Everything Has Changed, Part 4 - The Frac Sand Revolution

Nowadays, the hydraulic fracturing of a typical Permian well with a 10,000-foot lateral requires about 12,500 tons of frac sand — enough sand to fill more than 500 large sand trucks. That sand needs to be at the ready — delivered, offloaded, stored, and set for blending and use. If it’s not, the well completion and the start of production would be delayed or the hydraulic fracturing process would be shut down after starting — a mortal sin in the shale world. With reliable, seamless access to frac sand at the well site being so critical, E&Ps and their pressure pumpers are understandably doing all they can to optimize their “last-mile” sand logistics. This involves everything from minimizing truck-delivery congestion to maximizing the speed at which sand is transferred from truck to storage, as well as the type of storage used. It’s all much more high-tech than you might think. Today, we conclude our series with a look at the latest in last-mile logistics, which can account for as much as one-third of the total delivered cost of sand.

This series’ aim is to provide an up-to-the-minute look at the frac sand part of the U.S. hydrocarbon production machine. Things have been changing fast. As we said in Part 1, the Frac Sand Revolution we’re now in the midst of is characterized by longer lateral drilling lengths and a more intense use of sand per linear foot of lateral, which together have resulted in the need for larger volumes of frac sand. Sand use for U.S. hydraulic fracturing has more than doubled over the past three years, to more than 100 million tons per annum (MMtpa). To help meet that demand — and to offer sand at a much lower price than railed-in Northern White Sand from the Upper Midwest — a number of new “local” sand mines have been developed in the Permian (discussed in Part 1), and in the Eagle Ford, SCOOP/STACK and Haynesville (discussed in Part 2), to the point that the vast majority of the frac sand used in each of these plays is now locally sourced. In Part 3, we turned our attention to the increasingly hands-on role that a number of E&Ps have been taking in managing their frac sand supply chain. Traditionally, responsibility for ensuring that sand is procured, transported to well sites, and stored — ready to use in well completions — has fallen to the integrated oilfield services companies or pressure-pumping specialists that E&Ps contract with to provide completion-related services. That approach to sand supply oversight has been challenged in the past two or three years, however, as the drive to enhance reliability, maximize efficiency and minimize costs led at least some E&Ps to consider alternatives that would give them more control.

These same goals — reliability, efficiency and cost — also have been pushing E&Ps, sand-mining companies, pressure pumpers and others to examine every aspect of their last-mile logistics to see what can be tweaked (or, in some cases, entirely reworked) to improve productivity, save money, and further reduce the risk that frac sand won’t be at hand when it’s needed. Today, we’ll focus on two of the most important elements of sand management in this new era: (1) the delivery of sand by truck from the local sand mine or rail-transload facility, and (2) the selection of the equipment for handling and storing sand at the well site. We’re starting with the trucking side of things, though, because as we’ll get to, the type of truck used ties in to some degree with the sand handling and storage equipment that is employed.