Utah drillers import fracking sand from Wisconsin, but there ...

A trainload of sand, enough to fill 50 or more rail cars, can disappear down a single bore hole when drillers frack oil and gas wells in eastern Utah's Uinta Basin.

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They mix the sand with the fluids and chemicals injected underground to fracture rock formations and unlock the hydrocarbons they contain. Industry has discovered that more sand results in higher yields. Getting the sand is not easy or cheap, but relief might be on the horizon.

Utah energy developers must acquire their 'frac sand' from Wisconsin quarries, which hold an abundance of clean silica grains of the right size, shape and hardness, a material known as 'northern white.' But now alternative sources are under exploration in southern Utah's Kane County, potentially opening the West's first major quarries of sand needed for fracking operations.

A 12,000-acre area in Kane County could yield enough to meet the needs for Utah energy developers for 40 to 50 years, according to energy industry representatives speaking last month at Gov. Gary Herbert's Energy Summit in Salt Lake City.

'We have some of the best frac sand in the country,' J.T. Martin, president of Salt Lake City-based Integrated Energy Cos., told conference attendees. 'We are calling this 'Utah pink Champagne.' The Wisconsins have nothing on us.'

Martin's firms provide oil-field, transportation and marketing services to Utah's oil and gas industry. He said one, Integrated Sands LLC, controls claims and leases for sand on 12,000 acres of state trust and federal lands in Kane County, which it hopes to develop.

Officials with the School and Institutional Trust Lands Administration, or SITLA, are pleased with the prospect of producing such sand from its holdings, which in turn would support oil and gas production from its mineral holdings in the Uinta Basin.

'I am thrilled Utah is finally looking at home for frac sand. It's our job to get these things in production,' said Tom Faddies, who oversees mineral production for the state agency that manages land to raise money for schools.

Hydraulic fracturing, or fracking, has become a controversial drilling method over concerns it imperils groundwater, but it is credited with spurring a surge in domestic oil and gas production. The industry's use of sand has soared, prompting drillers to accept greater variation in the sand used, according to Faddies.

The Great Lakes region produces 70 percent of the nation's sand for fracking, with Wisconsin accounting for half the total. Transportation represents more than half the sand's cost at the wellhead.

Locally sourced frac sand could not only save industry millions in transportation costs, but also bring economic benefits to another corner of rural Utah.

'It will create a lot of jobs and generate a lot of money,' Rep. Mike Noel, R-Kanab, said at a legislative interim meeting this month.

Sand plays a vital role in the fluids that are injected under intense pressure into bore holes drilled horizontally through oil and gas deposits. Once the formation fractures, the chemical cocktails are sucked out, leaving behind the sand as 'proppant' that keeps the cracks open so the hydrocarbons can flow up the well.

Industry's use of sand doubled to 61.5 million tons between and but dropped off with the collapse in oil prices. Demand is expected to exceed 100 million tons this year as drill rigs return to work in response to rebounding prices, putting an intense crimp on supplies that could delay the coming drilling boom.

The need for sand is also expected to grow as fracturing technologies improve, extending the reach of cracks that need to be propped, according to the U.S. Geological Survey. Now exceeding 2 miles, horizontal wells reach ever greater distances, also increasing the amount of sand needed per well.

The best sand for fracking comes in rounded, spherical grains, about 0.5 to 1 millimeter in diameter. They must withstand the powerful forces associated with fracking, a property known as 'crush resistance.' Facets and impurities can render sand useless if the grains collapse.

In a study commissioned by SITLA, the Utah Geological Survey analyzed sand from 60 sites around the state and found promising sources in southwest Utah's eolian sand dunes.

'We specifically looked at roundness and sphericity, grain size and chemistry,' said UGS geologist Andrew Rupke. 'It has to be relatively pure quartz sand. You don't want a bunch of other material in there because then [the grains] tend to be weak, or might react with the drilling fluids and plug up the pores.'

Utah grains tend to be smaller than optimal, but faced with a supply crunch, industry has lowered its standards, Rupke said. Unconsolidated deposits and friable sandstone like those found in Utah are preferred sources because they require less processing to produce usable sand.

The SITLA report did not analyze crush resistance because those tests cost $3,000 each.

'We will lease the lands,' Faddies said, 'and let the lessee do the tests.'

Martin's firm has conducted some of these costly tests, and the results have shown the grains to be suitable, he said, if not ideal for fracking.

Two Kane County locations, around Coral Pink Sand Dunes west of Kanab and the sand hills outside Big Water, hold vast deposits of potentially acceptable sand, but they are still about a 350-mile haul to Utah's oil patch.

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Faddies believes SITLA's sand deposits closer to or even in the Uinta Basin would offer more economical sources for industry.

Not unlike other boom and bust industries, the frac sand industry has been a turbulent one in recent years, with oil prices crashing and recovering, but industry experts are anticipating the continuation of a positive trend for the upcoming years. A new study by the Freedonia Group estimates demand for frac sand to grow 4% each year through .

While demand for frac sand continues to surge, production is struggling to keep up, but new plants coming online are anticipated to ease the pressure.

Frac Sand Demand

The US currently holds the title for both largest producer and consumer of frac sand. Demand for the proppant sand pumped down wells in an effort to hold open fissures in shale formations, allowing hydrocarbons to flow out has seen increasing demand in recent years as oil prices bounce back and natural gas gains a greater share of the energy market.

According to an expert at OilPrice.com, demand for frac sand sat at 34 million tons. This jumped to 61.5 million tons in and dropped off after oil prices crashed. Upon recovery, however, Rystad Energy is quoted as anticipating 100 million tons in demand for ' almost double pre-crash levels.

Why Frac Sand Demand is Going Up

In addition to the frac sand industry's relationship with oil prices, two major trends have caused frac sand demand to swell: advances in horizontal drilling and the growing amount of sand employed per foot of well.

Advances in Horizontal Drilling

While hydraulic fracturing has been a progressive technology in its own right, its merger with advancements in horizontal drilling has brought oil and gas production to a new level.

Where drillers once drilled a number of vertical wells to access the resources in a shale formation, they can now drill a single horizontal well off of a vertical one that allows them to access a much greater portion of the targeted shale formation.

Advancements in horizontal drilling in recent years have promoted longer lateral lengths, further increasing the efficiency of a single well and upping requirements for the volume of sand per well. A write-up in Oil & Gas Journal on horizontal drilling states wells to be between 500 ' 3,000 feet long. In November of , ExxonMobil announced they were getting close to reaching 4 miles in lateral length with their wells ' an astounding feat.

Many in the industry are referring to these progressive lateral length wells as 'super laterals.'

Increases in the Amount of Sand Per Well (Proppant Intensity)

The amount of sand per well has also been on an upward trend in recent years; drillers experimenting with more sand per foot discovered that the more sand they pumped down a well, the greater their recovery. This has led to exponential rises in the amount of sand employed per well.

According to a report by International Oilfield Research group Kimberlite, the amount of sand employed per foot of well was between 300 ' 800 lbs. three to five years ago. More recently, this number has reached around 1,755 pounds per foot, with some reports claiming even higher volumes.

Although some wells have seen slight declines in the amount of sand employed per well as a result of optimizing other factors, the general increase in the more-sand-per-well trend remains strong.

Frac Sand Production

According to Credit Suisse, US frac sand production had a record-setting year in , garnering almost 70 million tons of the sand. The group anticipates to be another one for the books with an additional 30 million tons mined.

Despite booming production, however, frac sand supply has had a hard time keeping up with the torrent of demand. This has been aggravated by delays in rail deliveries and the lack of infrastructure near oil basins for mining and processing the quartz sand.

At present, a large portion of the sand comes from the Midwest, particularly Wisconsin, which is home to the best frac sand money can buy, but this frac sand comes at a high price when transportation by rail to oil basins is taken into account. A growing trend looks to provide relief.

In-Basin Sand Supplies

A shift in production to 'in-basin sand' ' sand sources closer to oil rigs that can be trucked in ' is bolstering development of mines and processing plants around oil basins. Despite being a lower quality, the local proppants provide sufficient recovery at a significantly decreased cost by eliminating the need for rail transport. This is especially being seen around the Permian basin ' the current hotbed for oil and natural gas production, where the majority of frac sand is destined for.

Frac sand dryer expert, Shane Le Capitaine, commented on his experience on a recent trip to the basin: 'They can't get sand fast enough. When a well is under production, they are literally trucking in sand every 6-10 minutes, 24 hours a day to keep things moving. It's really something to see.'

Although frac sand is a natural material, it still requires processing upon mining to optimize its characteristics for use as a proppant. Mined sand is washed and dried at a processing plant. It is then screened to segregate the various grades required by drillers and transported to rig sites.

Outside of sand production from Wisconsin and around the Permian Basin, according to the USGS, activity around frac sand production is also growing in Oklahoma, Minnesota, Iowa, Illinois, Ohio, Michigan, Missouri, South Dakota, Arkansas, Nebraska, Utah, and Arizona.

Conclusion

The frac sand industry is slated for record-setting times in both supply and demand in the coming years, thanks to recovering oil prices, advancements in horizontal drilling, and the increasing amount of sand employed per well.

Around the country, but particularly surrounding the Permian Basin, frac sand mines and processing plants are being constructed to support the skyrocketing demand with an in-basin source of sand while Wisconsin picks up the slack in the meantime.

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