptick in hauling frac sand. All of which points to one thing: drilling in the Marcellus/Utica has/is picking up…
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OFS Mammoth Energy Buys Second Sand Co. to Keep on Frackin’

Oilfield services company (OFS) Mammoth Energy Services, headquartered in Oklahoma City, OK, operates in both the Utica Shale and Permian Basin. Last week MDN reported that Mammoth, a new company formed in 2014 (but growing rapidly), had bought itself a sand mine/processing plant (Taylor Frac) in an effort to keep Mammoth’s fracking crews stocked with frack sand (see OFS Mammoth Buys Sand Co. to Ensure Steady Supply for Fracking). A couple of days later Mammoth did it again–purchasing a second sand mine (Chieftain Sand and Proppant) with twice the capacity. And they picked it up on the cheap, in a bankruptcy auction for $35 million…
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OFS Mammoth Buys Sand Co. to Ensure Steady Supply for Fracking

Oilfield services company (OFS) Mammoth Energy Services, headquartered in Oklahoma City, OK, operates in both the Utica Shale and Permian Basin. Mammoth offers services like “completion and production services, natural sand proppant services, contract land and directional drilling services and remote accommodation services.” Mammoth is a baby company, formed in 2014, but growing rapidly. The company booked $243 million in revenue for the 12 months ended June 30, 2016 (see Mammoth Energy 3Q16: “Intense Fracs” in Utica Shale). OFS companies like Mammoth do a lot of fracking. Lately there has been talk and concern that there won’t be enough frack sand to meet all of the increasing demand (see Go Pound Sand, Please! Proppant Shortage on the Way?). Mammoth wants to reassure its customers that it will have plenty of sand for fracking–so it just went out and bought its own sand mine! Yesterday Mammoth announced it has cut a deal to buy Taylor Frac, which owns a 0.7 million ton per year sand mine and processing plant. In addition, Mammoth cut a deal to buy Stingray Energy Services and Stingray Cementing, which offer services in fresh water transfer, equipment rental, re-fueling and cementing, primarily in the Marcellus/Utica region. Here’s the lowdown on the baby Mammoth that’s growing up rapidly…
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Go Pound Sand, Please! Proppant Shortage on the Way?

We’ve heard of concerns that there may be a shortage of sand used for fracking in the near future–right here in the Marcellus/Utica. We then spotted a story about an impending sand shortage by the Reuters news agency (below). It takes something like an average of 11 million pounds to frack a well. Chesapeake Energy experimented with pushing the envelope with a well in Louisiana by using 50 million pounds (see Propageddon: Chesapeake “Unleashes Hell” with Sand in LA Gas Well). To get the latest update on sand in northeast, be sure to attend a panel discussion on proppants MDN editor Jim Willis is hosting on March 2 in Pittsburgh, at the Oil & Gas Awards’ 2017 Northeast Industry Summit (register for free here). In the meantime, here’s the latest scuttlebutt about a sand shortage…
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Hi-Crush Intros New Sand Delivery System

hi-crushHi-Crush Partners, headquartered in Houston, TX, is a frac sand company. Even though the company is based in TX and has sand mines in Wisconsin, it owns and operates the largest frac sand distribution network in the Marcellus and Utica Shale region. Last week Hi-Crush announced the first successful test and roll out of something they call PropStream–a new and better way to get sand to the well site and into the well itself. Hi-Crush has also formed (with investors) a new subsidiary company called PropX to manufacture the equipment used by the PropStream system…
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Propageddon: Chesapeake “Unleashes Hell” with Sand in LA Gas Well

Chesapeake EnergyLast week Jason Pigott, vice president of operations for Chesapeake Energy, addressed analysts at a conference and disclosed that the company ran an experiment by pumping 25,000 tons (i.e. 50 million pounds) of sand down a single shale well bore. Incredible! And they found by doing so that output from the well was 70% higher than it normally would have been. Sand acts as a proppant to “prop open” cracks and holes in the fractured rock, allowing gas trapped in small pockets to escape. Chessy is calling the experiment “propageddon.” Catchy. At the conference Pigott said, “What we’re doing is unleashing hell on every gas molecule downhole.” Strong words! The well they tried it with is located in Louisiana. We highlight this story because what they learn there will no doubt come to the Marcellus/Utica as well…
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Saudi War on American Frackers Led to More Productive U.S. Wells

harder_better_faster_stronger1The Saudis sure didn’t see this one coming. Back in 2014 Saudi Arabia and their toadies in OPEC declared open war on the American shale industry. The aim was to bankrupt our shale drillers by pumping so much oil for so cheap, that our small potatoes drillers would go out of business. The thinking was that the Kingdom could outlast our private companies–for years if necessary. And sure enough, some of our o&g companies have gone bankrupt–nearly 100 of them since 2015. But here’s what happened along the way–the unintended consequence. Good old American ingenuity kicked in and our companies innovated–figured out how to drill for less money and get even more oil (and gas) out of the ground while doing it. That is, the Saudis’ action in trying to bury us was to make us better and stronger. One of the major ways we became better and stronger was through the lowly grain of silicon–as in sand. Can anyone say, “mega-frack”?…
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US Silica 2Q16: So-So Quarter, Buys Frack Logistics Company

US SilicaLast week U.S. Silica, one of the largest frac sand providers in the U.S., issued their second quarter 2016 update last week. Frac sand providers are a good barometer for when/if drilling is coming back. You don’t order sand unless you’re drilling wells. The company lost $12 million in 2Q16 versus losing $10 million in 2Q15. However, $1.1 million of that was due to “restructuring costs.” What about revenue? Revenue was $117 million in 2Q16 versus $147.5 million in 2Q15. So we can sum up 2Q16 as “so-so.” Not terrible, not good. With luck, 3Q16 will look better (with drilling beginning to pick up). However, in a sign that U.S. Silica believes the market will come back, they also announced last week they are buying out Sandbox Enterprises, “a leading provider of innovative logistics solutions and technology for the transportation of proppant used in hydraulic fracturing in the oil and gas industry.” That’s a sure sign they think oil and gas is coming back…
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CARBO Says 2Q16 “Likely” the Bottom for Proppant Market

CARBO logoContrary to the BH view that drilling will remain in the crapper for the rest of 2016 (see Baker Hughes Laid Off 3K in 2Q16, No Drilling Recovery in 2016), CARBO Ceramics, a company that supplies sand and ceramic beads used in fracking, was more upbeat about the rest of the year in their second quarter 2016 update. CARBO’s CEO Gary Kolstad said, “…the second quarter likely marked the bottom for activity levels as both oil and natural gas commodity prices and the North American rig count started to recover,” and “Sales volumes began to improve as the quarter progressed. In addition, with the increasing commodity prices, we have received increasing customer inquiries about procuring ceramic proppant for completions in the second half of 2016.” In other words, things are beginning to look up–at least according to CARBO. Their own numbers don’t seem to reflect that optimism. Total proppant sales (as measured in millions of pounds sold) were down an astonishing 75% year over year: 448 million pounds sold in 2Q15 vs. 112 million pounds sold in 2Q16. Here’s the CARBO upbeat 2Q16 update…
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Crack of Light – OH Sand Producer Says Market Turning Around

crack of lightFairmount Santrol, an Ohio-based sand producer that sells sand as a proppant for use in Utica and Marcellus Shale drilling, released their preliminary second quarter 2016 results last week. Although the company expects to lose between $91-$93 million for the quarter (compared to a profit of $14.1 million a year ago), things are not all bad. Yes, it’s been tough for Fairmount and other companies in the oil and gas industry. Really tough. But Fairmount’s CEO Jenniffer Deckard, said this: “…we are also encouraged by the early signs of improvement we are seeing in the proppant market.” In other words, a crack of light is peeking through the door and we’re beginning to see the great slowdown in drilling come to an end…
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