Sand is a necessary component of hydraulic fracturing, which is why surging investor confidence in the sand industry is being read as something of a predictive sign of the recovering health of the U.S. shale industry, which has struggled to deal with plunging global oil prices over the past two years. But sand isn’t just a bellwether for fracking firms, it’s also an opportunity for innovation. Bloomberg reports:
Sand, it turns out, is a much greater tool in hydraulic fracking than drillers had understood it to be. Time and again, they’ve found that the more grit they pour into horizontal wells — seemingly regardless of how extreme the amounts have become — the more oil comes seeping out.
On a per-well basis, sand use has doubled since 2011, climbing to nearly 8 million pounds, according to consulting firm IHS Inc…True, overall sand usage in the fracking industry is still way down from the 2014 peak — more than three-quarters of America’s drilling rigs, after all, have been idled since oil prices collapsed — but the per-well increases have analysts and investors betting that the sand industry will boom again as soon as fracking activity starts to pick up even a little bit. […]
“People are uber uber bullish on sand,” said Matthew Johnston, an oil-services analyst at Nomura Securities. “I get it. I understand where all the euphoria is coming from.”
The U.S. shale revolution has endured plenty of market tumult in its short lifetime, but if there’s one common thread for the emergent energy industry it’s this: the ability to improve, iterate, and innovate new ways to boost production, cut costs, and stay profitable even in a bearish market.
Increasing the quantities of sand injecting into wellheads at high pressure is just one example of this experimental approach to drilling. Companies have also employed “walking” rigs, developed techniques that allow them to drill greater numbers of horizontal wells from a single surface rig, and fine-tuned technologies that more accurately identify the most productive rock formations, to name just a few others.
While petrostates struggle to deal with the new oil market reality, American frackers are buckling down and working to solve the problem, rather than just endure it.