Proppant potential for bauxite

The shale gale and dash for gas continues unabated, and with it increasing demand for proppants required in hydraulic fracturing operations. It’s a golden opportunity for proppant feedstock suppliers - silica sand, bauxite, kaolin - to pursue this growth market. But the key questions are: Which material makes the grade? Where else outside the US is the market likely to catch fire?

American dream market

North America, and mostly the US, is where it’s at, and everyone has been monitoring this phenomenal development. According to PacWest Consulting Partners’ latest proppant market analysis, US onshore proppant consumption is expected to grow at 9% per annum through 2015, from 69bn lbs in 2013, to 83bn lbs in 2015.

Naturally, suppliers of US fracturing sand (frac sand) and ceramic proppants are rubbing their hands in anticipation of future contracts.

While frac sand remains the dominant proppant of choice in the US, holding an approximate 80-85% share of the US proppant market, use of ceramic proppants has risen markedly.

PacWest considers that growth in US frac sand consumption to 2015 will be perhaps in excess of 9% per annum, and resin coated sand will grow at 7%. Ceramic proppant consumption, however, is expected to grow at a rate of 12% per annum. Indeed, ceramic proppant consumption in the US has risen an impressive 40% since 2011.

One of the main drivers for rising demand for ceramic proppants has been the increasing practice of using frac sand and ceramic proppant blends in US fracturing operations (eg. 65% ceramic: 35% sand in the Bakken).

Ceramic proppants retain their premium price tag (4-6 times the price of frac sand), but their superior performance owing to greater strength and uniform shape and sphericity over frac sand offers greater efficiencies in oil and gas conductivity (flow through fractured target formation to recover at well head). Thus exploration and production (E&P) companies are employing blends of the two families of proppants to achieve optimum economic efficiencies.

With their greater crush resistance, ceramic proppants are also enjoying enhanced demand from more drilling at greater depths and thus at greater pressures (>10,000 psi), environments where natural frac sand fails.

These factors, combined with drilling operations employing more fracturing stages (40+), have ceramic proppant producers responding to this market demand (witness recent expansions/acquisitions by US ceramic proppant leaders Carbo Ceramics, Saint-Gobain, and Imerys), while bauxite producers and developers are keen to get in on the feedstock market.

Which bauxite is best?

The accompanying chart illustrates the different categories and characteristics of proppants.

With the notable exception of Russia (using magnesium silicate), most commercial grades of ceramic proppants are manufactured from calcined alumina-containing ores, either bauxite or kaolin, or from blends of each (see table of leading producers). Georgia and Arkansas, in the US, host unique bauxitic kaolin deposits which are used to make ceramic proppants.

So which material is best, or even typical for ceramic proppant manufacture? There does not appear to be a straight answer, with many different ores being using to produce different proppant grades.

Terry Palisch, Directory of Petroleum Engineering, Carbo Ceramics, emphasised that with so much competitive interest in ceramic proppant development, feedstock information was naturally highly sensitive. That said, generally speaking, Palisch offered: “If manufactured correctly, the strength of a ceramic proppant is directly proportional to the alumina content of the raw material.ÊImpurities such as silica will affect the end product.”

Ceramic proppants maybe divided into low density (45-50% Al₂O₃), intermediate (70-75% Al₂O₃), and high density (80-85% Al₂O₃) grades, their predominant feedstock raw materials being kaolin, bauxite, and bauxite, respectively (see chart).

As important as securing a high alumina quality raw material, is the correct execution of the ceramic proppant manufacturing process Ð this is all too often underestimated. The accompanying diagram outlines the main elements of the process route, with pelletisation and sintering being the primary two processes requiring expert attention.

There are dry and wet pelletisation variations depending on the feedstock material and desired proppant end product: the dry process is for calcined ore and high density grades; the wet process, for low density/intermediate density proppants, uses uncalcined ore, and employs slurrying prior to binder mixing, and a fluidizer sprays slurry onto seed particles prior to sintering.

Concerning bauxite, so-called “abrasive” grade bauxite has been the favoured specification for ceramic proppant manufacture. Typical specifications of a raw abrasive grade bauxite are min. 55% Al₂O₃, max. 5.00% SiO₂, max. Fe₂O₃, and min. 2.50% TiO₂. Calcination of raw material would normally increase alumina content to 70-85% Al₂O₃ depending on raw material and calcining conditions.

In short, intermediate strength ceramic proppants have been made from bauxite containing a significant amount of mullite (Al₆Si₂O₁₃), while high strength ceramic proppants are made from bauxite consisting mainly of corundum (Al₂O₃).

Until mid-2007, both Saint-Gobain and Carbo Ceramics imported calcined abrasive grade bauxite to their US plants from Comalco in Australia. Carbo Ceramics used the bauxite for production of its high strength proppant CarboHSP (83% Al₂O₃) and intermediate strength proppant CarboProp (72% Al₂O₃).

The raw bauxite used to manufacture ceramic proppants from deposits mined by Comalco at Weipa, Queensland, Australia had 60% Al₂O₃, with a typical range from 57-63% Al₂O₃, and an average 9% SiO₂, with a range of typically 7-11% SiO₂. Typical mineralogy comprised 30-50% gibbsite, 22-45% boehmite, 16-24% kaolinite, and less than 1% quartz. Oxides of iron and titanium totalled about 9-12%.

This raw bauxite yielded a calcined abrasive grade of 82-85% Al₂O₃, 6.5-7.3% SiO₂, 5.5-7.0% Fe₂O₃, and 3.1-3.7% TiO₂.

In 2007, Comalco exited production of abrasive grade bauxite and US proppant manufacturers were forced to seek alternative supplies: Carbo Ceramics selected a bauxite source in Guyana among others, and uses locally sourced bauxite for its Chinese and Russian operations.

In Pocos de Caldas, Minas Gerais, Brazil, Mineracao Curimbaba produces an intermediate density bauxite-based proppant, SinterBall containing 73.7% Al₂O₃ and 6.4% SiO₂, and lower density grades of 70.5% Al₂O₃.

Curimbaba has a ceramic proppant production capacity of 300,000 tpa. Gabriel Warwick, Corporate Technical Advisor, Curimbaba told IM: “By the end of 2015, beginning of 2016 we will add 70,000 tpa from a new plant.”

China is the largest producer of bauxite-based proppants, with over 100 plants mainly located in the bauxite-rich provinces of Henan, Shanxi, Guizhou, and Sichuan. There are some 20-30 leading producers, with capacities ranging 20-210,000 tpa, producing low, intermediate, and high density grades ranging 68-88% Al₂O₃.

As is well documented elsewhere, Chinese bauxite is primarily of the diaspore variety, compared to the gibbsitic bauxites of Australia and the Americas. Luoyang Maide Ceramics Co. Ltd, Henan, is bringing on stream a new production line in early 2014 to double capacity in excess of 100,000 tpa proppants.

Lucas Xu, export director, Luoyang Maide Ceramics said: “We source local raw bauxite in the range 75-85% Al₂O₃ for proppants. The main competition [for bauxite ore] is Chinalco for aluminium production.”

Many Chinese bauxite producers, already supplying refractory and abrasive grades, are now developing and expanding in proppant grade bauxites, have successfully established an export market in the US and are now looking elsewhere for the next proppant market.

The development of China’s proppant supply market and how it will influence global supply is the subject of a forthcoming in-depth report from Industrial Minerals Research (see p.33).

Developers of new bauxite sources are clearly keen to evaluate the potential of their material for proppants. First Bauxite Corp. in Guyana is developing the Bonsika bauxite deposit and last year successfully tested material for intermediate strength ceramic proppant applications.

Hilbert Shields, CEO, First Bauxite, said: “The Bonsika deposits are ideal for high strength ceramic proppants, being gibbsite based with up to 92% Al₂O₃ and certain deposits having the ideal type of iron embedded promoting additional strength.”

Where next?

Outside the North American market, which is set to continue its stellar growth for some years, the future potential hotspots for proppant demand, in descending order, look to be Australia, China, the Middle East/North Africa, Mexico, and South America. Although a range of factors could change this order in short notice - including investor confidence, political willpower, a lowering of cost risk.

China clearly has a developing ceramic proppant supply sector, but with the exception of Mineracao Curimbaba and Mineracao Varginha in Brazil, and Saint-Gobain in Venezuela, these regions are bereft of major producers of ceramic proppants.

Australia’s shale gas industry seems set for take-off. Santos has brought Australia’s second shale-gas well into production after successfully drilling the Moomba-194 vertical well in the Cooper basin. Along with coal bed methane (CBM; also requires fracturing), shale gas could become an alternative feedstock for Australia’s fast expanding liquefied natural gas (LNG) export industry.

Optimism in the Chinese shale gas market has been tempered by its difficult geology (shales are generally deeper and faulted), poor pipeline infrastructure, immature oilfield services, and crucial water supplies are limited in some areas.

But China has some of the world’s best source rocks, the government plans to increase the use of natural gas to around 230 bn cubic metres by 2015, and foreign interest is growing - oilfield services giant Schlumberger, already active in five Chinese basins, is to make China the centre of its global operations. This market is slowly but surely getting its act together and promises to rival the US in terms of activity and volume.

In 2012, Saudi Aramco made no bones about sending its drilling specialists to Texas to learn all about shale gas and hydraulic fracturing for its future strategy. In the MENA region Algeria and Saudi Arabia are now leading the race to exploit shale gas since both countries need more energy to meet rising domestic power generation needs.

Aramco is soon to invite bids from firms to build shale-gas processing infrastructure in the country. However, much work still needs to be done to galvanise shale gas development into the mainstream. In particular, there are concerns over water management. Mexico has reformed its oil industry by promising to open up to foreign investment and overhaul the state oil monopoly Pemex. This could help direct activities to Mexico’s huge shale gas potential in the Eagle Ford Basin, which is seeing intense activity within its US borders.

South America has some of the most promising shale-gas plays in the world, mainly in Argentina and Brazil, but exploration in the region remains in the early stages. Argentina is third after China and the US for hosting the world’s largest technically recoverable shale gas resources. The Neuquen basin contains the highly promising Vaca Muerta formation, but development has stalled and investors, while interested, remain cautious. A government election in 2015 could create some movement.

Already, ceramic proppant producers, along with bauxite deposit developers, are trying to assess the potential demand for proppants in these regions. That is no surprise, given the future world demand for energy (increasing by 41% to 2035 according to BP’s latest forecast), and the favouring of natural gas as the fossil fuel of the future. There is little doubt that there will be increased demand for ceramic proppants, and thus increased demand for their raw material feedstock.

Mike O’Driscoll is presenting “China’s ceramic proppant market: bauxite’s new bonanza?” at the 20^th Bauxite & Alumina Conference, 24-26 February 2014, Miami.