The meteoric rise in frac sand consumption over the past few years is well documented. However, explosive demand growth has posed significant logistical challenges, as well as attracting legislative attention keen to minimize the exposure of U.S. workers exposed to breathing in respirable silica “dust” produced as a result of fracking.
Logistical bottlenecks
In the early days of fracking, focus was concentrated on how to model fracture growth so as to pump more sand through better fluid systems. Over the past 35-40 years, the amount of sand pumped into a well has increased from approximately 50-150,000 pounds, to upwards of 10 million pounds per day. Nowadays, it is more a matter of solving the logistical challenge of getting enough equipment, sand, and water to keep everything running smoothly to dispose of as much sand as possible.
A real issue has become the traffic congestion caused at both the well site, and on the highways and transload facilities. The increase in number of drivers required, as well as the amount of driver hours wasted in waiting for loads rather than round tripping out, has presented a sizeable increase in trucking costs.
Alternatives: on-site silos and mobile containers
Over the past five years, alternative methods for unloading sand have been introduced in the industry to minimize the amount of time spent at the well site. Instead of the incumbent pneumatic trailers wasting man-hours waiting for a container to be emptied and filled, alternative technologies comprising of on-site silos and mobile containers are unloaded by forklift enabling the number of round trips delivered to increase by roughly double. These alternatives have managed to gain a tremendous amount of market share over a relatively short period of time as a result.
Regulatory impact on the future of fracking
With the newly announced Occupational Safety and Health Administration (OSHA) regulations on silica dust, the question remains on how quickly the trucking industry will be able to comply with OHSA’s more stringent air quality standard. Currently, respirators are worn in the sand area on pneumatic delivery, but because the new regulations will half the amount of silica dust permitted to be inhaled, alternative dust control systems will need to be put in place. There are some solutions out there that deal with dust control and pneumatic systems, though these leasing costs tend to add up over time. And because the actionable limit will be halved again with regulations in full enforcement by 2021, operators will soon have to implement an engineered solution in order to comply.
No turning back
With the rise in fracking posing unforeseen problems in delivery logistics, alternative methods have been introduced to help alleviate not only trucking costs, but also the amount of silica dust that is being emitted. For those operators moving a significant amount of sand, the use of these alternative methods have proved an attractive choice because of reduced trucking fees, less dust, and providing overall a more cost-efficient way of pumping 10-25 million pounds of sand through as compared to incumbent systems.
You can request a replay & transcript of the Hosted Event referenced above, or any of our Hosted Events, by emailing [email protected].
Coleman Research Group, Inc. (“Coleman” or the “Firm”) sponsors events featuring a wide range of speakers (“Guest Speakers”). The opinions, estimates, projections, and views contained in this summary are those of, and exclusively sourced from, the Guest Speakers and are not reviewed or endorsed by the Guest Speakers. In respect of this summary, Coleman makes no representation or warranty, express or implied, is not providing investment, legal, tax, financial, or accounting advice, and accepts no liability whatsoever. Coleman retains sole discretion as it relates to accessing this information by clients and prospective clients.