Frac Sand Weekly News Digest
October 18, 2017
Issue #137


Frac Sand Article on the Front Page of the Wall Street Journal on October 13 (focused on the Dunes Sagebrush Lizard)

The dunes sagebrush lizard is a picky reptile. The 3-inch-long, tan-skinned animal lives only in windblown hollows near the shrublike shinnery oaks scattered among the dunes of West Texas and Southeastern New Mexico. It even prefers a specific grade of sand—small grained, and not too coarse.

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Unimin’s Permian Plant Location Finally Revealed

The long awaited Unimin Permian sand mine location has finally been announced. A new filing reveals one of the best kept secrets of the Permian Basin sand mine rush: where will Unimin build their plant?

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$100 Million Frac Sand Mine Being Developed Near San Antonio as Demand Soars

As demand for frac sand continues to climb, Pennsylvania-based Preferred Sands LLC is the latest player to set up shop among a growing number of mines just south of San Antonio.

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How Real is the Rail Frac Sand Recovery?

How real is the rail frac sand recovery? The feedback I got during the first-quarter railroad earnings process — from energy exploration and production (E&P) analysts, railroads, trade associations, rail-car leasing companies, etc. — leaned toward bullish, but not completely so.

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Positive Signs for Oilfield Services Sector as U.S. Onshore Market Set to Grow, Westwood says

Westwood Global Energy Group, energy market research consultancy, has published a new market outlook for the U.S. drilling and completion market for the period from 2018 to 2022. The report is the result of a collaboration between Westwood’s expert oilfield services team and its most recent acquisition, U.S. energy market research company, Energent. Using Energent’s multi-million-well U.S. onshore database, the report details activity and associated expenditure forecasts for six unconventional oil and gas plays: DJ-Niobrara, Eagle Ford, Haynesville, MidCon, Permian and Williston.

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Permania Roars On

From U.S. Silica’s frac sand plant springing up in West Texas to new dock, rail and storage facilities being built at Port Corpus Christi on the Gulf Coast, the frenzied phenomenon dubbed Permania is roaring on. And, with record resources available for tapping, the shale oil boom of the Lone Star State is anticipated to continue having wide-ranging, long-term impacts on industry and transportation.

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Update On Permian In-Basin Mine Number Two, Mine Number Three & Contracting Competition

Several Permian Basin mines are now shipping sand. But only one is still fully operational. What’s the latest on the next two in terms of startup schedules? Based on our recent discussion with management teams of the new plants approaching the finish line, we provide readers with a status update on each.

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Tudor Pickering Holt’s “Energy Thoughts” on October 17 related to U.S. Silica

We recently caught up with the company to discuss evolving market dynamics and continue to believe this geographically diversified sand producer sits well undervalued

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EIA: Permian Basin to Drive Fourth-Quarter U.S Crude Production Increases

In its Short-Term Energy Outlook (STEO) update released this week, EIA forecasts that U.S crude oil production will average 9.4 MMbpd in the second half of 2017, 340,000 bpd more than in the first half of 2017.

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Infill Thinking Reader Feedback On Looming Electronic Logging Device (ELD) Regulations for Truckers

On Monday morning this week, we sent out an email survey to a select group of industry insiders who subscribe to Infill Thinking. We asked these folks to provide feedback anonymously on the risk to oilfield activity posed by phase-in of electronic logging device regs this December. We got some insightful responses so far and will be updating this article as we hear from more folks on this topic. Particularly interesting in our view were the comments on housing requirements, Eagle Ford vs. Permian driver preference, and pricing and headcount implications.

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Construction of New Sand Mine in Atascosa County Could Start by End of the Year

A Pennsylvania frac sand mining company expects to start construction by the end of the year at its new location in Atascosa County — a spot that it negotiated with the community.

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Mark Krumenacher earns NISA Recognition of Excellence Award

The National Industrial Sand Association (NISA) awarded Mark Krumenacher, a senior principal and senior vice president of GZA GeoEnvironmental, Inc., with its Recognition of Excellence Award at the Industrial Minerals Association 2017 Annual Meeting, in Chicago. The award is NISA’s highest honor and typically recognizes a lifetime of achievement and contributions to the industrial sand industry.

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Behind Hi-Crush Partners’ High Correlation With Crude Oil

So far in this series, we’ve looked at the four MLPs with the highest correlation with crude oil: EnLink Midstream (ENLC), DCP Midstream (DCP), Mid-Con Energy Partners (MCEP), and Plains GP Holdings (PAGP). In this article, we’ll look at the commodity price exposure of the MLP with the fifth-highest correlation, Hi-Crush Partners (HCLP). The frac sand producer has minimal direct commodity price exposure. However, it still has a high correlation with crude oil. HCLP and crude oil had a one-year correlation of 0.46 on October 6.

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If Risks Hypothetically Derail In-Basin Sand Supply, Will Permian Transload Capacity Be Enough?

There is a new discussion topic over in [Infill's] members-only discussion forum today. In it we ponder whether enough Permian transload capacity is in place to service demand growth if in-basin frac sand mines fall short of expectations. Understandably, investment appetite in transload has waned as in-basin mines have prolifereated. So we think through a hypothetical where known risk factors derail a material amount of projected local sand supply next year. We invite you to read the full thread and discuss it in our Thinking Aloud forum.

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Logistics Park (Which Will Handle Frac Sand) Planned for Oyen, Alberta

The town of Oyen, in east central Alberta, will be home to a proposed new transload and rail logistics facility. Sources say construction on the Oyen Rail Yard & Logistics Park will begin this fall. The 155-acre facility is billed as a multi-phase economic development project, to be managed by Alberta’s Special Areas Board, the Town of Oyen and the Palliser Economic Partnership. Rail service will be provided by Canadian National Railway.

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Transloading Provides Railroads with Another Way to Attract Business

For U.S. rail traffic, 2016 wasn’t exactly a banner year. Total carloads fell 8.2 percent compared with 2015’s level, marking the second consecutive year of declining traffic, according to data from the Association of American Railroads (AAR). A weak manufacturing economy and turmoil in energy markets were two of the main reasons for the decline, AAR officials said earlier this year. With their traffic dwindling among primary money-makers like coal, some Class Is have refocused their efforts on revenue opportunities in other business segments. One of the more promising segments is transloading, which is the transfer of goods from one transportation mode to another to complete a shipment.

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NISA Features The Petroleum Connection’s Frac Sand Weekly News Digest on their “News” Page of the New Website

The National Industrial Sand Association recently launched anew and improved website. On the “News” page of the site, they recommend their readers to go to the Frac Sand Weekly Digest.

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Pioneer CEO: Current Oil Price is What ‘We Have to Live Within’

For those oil and gas operators awaiting higher oil prices, Tim Dove has a message: Stop waiting. “There is no more bust -- this is the oil price,” said Dove, president and chief executive officer of Pioneer Natural Resources. He spoke as he awaited a reception honoring Pioneer hosted by the Midland Wildcat Committee Wednesday at the Petroleum Club. The company is celebrating its 20th anniversary as Pioneer -- born of the merger of Parker & Parsley Petroleum and Mesa Petroleum -- and the 55th anniversary of Parker & Parsley’s founding.

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OPEC, US Oil Markets At Odds

Differing cost structures between the U.S. and OPEC oil markets have been significant in causing the two to move in opposing paths, according to Ashley Petersen, senior oil market analysts at Stratas Advisors, who spoke with Hart Energy following the recent “The Bull Returns - Where Do Oil Markets Go From Here?” webinar.

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Prosecuctors: Uresti's Financial Problems Show He 'Had Motive to Defraud'

An attorney for state Sen. Carlos Uresti filed a motion to keep federal prosecutors from presenting certain evidence against him at trial -- including his loan history. Prosecutors fired back, claiming Uresti's personal finances show he "had motive to defraud" people of their money by getting them to invest in a Ponzi scheme.

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The Time For New Shale Technology

Following a decade of acreage grabs, HBP’ing and new asset development, shale-energy executives may be on the brink of a major shift in strategy, says Shawn Reynolds, portfolio manager for VanEck’s Natural Resource Equity Group. Reynold’s, formerly an exploration geologist and energy analyst, believes shale leaders could or should shift their normal mode of business for two reasons: geology allows for it and investors want it. New strategies deployed across the country’s many tight oil and gas plays could put an even greater emphasis and importance on any technology linked to greater well-site operational efficiency or down-hole production increases.

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U.S. Enhanced Completions Provide Excellent Results And Longer Term Implications For The USO

The oil markets continue to improve. US oil prices have continued to struggle as production has remained stubbornly high. Shale has been resilient, as operators have moved to enhanced completions. This has pushed operators to hedge around $50/bbl. Oil prices continue to meet resistance at this level, and traders continue to doubt the possibility of ranging higher. The US Oil ETF (USO) has continued to struggle, and contango continues to siphon returns. When comparing US plays, there are a large number of variables to consider.

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The Petroleum Connection Sponsoring the America First Energy Conference

The Petroleum Connection is pleased to announce we are sponsors at the America First Energy Conference, being held on November 11, 2017 at the JW Marriott Galleria in Houston, Texas. The event, hosted by The Heartland Institute, aims to bring together energy policy experts and industry leaders to discuss the impact of Trump administration policy changes.

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Ventnor Resources moves into silica sand project in Western Australia

Ventnor Resources Ltd has applied for three exploration licenses north of Eneabba, Western Australia, to explore for construction sand and high-quality silica sand. The targeted silica sand deposits at the Arrowsmith Silica Sand Project are the aeolian sand dunes that overlie the region which host the Eneabba heavy mineral deposits.

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Recent Issues


OCTOBER

  Issue #137 - October 18, 2017

  Issue #136 - October 11, 2017

  Issue #135 - October 4, 2017


SEPTEMBER

  Issue #134 - September 27, 2017

  Issue #133 - September 20, 2017

  Issue #132 - September 13, 2017

  Issue #131 - September 6, 2017



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