New Federal Sand Dust Rules Affect NatGas Drillers This Year
One of the primary ingredients in fracking is sand–a special kind of very fine sand called silica. When silica gets airborne and into a person’s lungs, it’s not good news. Silica behaves like asbestos, with the potential to cause lung cancer. The shale industry is keenly aware of it and takes steps to ensure workers are not exposed. The federal Occupational Safety and Health Administration (OSHA) developed a new rule for respirable silica (tiny tiny sand) that will go into effect for the shale industry in June of this year. We have the details below…
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Energes, an an oilfield services company providing flowback, well testing and sand management services, has just sold off its Oilfield Solutions subsidiary to Dynacorp, a Canadian designer and manufacturer sand filtration, sand cyclonic, and flowback equipment, for an undisclosed amount. The two private companies, both with a presence in the Marcellus/Utica region, are merging to form a new company: EnerCorp Sand Solutions. EnerCorp will be “a leading provider of sand management products and technologies for the oil and gas industry” according to the official announcement. Dynacorp, the company doing the buying, is a wholly-owned subsidiary of Intervale Capital, an energy services investment firm based in Houston, Texas. We previously wrote of another company snapped up by Intervale, back in June (see 
Fairmount Santrol, an Ohio-based sand producer that sells sand as a proppant for use in Utica and Marcellus Shale drilling, announced yesterday it has accepted an offer to sell itself to another sand company–Unimin, a subsidiary of Belgium-based SCR-Sibelco. Fairmount Santrol shareholders will get a $170 million payment and 35% ownership in the newly combined company. The new company will have revenues approaching $2 billion per year. Fairmount Santrol’s CEO, Jenniffer Deckard, is expected to become the CEO of the new company (the name of the new company has not yet been decided). However, make no mistake–Fairmount is selling itself. The board of directors for the new company will have 6 members picked by Unimim parent SCR-Sibelco and 4 members picked by Fairmount Santrol. The location of the headquarters is still up in the air. A lot of unknowns at this point. However, one thing that IS known is that this is a done deal…
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…
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…
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…
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…
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 
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…
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 
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 
Hi-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…
Last 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…
The 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”?…