Supplying high quality silica sand for hydraulic fracturing has changed the game for many sand producers throughout North America. The timing could not have been better for those sitting on the right deposit. With construction and housing in the doldrums immediately after the GFC, aggregate and sand suppliers faced the prospect of mothballing plants, consolidating assets and looking to the distant horizon for inspiration or perhaps salvation.
Salvation often comes in an unexpected form, in this case a combination of perhaps opposing forces. Green groups focused on reducing the greenhouse gases emitted by coal-fired power stations and the fierce desire of American industry to become independent from Middle East oil were two of the more significant drivers that led to an acceleration in the exploration for gas deposits in the US.
A KEY PROPPANT
The efficient extraction of oils and gas in most cases requires the use of proppants. The most common proppant available in the US is sand. There are certainly similarities that can be drawn between the US construction sand market and the Australian market. Most large construction-based infrastructure projects have finished or are nearing completion in all states of Australia, while commercial and industrial building approvals are subdued. Right now operators and asset owners are looking for alternative markets to maintain viable investments.
Similarly, in Australia, large scale investment in gas exploration is yielding a string of potential deposits that may well dwarf anything seen before in terms of operational scale and life cycle.
The drivers for the expansion in gas exploration and extraction in Australia again are analogous with the US experience. Among those drivers is the substantial reduction in CO2 offered by switching to gas-fired power stations and steel mills (as opposed to coal-fired facilities).
This is important not only in Australia but for global customers, as air quality and climate change start to affect populations. In addition, many international resource customers are keen to ensure they have diversified sources of energy. Finally, technology has improved substantially, enabling a more economical recovery of the various forms of this energy resource.
One such method of more efficient and effective extraction is the process of hydraulic fracturing, or fracking. While this process has been used in Australia for many years, it has been limited to certain deposits. With the expansion of horizontal drilling and fracturing of unconventional gas wells, the trend toward an explosive demand for proppants is evident.
The clear opportunity and also the challenge for sand producers and asset owners will be to determine their own capacity to exploit this burgeoning market. At first blush, it would seem demand and supply may for once be in equilibrium, with a strong potential demand and the earth?s crust being most commonly made up of silica sand, the most common proppant in use today. However the quality of proppant demanded is often only able to be met by combining the natural attributes of the deposit, such as sphericity and strength, with very effective processing to deliver tightly graded sizing and low turbidity.
Companies with many decades of experience in manipulating high silica sands are well positioned to add proppant production to their existing operations for greater diversity and increased sales. This being said, the experience so far suggests that up to 50 per cent of sand-based proppants are supplied by newly established or non-traditional sand-based proppant suppliers. This has been possible through leveraging the experience and knowledge of specialist suppliers such as McLanahan Corporation.
One of the benefits of working in the mining and minerals industry as well as the aggregates and sand industry for more than 178 years is that both industries have had to change production methodologies and business practices as markets, supply chains and source material shifts over time. McLanahan?s frac sand specialists were born of the mineral sand and recipe sand industries, where the markets have traditionally required a high level of product consistency.
According to John Best, the director of McLanahan?s aggregate processing division, the first step for most would-be frac sand producers is to accurately assess the quality of the deposit that will make up the base load for frac sand production. Following this, McLanahan then sets about designing a system that enables the producer to match the specification(s) demanded by the specific market or markets.
To reach the final specification, an end to end production facility would incorporate the wet processing plant to produce the base load frac sand product, followed by the dry plant for drying and polishing to deliver final size fractions as specified by customers.
It is not always necessary to have both facilities in the same location, as many suppliers may have wet processing plants close to the raw material deposit, while the dry plant may be located closer to the well or the bulk transport hub, which is similar to concrete and asphalt batching plants.
Flexibility of design is often an important requirement, as producers try to maximise the yield of each deposit by manufacturing product for traditional markets as well as for supply for proppants for the gas and oil industry. McLanahan Corporation incorporates modular design and in some cases mobile options to assist in providing ?plug and produce? systems.
While the potential offered by this emerging market is enticing, many of McLanahan?s existing customers have taken a cautious approach to changing their process to meet these demands. Traditional suppliers to the construction market have targeted specific deposits or specific grades of an existing deposit to process for the production of natural proppants. For other customers, McLanahan has developed a purpose-built operation suited to the deposit and the range of grades required by local and overseas resource companies.
Whatever the approach, McLanahan must start by reviewing the deposit to determine what nature has offered as a base resource. If the base resource has promise, anything is possible.
Source: McLanahan Corporation