Why the Ceramic Proppant is still the First Choice for ...

Currently there are mainly three types of proppant categories in the market: quartz sand, resin coated sand and ceramic proppant.

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Properties of different proppants:

Quartz sand is the earliest application of fracturing proppant, though with lower cost, yet the strength is also relatively low (-psi), only for shallow wells, which is easily broken in the process of transport and handling. Also the quality of the sand differs a lot because of the diverse mine resources.

Resin coated sand is coated on the basis of the original sand to enhance the compressive strength, but the fracking gap is easily plugged by adhesive resin at a certain temperature and pressure, thus reducing the conductivity. In addition, the fracturing equipment is easily wore out because of even shape, thus its service life is greatly reduced.

The ceramic proppant is made by high temperature sintering technology with uniform shape, high compression strength (-psi) and strong flow conductivity, which can significantly improve the oil well production and recovery.

From HSE point, the silica element of quartz sand has a negative impact on the environment. The pollution during resin coated sand production process and fracturing process also cannot be underestimated. In contrast, as the main raw material of ceramic proppant, bauxite is high temperature-sintered, with stable performance, which can be described as from nature to nature.

Without considering the economic costs, how to choose the right proppant among different types if you are the customer? Of course, to decide the proppant type according to its oil and gas output, compared with long term conductivity of each type. The main factors affecting proppant conductivity are particle size, sieving distribution, strength (crushing rate), and shape (sphericity, surface smoothness), etc.

As a professional ceramic proppant supplier, Wanli focus on the R & D, production and sales of ceramic proppant with over twenty years. Wanli continues to step foreward in scientific research, developing the difference among the various proppant. From below indicators case, let&#;s compare the difference between diverse proppant.

1. Sphericity and surface smoothness

Ceramic proppant has a better sphericity with smoother surface, which can reduce the wear of fracturing equipment when pumping. But the shape and sphericity of quartz sand changes a lot with the increase of pressure, the wear of fracturing equipment is four times higher than that of ceramic proppant, which will ultimately affect the long-term conductivity and reduce the oil and gas production.

2.Strength (crushing rate)

From figure 2 we can see that both the quartz sand and coated sand has a poor stability, because the crushing rate has increased rapidly with the increase of pressure, which are prone to collapse.

3.Sieving Distribution

During the process of ceramic proppant sintering, the sieve distribution can be controlled strictly, and the particle size distribution is more concentrated, which can increase the conductivity.

From the conductivity data of three different kinds of proppant of the same size, as shown in Figure 4, we can see that the conductivity of the ceramic proppant is far better than the quartz sand and coated sand. In addition, the production of the oil well is much better than that of quartz sand by using ceramic proppant. Therefore, ceramic proppant is the most ideal fracturing proppant with the lowest cost from the long-term cost and benefits.(see Figure 5 and Figure 6). But under the current market conditions, the operators have to choose the lowest price of quartz sand as a support agent in order to save cost. Yet, we believe that the operators will make the most rational choice when the market warms up or the price and performance of the proppant having a new breakthrough.

Case Study: Natural Sand VS Wanli Ceramic Proppant

Bakken Case Study

Decline per Frac Stage Sand vs. Wanli Ceramic Proppant

Price, price, still price

Since the second half of year of the oil price began falling fiercely, from 120$/barrel to 28$/barrel, now the motivation of exploring oil&gas is their price, at fracturing process, when the operators choose proppants and other equipment, products, firstly comes to their mind is cost, cost, still cost. How to survive on the current depressing oil price condition, is a problem the entire industry is concerning.

As a manufacturer of ceramic proppant, of course we know now many fracturing activities are choosing silica sand which costs less instead of ceramics or resin coated sand, the ceramic proppant industry is facing the crisis they have never met before, but crisis also means opportunity, how to survive, breakthrough and change in crisis is a pressing matter of the moment of ceramic manufacturing enterprises.

Wanli substitution type ceramic: (can be substitution of silica sand)

Wanli started from the purpose of meeting demand of current clients, strengthened the work of scientific research, using new materials, and after hundreds of thousands of dosing improvements and technology changes, successfully developed a kind of ceramic proppant which functions closely to normal ceramic proppant and much superior than silica sand, while can compete on silica sand for price. We believe this product can help us gaining more customers. Who wouldn&#;t like to spend the almost same price of silica sand to purchase ceramics which function much better? Survival of the fittest in natural selection. Those who can survive in such a harsh market conditions and innovate themselves will have the qualification to laugh in the end.

Except for saving cost for the customer, after lots of communication with different kinds of clients, Wanli is also pretty clear about the development trend of ceramic proppant------Super high strength ceramics and Functional ceramics.

Super high strength ceramics:

For the future fracturing process in deep ocean, super high strength ceramics will be used, the old ceramic proppant which can stands pressure of psi might be not able to meet the requirement any more. According to this developing trend, Wanli improved the dosing of ceramics, controlled the strength of products by adopting materials with bauxites cantain higher ratio of AlOand Kaoli and adjusting the sintering temperature and sintering time. Of course the improvement of raw materials and technologies surely would make the price higher than conventional ceramics.

Functional ceramics asfollows.

Self suspended ceramic proppant:

Using special polymer to coat the normal ceramics(process environmental and material can be degraded). After the water absorption its own portion weight lower down, changed the composition of water, making it owns a certain suspension performance in the sand carrying fluid. The suspended ceramic grains exist in a uniform way among clear water, therefore they have better mobility in the formation fracturing process, which won&#;t lead to partial accumulation and sand blocking phenomenon. Meanwhile, the operation process of self suspended ceramic is sample enough to shorter the fracturing cost and time. Currently Wanli had achieved a significant effect on the research and development of self suspended ceramic, after some modification they can be commercial produced immediately.

Adsorption ceramics:

For the adsorption ceramics Wanli had developed, the internal pores occupy 20%-25% of the total volume, with a lower bulk density, the adsorption amount (absorption of chemicals) can reach up to about 15%, the closure pressure within psi can be withstanded. After the adsorption of the chemicals they will be baked dry, then mixed together with ceramic proppant at a certain ratio, and be pumped down below the wells to prop the fractures. The chemicals absorbed in the proppants can be released gradually during the fracturing process to prevent the oil well plugging, prolong the service life of the oil well, and reduce the operation cost of the second times chemical adding. The products have different sizes and shape, Wanli has been producing in small amount, can meet the special needs of customers.

All along, the customers hope the appearance of a kind of proppant which owns a density close to water (extremely low density), to reduce the use of fracturing fluid, lower down cost and make the process more environmental. Although there is no evident breakthrough currently, Wanli has been paying attention on it.

The road of developing new products is long, the process would be tough, however, we are keep working hard and never give up easily. We believe Wanli can bring new proppants categories to the global fracturing market very soon and provide more options for customers. Shouldered with the divine mission of servicing the oil industry, Wanli will keep growing up with China oil industry and world oil industry.

If oil is black gold, then &#;frac sand&#; is gold dust. The fracking boom in America could not advance nor even exist without frac sand or its synthetic imitations. The mining, processing, shipping and transloading of frac sand has become a whole new gold rush unto itself.

Producers and shippers are tripping all over themselves to get a bigger piece of the frac sand action:

&#; Major frac sand producer U.S. Silica (NYSE: SLCA) recently announced plans to build a new 20,000 ton storage facility in Texas and upgrade its Illinois processing plant.

&#; Logistics firm Enserco Midstream LLC has expanded its shipping network through its purchase of a majority stake in frac sand supplier Frac Resources LLC.

&#; Canadian frac sand producer Rainmaker Mining (TSXVenture: RMG.V) has purchased nearly 100 square miles of frac sand deposits in Alberta.

&#; Proppant producer Carbo Ceramics (NYSE: CRR) has recently been upgraded to &#;overweight&#; by Capital One Financial.

But what&#;s the fuss all about? Why is frac sand so important? And isn&#;t there something about it being a cancer producing carcinogen?

Frac Sand&#;s Critical Role

Frac sand plays a critical role in the oil and gas extraction process known as fracking.
When an oil or gas well is depleted and abandoned, it isn&#;t completely dry. While the easily accessible oil and gas have been extracted, large quantities still remain trapped within rock that is less porous, locked within the more solid rock.

As shown in the diagram below, the fracking process injects highly pressurized water into this less porous rock, creating cracks and causing what few pores there are to open up, allowing for the trapped oil and gas to seep out.

Source: Wikipedia.org

If you want to learn more, please visit our website Quartz Sand Proppant.

To keep the fractures and pores open, the injected fluid needs to contain &#;propping&#; particles that remain lodged within the cracks and pours, keeping them propped open so the oil and gas can flow out. While some manufacturers produce synthetic &#;proppants&#; made of ceramic beads, aluminum beads and sintered bauxite, the most widely used proppant is frac sand.

The photo below compares frac sand on the left to ordinary sand on the right.

Source: Geology.com

Frac sand is primarily composed of silica quartz found in sandstone deposits that have been extensively eroded, giving its grains the nicely rounded and spherical shape necessary for oil to flow more easily around them. It is also extremely dense and hard, which allows it to withstand the tremendous pressures within the rock that would pulverize ordinary sand.

Silica sand has always been in demand in glass, ceramics, foundry molding, abrasive blast sand, chemicals, fillers for rubber and plastics, even on golf courses in those nasty sand traps. But fracking has rapidly become the largest use of silica sand, which the U.S. Geological Survey puts at 57% of all U.S. silica sand production.

The fracking boom has dramatically increased silica sand production in the U.S. by more than 62% over the past 5 years &#; from 30.4 million tons in to 49.5 million in &#; while its price has skyrocketed more than 45% from $30.82 to $44.78 per ton over that period. (minerals.er.usgs.gov)

As the USGS noted, &#;Increased demand for hydraulic fracturing sand in support of production of natural gas from shale gas deposits has led to production capacity upgrades and ongoing permitting and opening of numerous new mines.&#;

It has also lead to the recent expansion of numerous players vying for a bigger section of the frac sand sandbox to play in.

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Silica Production Boom

As most of the better quality silica mines are located in the southern Great Lakes states of Illinois, Indiana, Iowa, Kansas, Kentucky, Minnesota, Michigan, Missouri, Nebraska and Wisconsin, there you will find the greater number of frac sand refining plants.

Once the sand is washed and dried, the grains are sorted according to size typically ranging from 0.1 mm to as much as 2 mm. Oil and gas wells often require specific sized grains, most ranging from 0.5 mm to 1 mm in width.

There is even a premium quality frac sand that is coated with an oily resin that allows crude oil to slip past more easily. U.S. Silica noted above announced yesterday it has just completed modifications to its resin-coating facility in Rochelle, Illinois, enabling it to produce more of this higher-priced premium frac sand.

Canadian-based Rainmaker Mining has scored a prime silica mining property in its partnership deal with Zimtu Capital for 50% ownership of a deposit in the Peace River region of the Canadian province of Alberta. It&#;s prime location next to one of the largest oil sands deposits in the world will make this operation highly efficient.

&#;The acquisition of these four claims adjacent to a current producer of frac sands is a highly significant addition to our growing portfolio of properties,&#; announced Rainmaker Mining Vice President Chris Healey. &#;The claims are well located relative to several markets, and have excellent access to rail, giving Rainmaker a significant competitive advantage in this rapidly expanding market.&#;

Transloading Booms With It

Of course, not all silica mines are so conveniently located to where frac sand is needed.

While oil and gas deposits cover vast portions of the U.S., the regions which need frac sand the most (known as &#;tight oil and gas deposits&#; because the oil and gas are locked tightly within rock of low permeability) are mostly concentrated in North Dakota, Wyoming, Colorado, Texas, West Virginia and Pennsylvania, as indicated in the map below.

Source: RealClearEnergy.org

This requires a vast network of transloads &#; transport junctions where freight is switched off of one transportation network onto another. As can be noted on the following map of U.S. Silica production and transloading locations, there is a lot of room for expansion and improvement, especially into the Midwest.

Source: US Silica filing with NASDAQ

This makes the purchase of frac sand supplier Frac Resources LLC by logistics firm Enserco Midstream LLC quite prudent. Through this acquisition, Enserco gets two strategically located shipping depots in San Antonio and Laredo &#; right in the heart of southern shale country.

&#;We locate, evaluate, consult, test, and market, the highest quality ceramic proppants that are used in the gas and oil industry, on a worldwide basis&#; and develop transload opportunities within the shale plays,&#; Frac Resources explains its services.

&#;Fracking is currently used in 90 percent of North America&#;s natural gas and oil wells,&#; the company quantifies the demand for its services. &#;On average, it takes 44 rail cars of product and commodities to build out an oil well and bring it to production. 60% of those rail cars handle proppants. These transloads must be designed in such a way to be extremely efficient with the least amount of waiting trucks as possible.&#;

A strategically located network of transloads is the frac sand shipper&#;s ultimate quest. &#;High quality natural sands that are located on a full scale transload has become the new gold rush of the twenty first century,&#; the company proclaims.

For this reason, &#;Frac Sand Resources is interested in expanding its reach into delivery of these proppants and other upstream and midstream products to the well head to all parts of North America &#; and the world, for that matter &#; via rail or barge.&#;

Hence, Enserco Midstream saw Frac Sand Resources as the ideal acquisition to expand its frac sand logistics network.

Frac Sand Will Not Go the Way of Asbestos

But what about the health risks associated with silica sand dust? Protestors are already up at arms!

&#;Some 75 civic and environmental groups have endorsed a resolution started by the Wisconsin Network for Peace and Justice that calls for a ban on frac sand mining and a halt to a bill that would strip the ability of local governments to regulate the booming industry,&#; reports The Capital Times. The resolution was delivered to Governor Scott Walker and members of the state Legislature in early January.

The concern comes from the danger of inhaling fine silica dust particles that can travel through air for some distance. Once inside the lungs, the dust coats the capillaries which impedes the intake of oxygen into the bloodstream, and can also cause silicosis, bronchitis, even cancer.

But in , the Occupational Safety and Health Administration (OSHA) imposed stricter standards for workers handling silica, reducing maximum exposure amounts from 250 micrograms per cubic meter to 50.

Yet the hazards associated with silica dust are not comparable to those of asbestos, a mineral whose fiber-like crystals similar to fibreglass cause serious illness if inhaled, and has long been banned. Where asbestos once came into close contact with the general population through its use in wall and roof insulation, frac sand dust will only be found in silica processing plants, and can be controlled as any other dangerous workplace substance.

With fracking rapidly becoming America&#;s greatest means to energy self-sufficiency, frac sand&#;s integral role in the extraction process will make it a hot commodity for decades to come &#; putting its producers and shippers high on any energy portfolio&#;s &#;hot stocks to buy&#; list.

Joseph Cafariello

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