Frac Sand Plant McAlert

The objective of The North American Frac Sand Conference 2019 will be to bring the frac sand supply chain industry together to evaluate solutions for overcoming the current market and logistical challenges of supplying frac sand to well sites. A number of exhibitors and speakers will be addressing the optimization of the frac sand plants. The Mcilvaine company is collaborating with the organizers to provide visitors with optimization insights. A website entitled Frac Sand Plant Decisions will be accessible by all attendees. The conference will be held at the George Brown Convention Center on February 26-27, 2019. A list of speakers and exhibitors are displayed at the end of this issue of Insights https://www.frac-sand-conference.com/

The manufactured frac sand industry is booming and like other growing industries is faced with new challenges regarding equipment selection, product quality and regulations. Locating plants in the Permian and other arid basins dictates water conservation. Minimization of silica dust is another environmental driver.

Due to the fact that the raw sand quality varies continually and that sand plants are required to alter processes to meet different proppant demands there is a need for instant application of high level expertise. The way to serve this demand is explained at Subject Matter Ultra-Experts become the Foundation of the CFT Industry

The thesis is that sand plants in the future will be mostly operated and maintained with remote expertise which is available from around the world 24-7. There are three types of companies which need to adapt to this new business environment

Andritz is a company which has both the systems and many key components such as filter presses, belt filters, centrifuges, pumps, dryers, and controls. Their challenge will to be to select subject matter ultra experts from within the corporation and allow them to be effective

Hillenbrand is mostly a component company with frackng sand screens, crushers, pumps, and valves. Their challenge will be to acquire or collaborate with companies capable of providing the system expertise

IAC is a systems company. They have a unique dryer and dust filter but they are mainly buying the wet plant components. Their challenge is to extract the component expertise through collaboration.

The collaborative potential in many corporations is relatively untapped due to the size and history. Two of the exhibitors at Frac Sand 2019 are examples.

HAZEMAG will be displaying its Tertiary Impact Crushers HTI series designed for the economic tertiary crushing of hard rock. This company is part of the Schmidt and Kranz which also owns Fest (supplying automation) and Maximator who supplies high pressure valves and pumps. Hazemag is also partially owned by Sinoma. This leading engineering and design firm in China supplies complete cement plants and has expanded internationally into multiple industries. The challenge is for the various entities in this web of companies to effectively collaborate.

SWECO will be displaying its various screens both for frac sands and for resin coating. SWECO is part of M-I SWACO which in turn is a unit of Schlumberger. This group has a great deal of knowledge relative to needed frac sand properties as well as knowledge about the operation and maintenance of pumps, valves, screens and other eqiuipment used throughout the oil and gas processes

One of the biggest advantages for a large entity will be to share process management and data analytics programs and knowledge

Collaboration among divisions is difficult. However the access to common decision systems and data eases the problem. Frac Sand Plant Decisions is being created to facilitate this sharing among divisions, collaborating companies as well as the consultants and end users. Here are some sample entries

Manufactured Frac Sand Transforming the Combust, Flow, and Treat Markets for Granular Materials

Sand, gravel, crushed stone and sediment production and treatment generate billions of dollars of annual revenue for suppliers of combust, flow, and treat (CFT) worldwide. The market in the U.S. is changing considerably due to the rapid growth in manufactured shale frac sand. CFT expenditures for manufactured frac sand plants in the U.S. will exceed CFT expenditures for all the other granular related activities.

The importance of the manufactured frac sand on the U.S. CFT market is shown in the following chart. The tons of manufactured frac sand is small but the CFT expense per ton is high. Also the growth rate will be much higher than other granular categories. As a result most of the revenue growth in 2019 will be in manufactured sands.

U.S. CFT Expenditures for Aggregate Production
Granular Type	2018 million tons	CFT Expense Ratio	Factor	%	Growth Rate %	Total Growth 2019 %
Manufactured Frac Sand	50	20	1000	45	13	5.8
Other Frac Sand	50	2	100	4	-1	0
Other Sand And Gravel	700	1	700	32	3	1
Dredging	400	1	400	19	3	0.6
Total	1200		2200	100		7.4

The total production of frac sands in the U.S. will exceed 100 million tons this year at an average selling price of over $60 ton creating a $6 billion market. The revenues for CFT suppliers are much higher per ton of product because much of the production is shifting to local manufactured sands. So the big cost is in the processing and not the freight.

This fundamental shift in U.S. frac sand production is away from the Midwest, home to the highest quality Northern White, to lesser-grade sands which are then upgraded (manufactured). As a result, Northern White’s market share is expected to be 43 percent in 2019, down from 75 percent in 2014,

Various granular products require dry or wet processes. Some require both. These involve some combination of pneumatic or mechanical conveyors, pumps, valves, scrubbers, fabric filters, precipitators, filter presses, centrifuges, dryers, classifiers, fans, controls, and instrumentation.

In 2017, 890 million tons of construction sand and gravel valued at more than $7.7 billion was produced by an estimated 3,600 companies operating 9,400 pits and 360 sales/distribution yards in 50 States. Leading producing States were, in order of decreasing tonnage, California, Texas, Minnesota, Michigan, Arizona, Colorado, Washington, Ohio, Wisconsin, and New York, which together accounted for about 52% of total output. It is estimated that about 44% of construction sand and gravel was used as concrete aggregates; 25% for road base and coverings and road stabilization; 13% as asphaltic concrete aggregates and other bituminous mixtures; 12% as construction fill; 1% each for concrete products, such as blocks, bricks, and pipes; plaster and gunite sands; and snow and ice control; and the remaining 3% for filtration, golf courses, railroad ballast, roofing granules, and other miscellaneous uses.

Crushed stone, the other major construction aggregate, is often substituted for natural sand and gravel, especially in more densely populated areas of the Eastern United States. Crushed stone remains the dominant choice for construction aggregate use. Increasingly, recycled asphalt and Portland cement concretes are being substituted for virgin aggregate, although the percentage of total aggregate supplied by recycled materials remained very small in 2017.

Dredging may or may not involve more than just controls, pumps and valves. In many cases sediment is contaminated and must be cleaned with filters and separators. In the U.S. the amount of dredged material is around 200 million m³ or 400 million tons.

Region	Percent of Global Dredging Revenue	Revenue (Million €)	Amount Dredged (Million m³)
Europe	0.12	1,284	265.29
Middle East	0.11	1,177	364.40
China	0.29	3,103	960.68
India	0.04	428	132.51
Other Asia	0.12	1,284	397.52
Africa	0.07	749	231.89
North America	0.09	963	198.97
Latin America	0.10	1,070	331.27
Australia	0.06	642	132.64
TOTAL	1.00	10,700	3,015.17

The following market related articles have been extracted from the Frac Sand Plant Decisions Intelligence System

There is a growing demand from the public, government agencies, and the energy and mineral resource industries for credible information about frac sand and the frac sand resource industry. More than 40 United States (U.S.) companies (enclosed in this overview) are involved in mining, transporting, processing, and distributing frac sands to a robust market that is fast-growing in the United States and throughout the world. The need to reduce costs and ensure continued and consistent supplies of frac sand has resulted in the acquisition of frac sand mines by several petroleum producers and in collaborative agreements between several frac sand suppliers and rail lines. A new mineral rush is underway in the upper Midwest of the United States, especially in Wisconsin and Minnesota, for deposits of high-quality frac sand that the mining industry calls “Northern White” sand or “Ottawa” sand. Frac sand is a specialized type of sand that is added to fracking fluids that are injected into unconventional oil and gas wells during hydraulic fracturing (fracking or hydrofracking), a process that enhances petroleum extraction from tight (low permeability) reservoirs. Frac sand consists of natural sand grains with strict mineralogical and textural specifications that act as a proppant (keeping induced fractures open), extending the time of release and the flow rate of hydrocarbons from fractured rock surfaces in contact with the wellbore. The current sand mining surge has been driven by the boom in unconventional oil and gas production that has been largely spurred by advancements in technology promoting the expansion of hydraulic fracturing and horizontal drilling over the past decade. Because of its superior quality, the sand of the upper Midwest not only supports the majority of domestic oil and gas production, but it also supplies frac sand to some of Canada’s western shale basins.

Tags: 211111 - Crude Petroleum and Natural Gas Extraction 原油和天然气开采, 211111 - Crude Petroleum and Natural Gas Extraction 原油和天然气开采, Frac Sand, USA

The Vaca Muerta has gone “from a great opportunity to a fact.” The fact is that the giant shale formation is beginning to deliver on high expectations, according to German Macchi, Argentine country manager for PlusPetrol. The equipment available for drilling and completions “needs to improve significantly,” said Javier Gutierrez, global operations manager for Tecpetrol. If not, “new operators coming into the Vaca Muerta will stretch those resources to the breaking point.” The cost of drilling a well there is down by 50% or more, but it is lagging behind the costs of the Permian Basin, where there have been similar reductions from a lower base cost. “We are in a position within our company where we are competing for capital,” said James Blaine, project executive for international projects for ExxonMobil, adding that while the cost of the Argentine operations run by its XTO division are high compared with the Permian, “these are early days. Finding a low-cost local source of sand for proppant is another unsolved problem. YPF reduced that expense from astronomical levels by building a sand processing plant in the Vaca Muerta. The cost is still relatively high, though, because the sand mined is on the other side of Argentina. Astie said YPF is still looking for a sand source nearby that meets its standards. In comparison, mines in the Permian now provide 25% of the sand used there

Tags: 211111 - Crude Petroleum and Natural Gas Extraction 原油和天然气开采, 211111 - Crude Petroleum and Natural Gas Extraction 原油和天然气开采, Techpetrol, Techpetrol, ExxonMobil, YPF, Pluspetrol

Argentina has been relying on frac sand imports coming from China, Brazil, and the US, which has been extremely costly and makes hydrocarbon production at a competitive price a challenge. Finding a more affordable sand source closer to home has been, and continues to remain, a key focus in the country’s shale development efforts. Fortunately, recent discoveries of sand suitable for fracking have made domestic supply a reality. As a result, YPF built a frac sand plant near the Vaca Muerta that mines local sand, reducing costs. And while the frac sand source is domestic, but still far away enough to not be ideal; for this reason, the company is still looking for a closer source that will reduce costs even further. Other domestic sand projects are being sought as well “We have been supplying frac sand dryers to the industry since hydraulic fracturing started using frac sand in wells, but they’ve all gone toward the shale revolution in North America,” says FEECO Process Sales Engineer Shane Le Capitaine. “Now we’re getting an increasing number of inquiries in Argentina from producers looking to set up plants. A lot of people are expecting the frac sand industry to really take off down there and we’re ready for it.”

Tags: 211111 - Crude Petroleum and Natural Gas Extraction 原油和天然气开采, 211111 - Crude Petroleum and Natural Gas Extraction 原油和天然气开采, Feeco, Manufactured Sand, Dryers, Argentina

Freight costs are significant: Chubut (Argentina) properties are within 1-day trucking distance from: • Vaca Muerta (550 mi x $0.16/t/mi) = $90/t by road; • San Jorge basin (300 mi x $0.16/t/mi) = $50/t by road; • Uruguay properties to Vaca Muerta: • Container by sea ~1,000 mi (1,500Km): $25/t • Road transport (300 mi x $0.16/t/mi) $50/t • Total transport / tonne $75/t • Comparison: • China - Puerto Madryn $2,500 - $3,000 per container of 25t = $100/t • ~55 day delivery.

Tags: 211111 - Crude Petroleum and Natural Gas Extraction 原油和天然气开采, 211111 - Crude Petroleum and Natural Gas Extraction 原油和天然气开采, SA Silica Corp, Manufactured Sand, Argentina

When Argentina’s currency plummeted by 50% this year, the oil sector started to worry about a slowdown in the development of Vaca Muerta, the country’s biggest shale play. The peso’s crash led the central bank to hike the benchmark interest rate to 40% from 27.25%, pushing up corporate borrowing rates to as much as 70%. The result? The 2,000 small and midsize services companies in Vaca Muerta are facing hard times. “There are not many companies that can handle such a high financing cost,” said Federico MacDougall, a director at First Corporate Finance Advisors. The currency crisis, fueled largely by capital flight from emerging markets after a hike in US interest rates in April, comes as field operators seek to ramp up the development of Vaca Muerta. Argentina’s Pampa Energia recently said it will lead a $520 million, five-year pilot project in the play with ExxonMobil and Total. “There are a ton of opportunities for services companies because the operators are demanding more and more all the time,” MacDougall said. “But the service companies don’t have the capital and they are worried about losing their current contracts and those that are to come.” Many of these companies borrowed in 2016 as conditions improved in Argentina. The right-of-center administration of President Mauricio Macri removed the capital, currency and trade controls of its populist predecessors of 2003 to 2015. Interest rates fell, funding became abundant and the economy revived. On the other hand, operators have been trimming their well costs. YPF, the busiest player in Vaca Muerta, has slashed its development costs per horizontal well to below $12 million from nearly $30 million in 2015. Most of the operators are large locals or multinationals with easier access to capital, meaning that, despite the financial problems, they can still borrow in the single digits. With the hike in financing costs for services suppliers, however, the progress in bringing down overall costs to a target of US levels may take longer. How long? The government has suggested the first signs of economic recovery will be seen in the fourth quarter, but MacDougall said it could stretch well into 2019, a presidential election year when investment traditionally is put on hold.

Tags: 211111 - Crude Petroleum and Natural Gas Extraction 原油和天然气开采, 211111 - Crude Petroleum and Natural Gas Extraction 原油和天然气开采, ExxonMobil, Total, YPF, Investment, Argentina

Michael Lawson, vice president of investor relations and corporate communications at U.S. Silica, a producer of sand proppants and industrial minerals. says “With oil prices hovering around $70 [per barrel], we’re on a run rate [of frac sand demand] around 110 million tons [this year],” Lawson says. “We expect to end the year around 120 million tons” Predictions are also made by CDE and Mclanahan relative to the shift to local brown sand as opposed to northern white sand which is costly to ship to sites in Texas

Tags: 211111 - Crude Petroleum and Natural Gas Extraction 原油和天然气开采, 211111 - Crude Petroleum and Natural Gas Extraction 原油和天然气开采, McLanahan Corporation, CDE Resources, Inc., U.S. Silica, Sand

Frac Sand CFT purchasers include oil field operators, conglomerates and privately held sand companies

There are essentially three categories of companies that supply sand: turnkey oilfield operators like Halliburton, Schlumberger, and Mammoth Energy Services that include frac sand as part of their offerings; privately held sand companies including Vista Sand, Atlas Sand, Black Mountain Sand, Preferred Sands, and Alpine Silica; and then there are the publicly traded sand companies. US Silica was the longtime industry leader, with a market cap of $2.1B, and other companies include Hi-Crush Partners LP (NYSE: HCLP) (market cap: $1B), CARBO Ceramics Inc. (NYSE: CRR) ($272M), Smart Sand Inc. (NASDAQ: SND) ($227M), and Emerge Energy Services (NYSE: EMES) ($223.5M). A new frac sand leader was born out of a merger of Unimin and Fairmount Santrol called Covia Holdings Corp (NYSE: CVIA), with a market cap of $2.27B.

The use of centrifuges, filter presses, belt presses, screens, hydrocyclones, thickeners, pumps, valves, cross flow membranes and treatment chemicals in manufactured sand plants producing proppants for shale fracturing is growing rapidly.

The techniques developed in the U.S. to fracture shale for the purpose of extracting oil and gas are the foundation of the success of the U.S. economy in the last decade. Developers have continually reduced costs with new techniques such as horizontal drilling. The transport of sand with the correct fracking features from Wisconsin and Minnesota to West Texas has been very costly. One of the most recent cost reductions is to manufacture high quality sand from the lower quality resources available in the region.

The West Texas Permian Basin is relatively arid. Freshwater supplies are limited. The new fracking sand mining plants in the basin add to the large water demand already caused by the fracking process. One solution for the fracking sites is the use of treated municipal wastewater. Another potential is the treatment and use of brackish water. Nevertheless fresh water will remain the main source for the foreseeable future. As a result conservation becomes a high priority. Fracking sand plant suppliers have risen to this challenge by designing systems which reuse as much as 98 percent of the process water needed.

Fracking’s water footprint could grow by up to fiftyfold in some regions of the U.S. by the year 2030. The U.S. demand for water management services associated with the acquisition, transport, transfer, storage, flowback, treatment and disposal of water increased by nearly 50 percent over the last year at a cost of nearly $20 billion. Water management spending for hydraulic fracturing services in the U.S. is expected to total $150 billion over the next decade.

Sand mining plants are tasked with minimizing water use. There were at least five sand mines opened in the Permian Basin by Hi-Crush, Black Mountain Sand and U.S. Silica in 2018 with a proppant supply of 35 billion pounds per year. Many more mines are expected to be opened soon.

These mining plants can be designed to reuse nearly all the water with technology such as filter presses instead of settling ponds. Various treatment chemicals such as flocculants can result in very dry waste solids and little water loss.

Black Mountain Sand provides an example of how water use can be minimized at its Permian Basin mines. Instead of routing the used, turbid water into settling ponds, the system captures it in a settling tank where solids are concentrated into a mud containing anywhere from 25 to 35 percent solids. Next, this mud is pumped at high pressures into filter press membranes where filter press technology squeezes water out of the solids. Thus, instead of losing water to evaporation and ground seepage, the system feeds this recovered water back into the holding tanks to be used again and again. In addition, the wet sand is stored in a specially-designed decant building while awaiting final processing in the dryers. This step helps prevent water evaporation while promoting efficient draining; as water drains from the sand, that water is funneled through a drainage system in the floor directly back into the holding tanks. All told, Black Mountain Sand recycles and reuses up to 98 percent of the water used in its operations.

The challenge for designers of these sand plants is that both the parameters of the incoming sand and the proppant end use change continually. The control system and each of the CFT components has to be integrated with the changing production needs.

Bob Carter, president of IAC, a supplier of sand plants for the region, was asked how his company addressed the challenge of process variations.

Bob explained, “IAC introduced the concept of optimizing a plant performance including components at every point in time based on the various control points of a plant. A given plant may have multiple control points that become a limiting factor to the amount of feed that can be sustained. A plant that is designed to run at 250 TPH at a given feed gradation may be limited to 125 TPH with heavy clays, 205 TPH with excess fines or 180 TPH with heavy 40/70. Modeling the effect of each control point allows for the optimal sustained feed rate to be identified for a given area of the mine or mine blend ratio. The optimization of the plant prevents unplanned shutdowns and minimizes the amount of water wasted due to not operating the wet plant in its optimal state. It is just like a car, if you push it to high speeds up hill, the miles per gallon of the vehicle drops. If you run a wet plant inefficiently based on its mine reserve, you waste more water than is required.”

The market for specific CFT components for manufactured frac sand for the U.S., Argentina, China and other countries is shown at

	Frac Sand Plant McAlert
	No. 1 January 10, 2018