Source: Getty Images.
Now There’s Enough Pressure
Pumping and Sand To Go Around
Matt Zborowski, Technology Writer
O perators fracturing wells in the US
shale basins are enjoying a steady
supply of reasonably priced pressure
pumping services and sand.
After the market struggled to keep
pace with demand after the down-
turn, pressure pumpers are deploying
enough horsepower to satiate opera-
tors and their ambitious produc-
tion targets, according to data from
Rystad Energy. Fracturing work is
being augmented by the proliferation
of in-basin sand mines, which pro-
vide operators a more convenient, less
expensive source of proppant during
frac jobs.
38
This comes as the consultancy fore-
casts the number of horizontal wells
fractured to rise 32% in 2018 and 13%
in 2019. Total frac stages are project-
ed to increase 37% in 2018 and 16% in
2019. These numbers are based on pro-
jected oil prices of around $69/bbl in
2018 and above $70/bbl through 2021.
Demand for pressure pumping
horsepower is expected to jump 4 mil-
lion hp this year to 17 million hp, more
than double the 2016 level. Demand is
expected to grow 2 million hp in 2019
and another 4 million hp in 2020 to
23 million hp, where it will remain
flat in 2021.
On the supply side, horsepower is
expected to increase by 4.8 million
in 2018, more than meeting demand.
Growth will halve to 2.4 million hp
in 2019 and then spike to 5.1 million
in 2020. The increase next year will
primarily serve to fulfill “skyrocket-
ing” demand in the Midcontinent and
Haynesville regions, said Ryan Car-
brey, Rystad senior vice president, shale
research, during a frac market webcast.
As of mid-2018, all horsepower that
was previously available for refurbish-
ment has been refurbished, Carbrey
said, meaning only new horsepower will
be added to the field going forward. The
JPT • OCTOBER 2018
overall increased supply—from both
refurbished units and newbuilds—has
stabilized the market, and price increas-
es aren’t expected through late 2018
or early 2019.
However, some operators aren’t
pleased with the work they’re seeing,
Rystad has observed. A vice president of
one exploration and production (E&P)
firm told the consultancy, “Some of
these companies grew too fast and the
quality of their crews reflect that—too
many new guys that don’t know what
they’re doing yet.”
Meanwhile, pumping intensity
growth, which has increased rapid-
ly since the downturn, is forecast to
decline in the coming years “as we
believe a lot of the gains from increas-
ing horsepower hours have already been
realized,” said Carbrey.
A measure of that intensity, horse-
power-hours per horizontal well, are
expected to increase by an average of
just 2% per year between 2017 and 2021
after an average 29% per year between
2013 and 2017.
Thousands
45
40
35
Wells Fractured and Spud
30
25
20.2
20
15
10
0 0
2011
Horizontal Wells Fractured
Horizontal wells fractured in the US are forecast to increase 32% in 2018 and 13% in 2019. Horizontal wells spud are
forecast to increase 25% and 14% in 2018 and 2019, respectively. Source: Rystad Energy.
JPT • OCTOBER 2018
Bottlenecks Cap Permian
Growth
In the Permian Basin, the hub of US
fracturing activity, horsepower is one
potential stumbling block that isn’t cur-
rently an issue.
“I can pick up the phone right now,
request a frac crew in the Permian,
and get it. I couldn’t do that 6 months
ago,” a division manager for an operator
told Rystad.
While horsepower demand in the
basin is expected to increase 49% this
year, growth is expected to slow due
to well-documented issues relating to
trucking, roads, and takeaway capacity.
The latter will be felt during second-half
2018 and first-half 2019 as outbound oil
pipelines remain at full capacity.
Horsepower utilization in the basin
has peaked and is expected to average
above 80% during this year’s first three
quarters before falling below that level
for all but two quarters during 2019–
2021. Those two quarters, third- and
fourth-quarter 2019, are when new pipe-
lines are expected to have come online.
US Land Wells Fractured, Wells Spud, and Frac Stages
27.7
25.7
24.0
18.2 18.0
13.9
9.9
2012 2013 2014 2015 2016 2017 2018
Vertical/Directional Wells Fractured Horizontal Wells Spud
“We’ve already started hearing of a
few E&Ps pulling crews,” Carbrey said.
“We’ve heard of service companies tem-
porarily placing crews from the Perm-
ian into the Eagle Ford [Shale], and we
expect that to continue—at least until
the pipeline issues are resolved.”
Lower frac efficiency has also been
a problem in the basin due to logistical
constraints and worker inexperience.
As with the other major basins, frac-
turing activity has intensified in recent
years, but it won’t last. Horsepower-
hours per horizontal well in both the
Delaware and Midland Basins of the
Permian are forecast to fall this year
after rising 32% and 17%, respective-
ly, in 2017.
In the Delaware Basin, almost
all wells this year require more than
500,000 hp-hr per horizontal well, a
benchmark almost no wells surpassed
there in 2014. Anadarko Petroleum had
the most-intense fracs of operators in
the Delaware during 2017 and first-half
2018, requiring the most horsepower-
hours per horizontal well.
Thousands
1,000
800
Frac Stages
600
24.1 24.6
21.7
400
200
2019 2020 2021
Total Frac Stages
39
 Breakdown of Frac Sand Supply, by Type
2014 Frac Sand Supply Market Share
8%
17%
75%
Northern White Sand
Brown Sand
Other
Transforming the frac sand supply landscape, in-basin sand is expected to gain market share in 2018–2019.
Source: Rystad Energy.
In-Basin Sand Explosion
Driven by strong continued growth in
intensity, lateral length, and wells to
be fractured, US frac sand demand is
expected to balloon from 42 million
tons in 2016 and to 191 million tons
in 2021, said Thomas Jacob, Rystad
analyst, shale research, in a separate
presentation. The consultancy fore-
casts demand in 2018 to total 118 mil-
lion tons. The Permian now accounts
for 40–50% of the total demand
in the US.
Rystad projects frac sand supply to
rise 64 million tons this year to 198 mil-
lion tons, adding another 53 million
tons next year as growth begins to ease.
Some 45–50 million tons of new name-
plate supply is expected to be available
in West Texas by the end of this year.
Taking delivery of that sand in a time-
ly manner, however, will remain a chal-
lenge given the ongoing logistical con-
straints in the basin.
Across the US, average frac sand
intensity, or the amount of frac sand
pumped per lateral foot, is 1,900 lb/ft.
40
2019 Frac Sand Supply Market Share
1% 9%
3%
6%
10%
Northern White Sand
Eagle Ford In-Basin Sand
Haynesville In-Basin Sand
Brown Sand
Due to its geology, the Haynesville Shale
is the most frac-sand-intensive play
at 3,000 lb/ft, followed by the Dela-
ware and Eagle Ford at just more than
2,000 lb/ft each.
More and more sand is being sourced
in-basin, a big change from before the
downturn, Jacob noted. In 2014, north-
ern white sand represented 75% of all
frac sand supply. This year, it accounts
for just 43%, with in-basin Permian
sand now representing 24% of total
US market share.
“With in-basin sand penetration,
proppant costs are going to come down
at the wellsite by 40 or 50%,” said Jacob.
This means “costs wouldn’t be a deter-
rent to operators experimenting with
higher proppant loadings.”
The Haynesville, Eagle Ford, Midcon-
tinent region, and DJ Basin are also
increasing in-basin sand content. “Our
industry sources have also indicated
that sand companies are looking into
the feasibility of building sand mines in
the Marcellus-Utica region and the Bak-
ken,” said Jacob. There are sand reserves
4%
43%
24%
Permian In-Basin Sand
Mid-Con In-Basin Sand
-
DJ Basin In-Basin Sand
Other
in Ohio that could serve the Marcellus-
Utica and on the North Dakota-South
Dakota border that could serve the
Bakken, but the quality of that sand “is
not that great,” he added.
While many sand companies and
operators are considering adding more
mines, others remain wary of over-
building like the industry has done in
the past.
And in-basin sand isn’t for every-
body. Operators working in deeper for-
mations still prefer northern white
sand, Rystad has observed, as “higher-
quality sand would withstand downhole
pressures for a longer time relative to
inferior-quality sand,” Jacob said.
Demand for northern white sand
remains strong, but Rystad expects
its price to come down “significant-
ly” next year as more in-basin mines
come on line.
“From a quality perspective, northern
white sand is the gold standard,” Jacob
said, but the downturn showed that “the
industry is a lot more comfortable using
lower-quality sand.” JPT
JPT • OCTOBER 2018