INTERVIEW: More than just sand – the importance of proppants

INTERVIEW More than just sand - the importance of proppants Sameer Rupani, Vice President of Strategy & Development, Unimin Today we talk to Unimin’s Vice President of Strategy & Development, Sameer Rupani, to find out more about the role proppants play in the hydraulic fracturing process. Unimin is the world’s leading producer of quartz proppants (frac sand) and a major producer of resin coated sand proppants for oil and natural gas stimulation and recovery.

Monica Thomas (Shale Gas International): Why are proppants – frac sand for example, critical for hydraulic fracturing operations?

Sameer Rupani (Unimin): Nature abhors a vacuum and therefore fissures created underground during hydraulic fracturing would close up if there wasn’t anything to keep them “propped” open, hence the term “Proppants”, because they literally prop open the fractures enabling the oil or gas to flow out. They play an important role because without proppants oil and/or gas production from shales would not be feasible.

MT: What are the pros and cons of using sand as a proppant? Why would you choose to use sand rather than, say, ceramic proppants?

SR: The most important reasons are that it’s cheap and abundant. It does the job and it is available in the quantities that are required. This does not mean, obviously, that all of the sand that is available is suitable for use as proppant – otherwise we wouldn’t be shipping frac sand the distances that we do – but its low cost, fit-for-purpose and availability certainly go a long way to account for its popularity.

Ceramic proppants, on the other hand, are much more expensive. The difference in cost of ceramics versus sand varies but it is somewhere between 3:1 and 6:1.

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MT: You mentioned that not all sand is suitable for fracking. Could you tell us more about what makes a good proppant?

SM: One thing to understand is that when E&P (exploration and production) companies purchase proppant what they are really buying is conductivity. To better appreciate this concept, you need to understand the difference between conventional and unconventional reservoirs. A key difference being the natural flow rates between the two types of reservoirs.

In simplified terms, a conventional oil and gas reservoir like in Saudi Arabia for example – has a lake of hydrocarbons underneath the surface of the earth where you just drill down into the reservoir and oil or gas starts flowing (with the aid of a pump aka artificial lift).

In the case of unconventional deposits – like shales – the situation is very different. Rather than deposits that look like an underground lake you’ve got something that looks more like Swiss cheese.

What I mean by that is you have a body of low permeability rock with pockets that contain oil and gas. These pockets are small and randomly dispersed in the matrix of the rock. This is why horizontal drilling and hydraulic fracturing are such great innovations. By the way, people think that we’ve had the shale revolution in the last five years, but in fact the first frack in the U.S. was done in the Barnett Shale in the mid-50s. That technology has actually evolved over the last 50 plus years.

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Horizontal drilling allows you to access the The best fracking sands in the pockets of oil and gas that would otherwise world are found in the Upper be difficult and expensive to reach – simply Mid-West region of the USA. uneconomic. If the pockets of hydrocarbon are not where the wellbore is, we can access them by using hydraulic fracturing – by creating trees of fissures – called perforation clusters which are further expanded by a technique called stimulation. In this process proppant is pumped through the well-bore into the fissures to keep them open – to enable flow of the oil or gas which would otherwise be trapped in the low permeability rock.

So E&P (exploration and production) companies are really buying conductivity when buying proppant.

Using the right kind of proppant facilitates the flow of hydrocarbons from these dispersed pockets through a more conductive proppant pack and into the wellbore.

The “right kind of proppant” needs to have several characteristics that are crucial to its effectiveness.

One of these characteristics is sphericity. When we talk of hydrocarbons flowing in the formation, they are actually flowing through the interstitial space between the spheres. If the proppant is angular in shape, it would not create the spaces through which oil and gas could flow.

Another thing that makes sphericity important is the fact that a sphere tends to withstand and distribute stress better than any other shape since it doesn’t have any weak points such as the

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edges in say a triangle. A suitable proppant must also possess the crush strength to withstand the closure stresses applied by the reservoir, and hence maintain conductivity.

MT: Can I ask you about other characteristics that make for an effective proppant?

SM: Acid solubility is another important feature. Given other materials used in frac fluids it tends to be acidic. So obviously the last thing we want is for the proppant to dissolve in the ‘acidic’ frac fluid.

And if you have something on the actual proppant grains – say, clay deposits or something else that will disintegrate – it may actually block up the interstitial spaces through which oil and gas would flow.

Another characteristic that is similar is turbidity. Turbidity indirectly measures clay content of the proppant via the optical clarity of a solution into which proppant is added. Essentially what you’re looking for is a clean proppant particle (sand grain or otherwise) of a specific size, with nothing else on its surface that can dissolve or breakaway and in the process contaminate either the frac fluid or reduce the conductivity of the proppant pack.

MT: With so many requirements that frac sand should meet, can you tell us a little about how this sand is sourced?

SM: The best fracking sands in the world are found in the Upper Mid-West region of the USA. This is because Wisconsin and Minnesota were beach front property around 500 million years ago. Silica sands in the region were rolled over millions of years by wave action resulting in round, spherical grains – this is ideal for proppants. These are what we call Northern White sands, which are known for high purity, sphericity and strength.

As a global mining company, Sibelco, Unimin’s parent company has explored and located fracturing sands in Europe (UK, Poland), Latin America and Australia. But the global benchmark remains the Northern White frac sands found in the states of Minnesota, Wisconsin and Illinois in the USA.

MT: UniMin has a number of proppant-types on offer, so clearly this is not a case of “one size fits all”. Can you tell us more about the different types of proppant and their use?

SM: There are four main sizes or proppant grades, from the smallest to the largest grains, these are: 100 mesh, 40/70, 30/50 and 20/40. Whether it is resin-coated sand or a ceramic proppant all are produced in these grades.

The smaller the particle, the stronger it tends to be – in terms of crush strength. So for instance, if you have a very deep, very high pressure reservoir, you would likely pump 40/70, which while less

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conductive than 20/40, it (40/70) will maintain grain integrity better due to higher crush strength and hence be a better ‘fit for purpose’ proppant.

That’s the trade-off that must always be managed - between proppant (crush) strength which comes with smaller size and conductivity which favours larger size grains.

MT: What is the difference in performance between: natural silica sand, resin coated silica sand and ceramic proppants?

SM: The simplest answer to this question is: economics - the conductivity that can be achieved at a price that can be afforded. Frac Sand offers the best economics vs resin coated sand (RCS) and ceramics in all but the most demanding of reservoirs. Also, RCS has evolved from being used as a pure proppant to being a flow-back control agent.

So what is flow-back control? After a well has been stimulated, fluid starts to flow toward the wellbore. The force with which it comes out pushes against the entire proppant pack and can carry it back into the well bore and to the equipment on the surface. RCS particles have the ability to bond with one another, thus creating a ‘permeable plug’ that allows hydrocarbon flow, but significantly reduces the proppant from being carried back into the well (flow back). In so doing, the proppant is left in place to do its job - provide conductivity for on-going / future hydrocarbon production.

MT: Before the price slump, the frac sand industry grew rapidly due to increased demand and under-supply. Then the downturn came, which can’t have been good for the frac sand industry. However, many E&P companies have reacted to it by improving productivity through increasing the amount of proppant in their operations. Which makes me wonder: do these two things balance themselves out?

SM: The slump oil (and gas) prices have had a commensurate effect on shale drilling and completion activity, and hence has impacted the proppant industry. E&P companies are focused on both increased well productivity and cost efficiency. The use of more frac sand per well (known as frac intensity or super fracs) in well stimulation has helped to drive up initial production (IP) rates, and the substitution of higher cost proppants with frac sand has helped lower the total proppant cost. That said, the decline in well counts and stage counts far outweighs the increase in frac sand usage.

MT: So do you think the current situation will improve soon, and if so how do you think it will affect the industry?

SM: To fully understand the current situation one needs to sit back and look at the supply and demand of oil. If you go back a few years, we lived in the so called ‘supply limited world’. So even

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while the price of oil was up at $100 or more a barrel, it was because there was a perception that we don’t have enough. If you go to a store and all of a sudden we’re running out of flour, what do you think will happen to the price of bread?

Oil is probably the purest commodity that exists. So its price is really a reflection of the perception around supply and demand. We’ve gone from a situation where five years ago people thought that we will run out of oil – I’m sure you’ve heard of the ‘peak oil’ discussion i.e. supply exhaustion. Now, believe it or not, the discussion has swung towards “peak demand”. We have become more efficient consumers of energy, and the demand for oil even in emerging economies (China, India, etc) is far less intensive on a per capita basis than the US. Add to this, the advent of shale oil and gas in the US and we have a 180 degree different situation in the world oil market. Today’s low oil prices reflect the widespread acceptance of this situation today... and for some time into the future (anywhere from 1 to 3 years barring any ‘balance altering events’).

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In this new environment, it is the E&P Frac Sand offers the best companies with the lowest costs that will economics vs resin coated continue producing. The US, via shale oil, sand and ceramics in all has assumed the role of the world’s swing but the most demanding of producer. But when it comes to shale or reservoirs. unconventional, the challenge can be summed up in one word - “non-linearity”. Nothing is the same within a shale play and certainly between plays. The reservoirs and hence well designs, frac treatments can be quite different from each other. This can be a source of cost.

Pioneering companies, such as EOG, have found that a more intensive frac (higher proppant pumped per later foot) does yield much better production, enough to offset the higher cost.

Capex across the U.S. E&P is down between 30 and 40 percent. Activity is down at least 40 percent.

But if you look at the U.S. production it is actually not down at all. That’s because of ‘efficiencies’.

E&P companies are working their most productive acreage, using lower cost frac treatments, higher proppant intensity and generating more oil per well.

All that said, we need to see global supply curtailed in the short term. This is happening in two ways, large projects are being deferred until a better oil price horizon is established and there is a natural decline in production from currently producing wells and fields. The remarkable difference between large conventional projects is that they are slow to turn on or off, unlike US shale oil which has a decision to production timeline of about three months.

At the end of the day, the longer the downturn lasts the more large overseas projects get deferred and cancelled. The longer it lasts – the greater will be the importance of the U.S. unconventionals. And if at any time there is an increase in demand, the U.S. will respond faster than anybody else.

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MT: What are your predictions for the frac sand industry for the next several years? Since 2012 the industry has seen some M&A activity – with Hi-Crush acquiring D & I Silica in 2013 and U.S. Silica acquiring Cadre in the second quarter of 2014. Do you think this trend will continue?

SM: Absolutely. Every company is looking for a way to improve its position. There’s probably no better time to do that than when you have a significant downturn. That said, it comes down to an individual company and what it’s trying to do and weaknesses that it can shore up.

I will say this: that there’s a lot of frac sand players out there that are desirable to nobody. And if their cost and/or customer positioning isn’t great, they will fail. And there are some who are very desirable and if they are available at the right price, then I’m sure that somebody will try to go after them.

Published: 31st August, 2015

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