OFM Houston: the shale gale continues

By Emma Hughes
Published: Thursday, 03 July 2014

As the US energy landscape shifts towards unconventional sources, the demand for oilfield minerals including barite, bentonite and frac sand is ever increasing. Oilfield Minerals Outlook 2014 delegates gathered in Houston last week to find out more.

Natural gas is “a winner” in the North American energy market and is expected to contribute towards 30% of total energy demand by 2040, leading the country away from conventional fuels like coal and petroleum.

Oilfield Minerals Outlook delegates gathered in Houston for the third year running.
Credit: Norm Lanier 
This was the basis of the opening presentation from Stan Kaplan at the Energy Information Administration (EIA), at this year’s Oilfield Minerals Outlook, held in Houston, Texas, last week.

Kaplan, who is the EIA’s director of the office of electricity, renewables and uranium statistics, explained that the market for natural gas is expected to increase in coming years, with shale gas contributing an ever-increasing portion of this total.

This is expected to significantly increase the demand for oilfield minerals including barite, bentonite, hectorite, frac sand and graphite.

Kaplan also noted that the growing use of shale gas falls in line with government-backed efforts to decrease the amount of carbon-intensive fuels used in a move towards a ‘greener’ energy mix.

Interestingly, these government policies, coupled with technology innovations, could lead to a reduction in energy demand by 2040.

“Electricity sales have decreased in five of the last six years. Prior to 2000, sales declined only once in 50 years,” Kaplan told delegates, adding that while overall energy demand is likely to reduce, the percentage of shale gas contributing to the overall energy mix by this time will lead growth in total gas production, with the possibility of reaching half of total US output.

Drilling muds

Bentonite has been, and is expected to continue to be, an important mineral for the oilfield industry. This mineral, also known as fuller’s earth, is used in both conventional and unconventional drilling, including hydraulic fracturing (fracking).

Bentonite can be used to cool and lubricate the drill bit, remove cuttings from the bottom of the well, seal the borehole and stabilise the well bore without damaging the formation.

Also speaking at the conference in Houston, Sue Shaw, a senior analyst at Roskill Information Services, outlined just how important shale gas market growth will be for bentonite, outlining that the drilling muds market is currently the fourth largest consumer of this mineral.

“Demand from drilling muds increased 4% per annum over the last decade and is one of the largest growing end uses for bentonite,” Shaw explained to delegates.

Historically, drilling consistently accounted for just over 20% of US bentonite consumption, Shaw added, “until recent increases of up to almost 30%”.

Using 2012 figures, Shaw outlined that global demand for bentonite stands at around 23m tonnes.

However, while the demand for bentonite in the oilfield is increasing year-on-year, alternatives are creeping on to the market, with hectorite remaining a prime example of a natural product that may be used in harsher oilfield conditions (higher depth and temperature, for example).

Jay Chmelauskas, president of Western Lithium USA Corp. and Hectatone Inc., spoke in more depth about this alternative mineral at Oilfield Minerals Outlook 2014, highlighting its suitability for more complex oil and gas drilling environments associated with horizontal and deep drilling methods, such as fracking.

The company is developing a Hectatone line of organoclays which will be processed at a plant in Nevada, US, that will also be able to dry other clays, including bentonite. This is expected to be commissioned in autumn this year.

Frac sand

While day one of the conference focused on drilling minerals including barite and bentonite, day two saw presentations from several members of the frac sand industry, which has received a lot of airtime owing to its use in the fracking process, where it is used to prop open fractures made in shale rock to aid the extraction of natural oil and gas.

Frac sand takes up approximately 80% of the total proppant market – with a 10% share belonging to ceramic proppants, most often comprised of sintered bauxite or kaolin, and the other 10% to resin coated versions of sand or ceramic proppants.

However, while this is the “industry standard” market split, Taylor Robinson, president of PLG Consulting, told delegates that the use of natural sand as a proppant is actually on the rise thanks to new stimulation techniques, while ceramic and resin coated volumes are down.

“The ratio of proppant use has actually shifted towards more natural sand overall – sometimes 100%,” he said.

According to Thomas Dolley at the US Geological Survey, who spoke to IM on the side lines of the conference, the US frac sand market hit 30m tonnes in 2012, with the majority produced in Wisconsin, Minnesota and Illinois, respectively.

Around 90 frac sand mines are now operational in Wisconsin, Robinson outlined, while 15 remain in development, 15 are permitted, 16 are proposed, 5 stalled and 3 inactive.

However, while frac sand is famed within the oilfield industry as a key component of unconventional extraction, it has also found fame for the wrong reasons owing to its fine crystalline particles.

Carrie Tuit, senior environmental chemist at Gradient, provided a detailed overview of how a certain type of sand, known as respirable crystalline silica, can pose health risks including silicosis and lung cancer.

In response to an increased amount of activity in the frac sand industry, several industry bodies are now working on crystalline silica classification, including the US Occupational Safety and Health Administration (OSHA), which has proposed updated crystalline silica safety standards aimed at reducing the risks of working in an environment where silica particles are present.

OSHA has proposed a new permitted exposure level (PEL) for respirable crystalline silica as well as new provisions for measuring how much silica workers are exposed to.

IM Research has recently published a report on China’s Proppants Market: Raw material, supply & consumption.

You can also download a free proppants infographic wall chart on indmin.com.