Based on the expanding amount of exploration taking place in both conventional oil and gas markets, as well as the burgeoning shale energy industry, the demand for oilfield minerals is expected to rise.
The increased call for minerals used during oilfield processes has caused price volatility over the past years especially following the US shale gas boom, which took place from 2011 and is still having an impact on the market today.
Spikes in the price of barite (barytes), potash and silica sand (frac sand) over the last seven years have caused key buyers of raw materials drilling fluid manufacturers such as Halliburton, Baker Hughes, Schlumberger and Weatherford to take a hit of up to $160m in one year.
Freight costs, lack of suitable raw material supply, and Chinas production domination have all been blamed for pricespikes seen in oilfield minerals, particularly barite and potash.
Elsewhere, rising demand for ceramic proppants derived from bauxite and kaolin has sparked a raft of plant expansions in the US.
The supply and demand situation has alsoincreased the call for drilling minerals such as bentonite and barite.
Volatility in the oilfield market will remain,and the only way to overcome the gap that may open up in the supply and demandchain is to keep a close eye on industry developments.
How are industrial minerals used in fracking?
- Drilling mud which consists of bentonite with additives such as barite, calcium carbonate and graphite is used to lubricate the drill bit.
- Fracking fluid which consists of silica sand (1.959%) and water (97.85%) and a chemical mix (0.5%) including organic phosphonate, diatomite, calcium chloride, sodium chloride, calcium carbonate and magnesium chloride is sent down a well to prop open fissures in the shale rock