Truck off: Capacity squeezed in frac sand markets

Published: Thursday, 14 December 2017

Demand for frac sand is booming in Texas but supply is limited by a serious shortage of truck drivers. But a shift in fracking philosophy toward closed systems may help to relieve the pressure.

As frac sand demand more than doubles, trucking capacity in Texas in the United States is being squeezed to its limits.

The increased frac sand demand for use in oilfields in west Texas is putting pressure on local trucking capacity, with drivers in short supply.

"If you released all the convicts in Texas prisons, you [still] wouldn’t have enough drivers," Joel Schneyer, director of minerals consultancy Headwaters, told Industrial Minerals. "I’m not aware of a way around the problem."

Over 2017, frac sand usage has rebounded strongly and is set to grow further next year, largely due to an increase in oilfield activity.

As of November 3, there were 380 active oil rigs in the Permian oil basin in west Texas, according to oilfield services company Baker Hughes.

This was up by 248 from 132 rigs in April 2016, reflecting both a more stable oil price and increased confidence that fracking projects can be made profitable, even when oil prices dip below $50 per barrel. The front-month West Texas Intermediate oil price currently stands around $57 per bbl.

But sand demand is also being driven by a shift in fracking philosophy, with oil companies increasingly focusing on "touching more rock," which means getting as much sand down the hole as possible.

Horizontal wells are getting longer, with slickwater technology allowing proppants to be pumped further underground. The amount of proppant per foot of drilled well has also been rapidly increasing.

The US Energy Information Service reported 2016 frac sand demand at just 37 million short tonnes while most of the industry expects 2017 consumption to be more than 80 million tonnes.

A frac sand truck is filled at source.
Petr Brož, Via Wikimedia

Truck squeeze

With millions of new tonnages to be delivered, the pressure on the trucking industry is mounting.

"There [definitely] is a squeeze starting to happen as these Texas mines start up," Chris Tucker, director of business development at Resource Logistics, said. "As this happens, we’re seeing limitations on driver availability."

Resource Logistics handles sand logistics and delivery of frac sand, along with commodity broking services, but does not have its own truck fleet.

The shortage of truckers is a recurring theme that was brought up by several attendees at Industrial Mineral’s Frac Sand Conference in Denver in September.

Speaking to Industrial Minerals at the conference, the president of one major frac sand producer painted a gloomy picture of truck availability.

Truckers are already in high demand on the Gulf Coast of Texas, due to the rebounding chemical sector, he noted, while the reconstruction work currently taking place in Houston in the wake of Hurricane Harvey is likely to further increase demand.

With ample job supply in the more densely populated coastal regions, there is also little incentive for truckers to move to the West Texas oilfield in search of jobs, he said. 

Shift to local mines

There is room, however, to streamline operations, with fracking operators increasingly sourcing sand supply from local mines rather than rail depots, Tucker said.

Along with a trend toward bigger sand volumes, the industry is increasingly less concerned with quality.

This has driven a move away from the large, high-strength sand found in Wisconsin and Minnesota, US, toward more affordable sand mined near the fracking sites in Texas. 

This means more sand being collected nearby, rather than arriving and needing to be unloaded in rail depots across the regions. 

"You’ll have a more efficient use of routes [when] you pull from the nearest mine," Tucker said. "Instead of pulling from different rail terminals, you’ll be pulling all of that production from one mine."

A shift toward boxed sand systems could help reduce bottlenecks, allowing sand to be loaded over a broader area, Headwaters’ Schneyer said. This would reduce the queues at rail depots, a common complaint in the sector.

"One of the advantages of these infield boxes is that, in effect, you can have fewer drivers but they’re always working," he said. "There are fewer drivers required because peak is lower."

Boxed sand systems use preloaded containers of sand, which are loaded onto trucks and carried to the wellhead, where they are pumped into the formation in a closed system. 

Such systems are increasingly popular because, in addition to their logistic benefits, they help to reduce both particulate air pollution and noise pollution, which is useful for fracking operations close to inhabited areas.