The techniques used to wring increasing volumes of crude oil, natural gas and natural gas liquids (NGLs) out of shale continue to evolve, and as they do, producers are facing mounting costs for securing frac sand and for disposing of produced water from the wells. These costs are squeezing producer profits, and—in an era of sustained low hydrocarbon prices—sometimes even flip production economics from favorable to unfavorable. Today we continue our surfing-themed series on sand costs and water-disposal expenses with a look at how sand use in shale plays has evolved—and how these changes affect the bottom line.
In Part 1 of this blog series, we discussed how the trend toward much longer laterals and high-intensity well completions has significantly increased the volume of frac sand being used, with some individual well completions using enough sand to fill 100 railcars or more. We also noted that an even bigger concern for many producers is the rising cost of disposing of produced water—that is, the water that emerges with hydrocarbons from these supersized wells. As we said in Tales of the Tight Sand Laterals, freeing the vast amounts of oil, gas and NGLs trapped in shale and tight sands requires horizontal drilling to access the long, horizontal layers where the trapped hydrocarbons reside, and proppant (natural sand, ceramics and resin-coated sand) that, when forced out of the horizontal portion of wells at high pressure (using water and other fluids), fracture openings in the surrounding shale/tight sands. When the pressure is released, the fractures attempt to close but the proppant contained in the fluids keeps them open, making a ready path for oil, gas, NGLs and produced water to flow into the well bore.
Today, we’ll discuss the evolution of frac sand use, including ongoing shifts in the types of sand that are preferred and in the volume of sand being used in each type of well. Then we’ll consider sand logistics—which, given that the most in-demand sand is mined in the Upper Midwest, account for a significant share of total sand costs—and lay out the challenges that producers face in securing the sand they need without breaking the bank. (The costs associated with produced-water disposal will be covered later in this series.)
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