In an effort to maximize well-productivity in the current low oil-price environment, operators in North America have adjusted their completion designs and substantially increased their proppant use. At $50 oil prices, we expect to see that trend continue&#;particularly in the Permian, where our analysis indicates that proppant intensity will rise by 35 percent before reaching optimal economics. The resulting increase in North American demand&#;up from 45 million tons in to 110 million tons in &#;will be a boon for suppliers, and a key driver of low-cost sand flooding into the Permian.
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The length and severity of the downturn has forced operators to find new ways to increase production. Among North American E&Ps, two primary methods have emerged: confining drilling to top-tier acreage and introducing more aggressive completion designs for new wells (exhibit 1). Since implementing these practices, operators have realized annual productivity increases of 15 percent, up to an average 30-day initial production (IP) rate of 3,800 barrels per 1,000 lateral feet. Based on these observed IP increases, we anticipate that North American shale basins can sustain a 10 to 35 percent increase in proppant loading intensity before becoming uneconomic at an oil price of $50 per barrel.
Each basin&#;s relationship between proppant intensity and IP is different, and for each basin there is a point at which the optimal net present value (NPV) is reached and pumping additional sand into a well becomes uneconomic. However, identifying where this &#;sweet spot&#; exists is not straightforward. As an example, we have analyzed the different optimal points for two North American unconventional plays&#;the Bakken basin and the Delaware-Wolfcamp sub-play of the Permian basin&#;by examining the impact of increasing proppant intensity on NPV.
The Bakken was one of the first shale plays where operators began extensively applying unconventional drilling techniques, so operators have been able to use several years&#; worth of data to inform their decisions regarding lateral lengths and proppant loading intensities. Completions data from the first half of indicates that while lateral lengths have changed relatively little over the past year, operators have continued to push the limits on proppant intensities. In fact, average loading has increased from ~800 pounds per foot in to nearly 1,000 pounds per foot as of mid-.
By performing a sensitivity analysis on proppant intensity, we can see that operators in the Bakken have limited growth potential from current intensity levels before the incremental pound of proppant negatively impacts NPV&#;observed after ~1,100 pounds per foot (exhibit 2). Given the speed at which proppant usage is increasing in the basin, the Bakken may reach this point as soon as mid-, after which additional moves toward higher proppant intensities will likely diminish the value of the well.
Characterized by strong growth and low breakeven prices, the Permian has experienced rapid changes in well design as operators test ever-greater proppant volumes in the Midland and Delaware sub-plays. Since , proppant volume per well in this region has more than doubled as operators began using low-cost local sand in fine grain completions.
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Despite the basin&#;s strong growth in proppant intensity, the Permian&#;unlike the Bakken&#;does not appear to be near its optimal loading potential. For example, the Delaware-Wolfcamp sub-play has an average current proppant loading of nearly 2,000 pounds per foot, yet could realize up to a 35 percent increase in proppant intensity before approaching its &#;sweet spot&#; in proppant loading per foot (exhibit 3).
This trend toward greater proppant loading comes as sand suppliers have announced a surge of in-basin supply&#;over 40 million tons of local sand capacity has been announced. And while it would initially appear that an increase of this magnitude would result in chronic oversupply, we&#;re expecting Permian proppant demand to increase from 13 million tons in to 38 million tons in . As a result, we&#;ll see relatively high utilization rates (~70 percent) of this cheaper, fit-for-purpose supply. Interestingly, even if the price of proppant increased by 50 percent, the optimal proppant loading per basin would not significantly change&#;although NPV would decrease&#;indicating the relative resiliency of the &#;high proppant intensity&#; trend to pricing.
Assuming that the projected demand materializes and that supply exists to meet it, there remain two major factors that could create headwinds for the proppant market: transportation logistics and pressure pumping capacity. Challenges with proppant transportation tend to center around last-mile logistics, as the proppant is moved from a rail station to the wellhead via truck. West Texas roadway infrastructure, in particular has become progressively more congested as each well requires delivery of several million pounds of sand. Even sourcing enough drivers for all these trucks has proved difficult.
Similar issues have been observed by companies providing completions services, as the growing rate of drilling over the past year has stretched existing frac crews beyond available capacity. This problem has been exacerbated by the rising volume of sand that each well demands and the additional time it takes to pump these larger volumes. Although both service companies and producers are aware of these issues and are attempting to address them, it is too early to tell how these problems will be solved or if they constitute major bottlenecks to the ability to increase proppant loading and overall demand.
Provided these concerns can be resolved, there are implications for both the North American proppant market and the global oil market. Demand for proppant will grow in basins like the Permian, which exhibits both strong drilling activity recovery and capacity to increase proppant intensity levels. The need to pump more proppant may put continued upward pricing pressure on completion-related oilfield services, which have already seen 20 to 30 percent increases in the past year. Even with this potential rise in costs around services, the resulting production gains and increases in well NPV will keep shale oil production profitable at prices of $50 per barrel. With the high likelihood of maintaining profitability and competitiveness in a low-price environment, North America shale oil will continue as a key contributor to the global oil supply stack for the near- to mid-term future.
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Global Proppant Market was valued at USD .16 million in and is anticipated to project robust growth in the forecast period with a CAGR of 8.46%, owing to a rapidly increasing mining activities through hydraulic fracking.
Proppant is a persistent material with consistently equal-sized particles used with fracturing fluid during the hydraulic fracturing (fracking) process to hold cracks created in the earth to extract oil and gases. Proppants come in a wide range of varieties, including both man-made and naturally occurring proppants. The sand coated in resin or sturdy ceramic materials is an example of man-made proppants. Proppants are available in a wide range of sizes and shapes, such as spherical and cylindrical, for a wide range of applications like coalbed methane, shale gas, tight gas, tight oil, deep gas, and others.
Rising Mining Activities through
Hydraulic Fracking to Drive Market Growth
The immediate impact causes cracks in
the rock after fracking into the seabed. The liquid mixture of proppant,
chemicals, and water is driven into a well to ensure the well's productivity
for extended periods. When a proppant mixture is forced into the wellbore at
super high pressure, it fractures the shale and allows hydrocarbons to move out
through the punctures and up to ground level. Approximately the conventional
oil and gas wells require 136 tons of proppant; in coalbed fracture treatments,
34 to 145 tons of proppant is used, and shale gas wells can consume more than
tons of proppant per well. Briefly, every oil and gas field require ample
proppant according to the size of the wells to extract petroleum and natural
gases. Global oil production amounted to 89,877 thousand barrels per day in
, which is an upsurging trend after the pandemic's impact and is expected
to rise in the future. Hence, growing extraction activities are expected to
increase the demand for proppants in the forecasted period.
Increasing Demand of Natural Gases is Helping
in Driving Global Proppant Market
The energy security of a country is
evaluated on the availability of hydrocarbons present in the country. Demand of
natural gas is increasing day by day with the increase in technological
advancements in fracking industry. Hydraulic fracking is mainly used for the
extraction of natural gases, Hence, coal, oil, and gas storage and capacity
play an essential role in the nation's development. Therefore, to obstruct such
issues government has created significant alternatives by increasing storage
space or demand for natural gases and oil to fulfil the demand. Such activities
can lead to rise in the production of oil and natural gas and an increase in
the demand of the proppants market globally as it is used in the extraction of
resources from wells.
Rising Demand from Growing Economies
Growing demand for proppants in
developing economies to use in their non&#;conventional drilling activities can
fill the demand gap in the supply chain of proppants caused by the Russia
Ukraine war. Countries like China, India, Brazil, and others have lucrative
opportunities for a proppant market owing to the rising number of oil and
natural gas wells and allowing trade benefits. For instance, the production of
natural gas from tight gas, shale gas, and others together accounted for 44% of
domestic natural gas production in China in . As emerging countries hold
large population, the demand for proppant is expected to rise in the future.
Improvement in Fracturing Technology
Oil and natural gas were formerly
obtained using conventional extraction methods. The rising implementation of
unconventional oil and gas extraction methods that require advanced and
lightweight proppant that facilitate resources to flow smoothly due to the
depletion of these resources is creating lucrative opportunities. Modern
ceramic proppants engineering plants make lightweight ceramic proppants using
high-quality oxidized kaolin clay and modify them to be commercially feasible.
In addition, producers are introducing new fracking methods like horizontal
multistage fracturing. These strategies foster a positive perspective for the
market because it is anticipated that it is going to gain traction in the coming
future.
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Market Segmentation
The Global Proppant market is segmented
based on Type, Application, Region, and company. Based on Type, the market is
further fragmented into Frac Sand, Resin Coated frac sand, Resin coated ceramic
proppants and high strength ceramic proppants. Also, segmentation of the market
on grounds of the application is done into Shale Gas, Coalbed methane gas,
tight gas, tight oil, deep gas and others.
Company Profiles
US Silica Holdings
Inc., Compagnie de Saint-Gobain S.A., Smart Sand Inc., Badger Mining Corporation, Xinmi Wanli
Industry Development Co., Ltd., Petro Welt Technologies AG, Mineração Curimbaba
Ltda, Vikas Proppant & Granite Limited, Nika Petro Tech, JSC Borovichi
Refractories Plant.
Attribute
Details
Market size value in
USD .17 Million
Revenue Forecast in
USD .4 Million
Growth Rate
8.46%
Base Year
Historical Years
&#;
Estimated Year
Forecast Period
&#;
Quantitative Units
Revenue in USD Million, and CAGR for - and -
Report Coverage
Revenue forecast, company share, competitive landscape, growth factors, and trends
Segments Covered
Type
Application
Region
Regional Scope
North America , Asia Pacific , South America, Middle East & Africa & Europe
Key Companies Profiled
US Silica Holdings Inc., Compagnie de Saint-Gobain S.A., Smart Sand Inc., Badger Mining Corporation, Xinmi Wanli Industry Development Co., Ltd., Petro Welt Technologies AG, Mineração Curimbaba Ltda, Vikas Proppant & Granite Limited, Nika Petro Tech, JSC Borovichi Refractories Plant
For more information, please visit ODM oil fracturing proppant fabrication.
Customization Scope
10% free report customization with purchase. Addition or alteration to country, regional & segment scope.
Pricing and Purchase Options
Avail customized purchase options to meet your exact research needs. Explore purchase options
Delivery Format
PDF and Excel through (We can also provide the editable version of the report in PPT/pdf format on special request)
Report Scope:
In this report, Global Proppant market has been segmented into following
categories, in addition to the industry trends which have also been detailed
below:
· Proppant Market, By Type:
o Frac Sand
o Resin Coated Frac Sand
o Resin Coated Ceramic Proppants
o High strength Ceramic Proppants
· Proppant Market, By Application:
o Shale Gas
o Coalbed Methane
o Tight gas
o Tight Oil
o Deep Gas
o Others
· Proppant Market, By Region:
o North America
§ United States
§ Canada
§ Mexico
o Asia Pacific
§ China
§ Indonesia
§ Malaysia
§ India
§ Vietnam
§ Rest of Asia Pacific
o South America
§ Argentina
§ Chile
§ Venezuela
§ Bolivia
§ Rest of South America
o Middle East & Africa
§ Saudi Arabia
§ UAE
§ Oman
§ South Africa
§ Rest of Middle East & Africa
o Europe
§ Russia
§ Ukraine
§ Denmark
§ Hungary
§ Poland
§ Rest of Europe
Competitive Landscape
Company Profiles: Detailed analysis of the major companies present in Global Proppant market.
Available Customizations:
With the given market data, TechSci Research offers customizations according to a company&#;s specific needs. The following customization options are available for the report:
Company Information
Detailed analysis and profiling of additional market players (up to five).
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