Frac sand in demand with uptick in oil rigs

Feb 20, 2017

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With an uptick in oil rigs, concerns about the supply of frac sand, the key component of drilling, are also arising.

As Business Insider reports, oil producers have added hundreds of rigs in U.S. oil fields from Texas to North Dakota. A couple of weeks ago, the U.S. rig count hit 591, the highest since October of 2015.

U.S. producers pump frac sand and other materials into wells to break up shale rock and produce oil and as wells get longer and wider, larger amounts of sand are required.

Frac sand companies were among the hardest hit during the oil rout of the past two years but global oil production cuts are expected to provide stable higher prices, so producers are once again looking to lock in long-term supply contracts.

Financial planning company Raymond James estimates frac sand demand will hit record levels this year at roughly 55 million tons and exceed 80 million tons by next year, 60 percent above 2014 levels, due in large part to producers requiring more sand per well. This is expected to push sand prices up by 60 percent over the next 18 months.