The landscape for oilfield
minerals, used in the extraction of hydrocarbons from
underground wells, has shifted over the past five years as an
increase in hydraulic fracturing (fracking) worldwide has
driven up demand for frac sand, sintered bauxite and kaolin,
the main components of oilfield proppants.
Proppants, which are used to
literally prop open fractures blasted into shale rock
formations, have as a result joined a family of other oilfield
minerals, including bentonite and barite (barytes), which have
for years been used in conventional drilling processes and are
now seeing increased use in fracking.
With the exception of bauxite,
which is largely converted to alumina for use in refractories,
ceramics or abrasives, oilfield is the main end market for
Driving demand is an increased
focus on unconventional hydrocarbon recovery through fracking
and horizontal drilling.
Unconventional resources extracted
using these methods include shale gas, shale oil, tight gas,
tight oil and coal bed methane.
According to a recent IM
Research report entitled Chinas Proppants
Market, factors that have helped spur the development of
these resources, particularly shale gas, include relatively low
cost production, increasing world demand for energy and the
emerging establishment of liquefied natural gas (LNG) as the
fossil fuel of the future.
To date, the majority of
large-scale shale oil and gas development has occurred in North
America, in what has been described as a shale gale
taking place across deposits such as the Bakken, Marcellus,
Eagle Ford, Haynesville, Niobrara and Barnett formations,
stretching from central Canada to southern Texas.
US shale gas production has
increased from <5bn cubic feet per day (bcf/d) in 2007 to
>25 bcf/d since 2012, IM
Researchs Chinas Proppants report
Natural gas is expected to
account for 30% of US energy consumption by fuel in 2040, of
which almost 50% is projected to be supplied by shale
gas, the report adds.
Other countries with the potential
to tap unconventional oil and gas resources include China,
Australia, Mexico, the Middle East, South America, Europe and
Russia. However, technical political, logistical and
environmental challenges in these regions have hampered their
development, compared to the rapid escalation of the industry
in the US.
As a result of its shale gale, the
US requirement for frac sand, ceramic proppants and
resin-coated versions of each has grown from around 5m tonnes
in 2007 to 34.7m tonnes in 2013, according to the
Chinas Proppants market report.
In terms of market split, frac sand
remains the most popular choice of proppant, owing to its low
cost in comparison to ceramic proppants, as well as its
At present, frac sand takes up
approximately 80-85% of the market share by volume, with
ceramic proppants and resin-coated versions taking 10-15%. By
value, however, ceramic proppants take a 50% share of the
According to figures from the US
Geological Survey (USGS), global production of frac sand
reached 141m tonnes in 2013, up from 139m tonnes in 2012. The
US accounted for the lions share of this production, with
44 major companies producing around 50m tpa between them last
Frac sand specifications
Like some other oilfield minerals,
the type of silica sand suitable for use as frac sand is
specified by the American Petroleum Institute (API).
These specifications stipulate that
the percentage of quartz (SiO2) must be 99% or more
and crush resistance (hardness) must be high so that the sand
can withstand compressive stresses of 4,000-6,000 psi.
The permissible amount of fines
allowed to be generated as a result of compression under these
stresses vary by weight (max. fines wt.%) and are limited to:
14% for 20-40 mesh; 14% for 16-30 mesh; 10% for 30-50 mesh; 6%
for 40-70 mesh; and 20% for 6-12 mesh.
Acid solubility must be low and
roundness and sphericity must meet API >0.6. Turbidity tests
also measure the amount of light that can pass through a
wetting fluid. The higher the measurement, the more suspended
particles are present. Turbidity is measured in Formazin
Turbidity Units (FTU) and the minimum threshold limit is
<250 FTU. Producers will look for a lower turbidity rating
as high turbidity readings can be an indication of poor
proppant manufacturing, transportation, or handling practices,
which can lead to interference with the fluid chemistry.
Frac sand concerns
While frac sand has remained the
proppant of choice for most fracking operators in North America
and further afield, concerns surrounding its possible
environmental and health impacts have been raised.
North American proppants
manufacturer Preferred Sands told IM that over
the last five to 10 years, it has seen a shift in
industry practices towards the utilisation of more
environmentally-friendly technologies and proppants.
With a heightened awareness
of the environment within the industry, including proposed
rules such as the OSHA [US Occupational Safety and Health
Administration] rule that would reduce the permissible exposure
limit (PEL) for respirable silica dust by half, Preferred Sands
has seen an increase in customer requests for sustainable
products, a company spokesperson told
Inhalation of respirable
crystalline silica particles is dangerous, as it can lead to
silicosis - an incurable lung disease caused by breathing in
large amounts of silica dust over an extended period of
As awareness of the risk of
contracting this disease has increased, national legislators
and employers in various industries including construction and
fracking have been looking for ways to minimise the exposure of
their workers to harmful silica dust.
Currently, the US OSHA has
two standards in place for regulating frac sand exposure,
calculated using PEL equations originally adopted in 1971.
Based on these formulas, the PEL
for general industry is approximately 100 micrograms per cubic
metre (µg/m3), averaged over an eight-hour
day. For construction work and shipyards, the PEL is roughly
The new rule would dispense with
the PEL equations and set a single PEL applicable to all
industries of 50 µg/m3 of air, averaged over
an eight-hour day. The new rule would cover all three forms of
crystalline silica: quartz, cristobalite and tridymite.
The proposed rule also sets an
action level of 25 µg/m3 of air.
In workplaces where the action level is exceeded, employers
would be required to monitor airborne exposure levels.
Given the extent of the proposed
reduction in silica PELs, measures are swiftly being taken by
companies to ensure compliance ahead of the rules
introduction, including investing in new technology.
For example, Preferred Technology,
an affiliate of Preferred Sands, launched DustPRO - a dust
prevention proppant solution for the oilfield industry to help
silica sand companies meet and exceed current and future silica
dust exposure limits - in April this year.
Despite the introduction of new
safety solutions ahead of OSHA amendments, the USGS has warned
that the fracking industry should expect local shortages of
industrial sand and gravel as a result of the new
In future, sand and gravel
operations are likely to be located at greater distances from
high-population centres in an effort to minimise the risks
associated with silica sand exposure.
Ceramic proppants are favoured for
their suitability for deeper, high pressure wells. Most
commonly comprised of sintered bauxite or kaolin - or blends of
both - ceramic proppants have proven to be stronger, denser and
more uniformly round than frac sand, making the proppant pack
Ceramic proppants are graded
according to bulk density, which is related to alumina content,
which is generally proportional to the proppants crush
Unlike frac sand, which is mainly
mined and consumed in the US, the majority of ceramic proppants
are manufactured in China, which produces around 4.5m tpa,
accounting for 66% of world capacity, according to IM
In the US, until 2012 there were
just two main ceramic proppants producers, Carbo Ceramics and
Saint-Gobain, before French multinational, Imerys, joined the
market, later acquiring PyraMax Ceramics. The US now accounts
for 23% of the market with 1.49m tpa, Russia 7% (0.5m tpa) and
Brazil 4% (0.3m tpa).
The word barite is derived from the
Greek βαρύς, meaning heavy. Barite
can be used in drilling mud to lubricate the drill bit, prevent
blowouts of oil and collapse of the drilling-well wall, to
carry drill cuttings from the well bottom to the surface or as
a weighting agent in fracking operations, aiding proppant
The high atomic weight of barite
(molecular weight = 233.39 gm) is attributed to the presence of
barium in the compound. This gives barite an extremely high
specific gravity and it is this that makes it a popular choice
for use in oilfields.
Barite powder containing a minimum
90% barium sulphate with 4.15 specific gravity is recommended
for drilling. For offshore drilling, the specific gravity
should be 4.2. At least 97% of ground barite should pass
through a 75-micron IS sieve and 95% through a 53-micron IS
These standards have been set by
the API in response to dwindling reserves of high quality
barite in the US.
Michael Miller, a geologist at the
USGS, told IM that the specifications have
been designed to increase production in the US and, had the API
not made this change, the industry would have needed an
investment of something like $200m in exploration and
The oilfield market accounts for
84% of global barite production, a figure that is expected to
increase with the growing amount of fracking taking place in
the US, Europe, China and other areas of the world.
In the drilling mud market,
alternatives to barite include celestite, ilmenite, iron ore
and synthetic hematite, manufactured in Germany. None of these
substitutes, however, has had a major impact on the barite
drilling mud industry, according to the USGS.
Fracking and the impact on barite
While barite has for years been a
staple of the oil and gas extraction industry, a global
increase in fracking operations could affect overall demand for
Tom Eisenman, general manager at
barite and calcium carbonate company, Superior Weighting, told
IM that location, formation characteristics,
depth and pressure all impact the amount of barite used.
He said that using fracking or
horizontal drilling techniques means that wells are under
higher amounts of pressure, with tight sands such as the
Haynesville Shale in Northwest Louisiana and northeast Texas
resulting in barite consumption going up.
As a well is drilled, the bit
passes through various formations, each with different
characteristics. The deeper the hole, the more barite is needed
as a percentage of the total mud mix.
Fracking, coupled with
extended horizontal drilling techniques, has significantly
increased the production zones, which normally also increases
the barite consumption, said Eisenman.
The USGS Miller told
IM that while these alternative techniques
might not have a great impact on the amount of barite used as a
lubricant, the fact that fracking requires the mineral as a
proppant suspension aid is also likely to have an effect on
demand. Last year, almost 95% of the barite produced in the US
in 2013 was sold for this purpose.
The use of unconventional
drilling [fracking] has certainly expanded the use of barite,
but not because it requires more barite per well but because it
has opened up more areas to exploration and the number of wells
being drilled and the total metres drilled has increased,
Conversely, others have suggested
that an increase in unconventional drilling could actually
reduce the amount of barite consumed in oilfields.
If the wells are shallow, with less
pressure and more liquids, such as the Eagle Ford Shale in
south Texas, the barite consumption goes down, even though the
rig count may increase.
As an example, the Haynesville
wells average about 1,500 tonnes barite per well, while the
Eagle Ford wells only use 200-300 tonnes barite per well,
explained James Vernon, director of supply chain of drilling
and completion tools at oilfield services company, Baker
Vernon also expects demand for high
quality barite to decrease as shale plays do not require barite
as heavy as conventional well bores, because the density is not
as high when compared with conventional well bores, adding that
the higher grade barite of 4.2 SG or above is a little
bit scarcer than it used to be.
There is not a lot of
pressure on these [shale] formations, so you dont need a
large volume of barite to drill with, he told
Global demand for barite fell in
2013, according to the USGS, with the US importing 25% less
than during 2012. This was a result of possible stockpiling in
In descending order of production,
China, India, Morocco and the US were the leading producers of
barite in 2012. These four countries accounted for 82% of
estimated world barite production, Miller told
According to figures from the USGS,
in 2012, China exported 2.95m tonnes barite, a slight increase
on 2011, while the US was by far the countrys leading
trading partner, accounting for 64% of the total, with Saudi
Arabia and Indonesia accounting for 10% and 5%,
Miller told IM
that Chinas barite exports have decreased in recent years
as a result of falling mine output and increased domestic
consumption, as a result of the country looking to diversify
its energy supply from coal to less polluting shale gas.
He added that the US barite
industry had become very dependent on China, as well as India,
for its barite and failed to act on finding alternative
supplies until prices had increased six-fold over the last six
to eight years.
Eisenman, general manager at
Superior Weighting, told IM that although US
domestic production of barite is increasing, this is not enough
to keep up with demand, therefore imports will still be the
countrys main supply.
According to Eisenman, although
China has been the dominant supplier to the US industry for the
last three or four years, Morocco is becoming a stronger
player, as are Mexico and India.
If they [China] can roll back
their prices back to where they were in 2007/8, they can
probably cover part of the market, he suggested.
Theres nothing out
there right now that [indicates] youre going to see any
radical change. If some of these [countries like China] go on a
binge buying spree - that could affect [prices] - but I
dont think its going to be big swings - probably
curve swings, he said.
Eisenman added that although China
is expected to increase its consumption of barite as a result
of shale gas discoveries, it will have very little impact on
prices, because the country will meet its demand
It has been too expensive to
export because of where its [barite] located, therefore it
probably wouldnt impact the export barite market. But
its really hard to get to that information - Chinas
not very good at exposing what their reserve picture is -
either for minerals or natural gas, he told
In October last year, what could
become the largest barite supplier in China was formed between
Chinese barite miner Rocky Mountains and Hao Hua Chemical
At present, Rocky Mountains
controls the Tianyan barite deposit, covering an area of
0.128km2 with Hao Hua Chemical Groups deposit
covering an area of around 3km2.
The Tianyan deposit of Rocky
Mountains currently produces 160,000 tpa while the Hao Hua
Chemical Groups deposit has not yet been mined.
The two mines will be merged under
the joint venture (JV), called Tianzhu Chemical Mining Corp.,
and will cover a total area of 3.22km2.
Speaking to IM,
the companys chairman, Rocky Wu, said this JV would not
only extend its mining licence for another 10 years but also
produce over 1m tpa barite.
Wu said that consumption of barite
will be picking up very quickly as a result of China making
headway in tapping into its oil reserves.
He added that China is currently
facing competition from India, because India can supply
homogenous quality barite, including colour, SG and other
chemistry combinations of barite, but in the long run,
China is going to be more competitive because of its huge
He cautioned that the government
could implement a ban on exports of the commodity in the
future, as more plants are being constructed and more barite
Fees or tax are already being
charged to suppliers/exporters of raw barite, said
Bentonite: a boring
Bentonite is a clay mineral,
largely composed of montmorillonite, which is mainly a hydrous
In drilling, bentonite is usually
mixed with a measured quantity of water to form drilling mud,
which is then pumped into the bore hole during the drilling
The purpose of drilling mud is to
remove cuttings, control subsurface pressure, suspend drilled
cuttings, cool and lubricate tools, to build walls, to support
drill strings and casings and control corrosion.
Bentonite clay is generally mixed
in with additives such as barium sulfate (barite), calcium
carbonate or hematite to form drilling mud.
Other than as an oilfield mineral,
bentonite is also used in a variety of applications such as
sand casting, iron ore pelletisation, insecticides, pet-litter,
pharmaceuticals and cosmetics.
Figures from the USGS put global
production of bentonite at 10.3m tonnes in 2013.
During that year, the US was the
top producer of the mineral with almost 5m tonnes, although
this was less than in 2012, according to data from the
53% of current bentonite production
goes towards absorbents and drilling mud.
Following the economic recession of
2008-9, which impacted many industrial minerals end markets,
improving economies led to an increase in bentonite demand from
countries such as Canada and Japan, to where 1.02m tonnes,
valued at $176m, was exported from the US in 2011.
However, while US exports rose
between 2009 and 2012, they fell by almost 9% in 2013.
The worlds second largest
producer, Greece, increased production between 2012 and 2013 by
50% from 800,000 tonnes bentonite to 1.2m tonnes in 2013.
Despite these figures, Robert
Virta, a geologist with the USGS, told IM that
there have not been any major global changes in consumption of
production of bentonite.
In the US, sales for drilling
mud increased from the early 1990s until 2010, where it has
levelled off a bit. With the increasing global demand for gas
and oil, however, sales of bentonite for drilling are not
likely to decline for the near future, Virta
On the one hand, you are
extracting more gas and oil from a single drill hole but you
are also drilling holes in locations where there was previously
little or no production. It may take a couple of more years to
determine any effects. It will also depend on whether or
not the public accepts fracking.
While the energy industry likes it, much of the public does not
and would like to see it banned, Virta said.
In terms of supply, Virta told
IM that he does not foresee see any issues
arising anytime soon, regarding bentonite supply.
Nor do I see any situation
that could cause a sudden increase in pricing (...) I
dont believe that we will see the demise of the bentonite
muds anytime soon, he added.
However, others, including US-based
Halliburton, one of the worlds largest oilfield services
companies, told IM that the industry is moving
away from bentonite as there are similar performing substitutes
on the market.
Halliburton has solutions
that require low quantities of bentonite - some have no
bentonite at all, said Steve Gray, resource development
at Halliburton, at IMs 22nd
Congress in Vancouver in April.
Leading producers in the bentonite
field include AMCOL; Indias largest multi-mineral
solutions provider, Ashapura Group; US-based companies
Bentonite Performance Minerals, Black Hills Bentonite, S&B
Industrial Minerals, Wyo-Ben; Swiss company Clariant,
Schlumberger subsidiary, MI Swaco; and Chinese company Zhejiang
Clay Chemicals Co.
Earlier this year, AMCOL was the
target of a bidding war between speciality minerals and
refractories company Minerals Technologies Inc. (MTI) and
French industrial minerals multinational, Imerys.
After several months of counter bid
after counter bid, US-based MTI finally won the battle and
initiated the $1.7bn merger offering $45.75/share.
As the global energy landscape
changes, demand for oilfield minerals such as barite and
bentonite, as well as minerals used in proppants, is expected
to increase as in the majority of cases, there are no
reasonable substitutes for these minerals.
In terms of world natural gas
production, Linda Doman, senior international energy analyst at
the US Energy Information Administration (EIA), told
IM that this is likely to increase by 1.7%
every year until 2040.
Unconventional gas on the other
hand is expected to go up by almost 5% a year between 2010 and
2040, with the majority expected to come out of the US and
Canada, she added.
As a result, most of the demand for
oilfield minerals is likely to come from the US and North
However, another major growth
market for unconventional oil and gas is China, said Doman.
China country holds the
worlds largest reserves of shale gas and has set a
national output target of 6.5bn cubic metres by 2015 and as
much as 100bn cubic meters by 2020.
China Petroleum & Chemical
Corp., Asias largest refiner, known as Sinopec, has
recently marked shale gas development as its 2014 priority
after doubling its output forecast from a key field in the
Sichuan region in the southwest of the country.
They have very ambitious
production targets for the unconventional so it will be
interesting to watch and see what theyre able to do but
in terms of our outlook right now its the geography and
water issues is keeping us a little less optimistic than they
are, Doman told IM.
Here, increased domestic
consumption of the ceramic proppants the country manufactures
is expected, while exports to the US reduce.
Other countries, such as Australia, Mexico, the Middle East,
South America, Europe and Russia, are also expected to follow
suit as the requirement to switch to more sustainable energy
sources increases. However, before this happens technical,
political, logistical and environmental challenges will need to