Proppant Prospects for Industrial Minerals Mike O'Driscoll IMFORMED at SME 2015

of 66 /66
Proppant prospects for industrial minerals Ceramic proppant supply and demand trends imformed.com Networking and knowledge for the industrial minerals business

Embed Size (px)

Transcript of Proppant Prospects for Industrial Minerals Mike O'Driscoll IMFORMED at SME 2015

  • Proppant prospects for

    industrial minerals

    Ceramic proppant supply and demand trends

    imformed.com

    Networking and knowledge for the industrial minerals business

  • imformed.com

    [email protected] +44 (0)1372 450 679 mobile +44 (0)7985 986 255

    Mike ODriscoll Ismene Clarke

  • imformed.com

    [email protected] +44 (0)1372 450 679 mobile +44 (0)7985 986 255

    Launched in January 2015

    The new source of professional networking opportunities and market research expertise for the global non-metallic minerals industry

    Focused high profile Forums on specific market areas

    Research and consultancy

    Market briefings

    Training seminars

    Field trips

    Special publications

  • imformed.com

    [email protected] +44 (0)1372 450 679 mobile +44 (0)7985 986 255

  • Outline

    1. Hydraulic fracturing

    2. Proppants

    3. Ceramic proppants (CP) & raw materials

    4. Trends and developments

    5. Outlook

    6. Conclusions

    Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    1. Hydraulic fracturing

    Exploiting unconventional oil and gas resources

    Drivers

    Energy demand

    Evolution of:

    Horizontal drilling Hydraulic fracturing Proppants

    Source: EIA

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    1. Hydraulic fracturing

    Squeezing out oil and gas from low permeability rocks

    Source: Carbo Ceramics

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    1. Hydraulic fracturing

    Pumping water and proppants under high pressure

    Propping agent

    = proppant

    Props open

    fracture

    Permits oil/gas flow

    (conductivity)

    Drinking water acquifer

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    1. Hydraulic fracturing

    Objectives: reservoir contact + conductivity

    Reservoir Contact (Fractures)

    Primarily driven by fluid rate and

    fluid/proppant volume

    Enhanced Flow Capacity (Conductivity)

    Primarily driven by the proppant Source: after Mark Chapman, Carbo Ceramics 2014

    $!!

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    1. Hydraulic fracturing

    Typical fracturing fluid components

    Source: FracFocus

    Water up to 98%

    Proppants up to 1-2%

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    1. Hydraulic fracturing

    Evolution of hydraulic fracturing

    17 March 1949

    Duncan, OK

    First fracturing by

    Halliburton for

    Stanolind Oil Co.

    Images: Montgomery & Smith 2010

    1949

    patent filed; excl. licence

    Halliburton, Stephens OK, Orchard

    TX; 100-150lbs sand, 332 wells;

    75% up in output

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    1. Hydraulic fracturing

    Evolution of hydraulic fracturing

    Mid-2000s:

    Multiple frac stages/well Increased to 4-6m lbs (3,000 st) proppant/well From 2013

    40-50 frac stages Up to 20m lbs (10,000 st) proppant/well

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    1. Hydraulic fracturing

    Significant growth in world proppant demand

    2014

    90bn lbs 2003

    5bn lbs

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    2. Proppants

    Proppant types

    The ideal proppant is one that has:

    the specific gravity of water, the strength of iron, and is cheaper than dirt!

    walnut shells silica sand alumino-silicates fused zirconia plastic pellets

    steel shot glass beads aluminium pellets fly ash

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    2. Proppants

    Proppant types

    Silica sand (frac sand, FS): derived from silica sand

    deposits, 99%SiO2

    Ceramic proppants (CP): derived

    mainly from bauxite and/or kaolin,

    >50% Al2O3

    Resin coated proppants

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    2. Proppants

    Proppant specifications

    API RP 19C ; ISO 13503-2

    Particle size

    90% within specified size ranges, frequently:

    12/20# (1700-850 microns) 20/40# (850-425 microns)

    40/70# (425-212 microns) 70/140# (212-106 microns)

    Particle shape Well-rounded, spherical grains (>0.6 for frac sand, >0.7 for resin

    coated sand and ceramic proppants)

    Crush resistance Withstand compressive stress 4000-6000 psi (28-42 MPa),

    determined at 10% crush material

    Acid solubility Limits on acid soluble material (

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    2. Proppants

    Proppant specifications

    Source: Krumbein & Sloss 1955

    API

    0.6

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    2. Proppants

    Proppant market structure

    US proppant market 80bn lbs (40m short tons; 36m tonnes)

    Silica sand (frac sand)

    80-90%

    Resin coated

    proppant 5-10%

    Ceramic proppant 5-10%

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    2. Proppants

    Proppant market structure

    Source: after Carbo Ceramics

    COST

    $0.25-

    0.90/lb

    $0.20-

    0.30/lb

    $0.0135-

    0.0675/lb 80-90%

    5-10%

    5-10%

    Estimated US market share

    Up to 10,000 psi

    Up to 12,500 psi

    Up to 15,000+ psi

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    2. Proppants

    Selection criteria

    Proppant properties Strength

    Shape

    Size

    Durability

    Proppant availability Supply source, quality, and cost

    Fracture treatment eg. fluid system required, slickwater vs cross-linked fluids and

    impact on proppant size

    Conductivity requirements Desired conductivity

    Cost vs benefit, ie. proppant cost set against oil recovery

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    3. Ceramic proppants

    Superior performance

    Uniform size/shape

    enhances conductivity

    of proppant pack

    Inconsistent sized,

    irregular shaped,

    tightly packed

    grains reduce

    conductivity

    INCREASED CONDUCTIVITY = IMPROVED EUR, ROI

    Higher cost Stronger, more durable Uniform density Uniform sphericity Uniform size Higher conductivity Superior performance

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    3. Ceramic proppants

    High pressure environments favour ceramic proppants

    Source: Carbo Ceramics

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    3. Ceramic proppants

    Raw material feedstock

    Primary raw materials

    bauxite kaolin bauxitic kaolin bauxite/kaolin blends

    Additives:

    diatomite titanium dioxide chromite boron magnetite magnesia manganese oxide rare earth oxides

    Alternative raw materials

    magnesium silicate (derived from serpentinite, olivine, dunite)

    andalusite metabasalt fly ash cenospheres alumina-rich clays nanostructured ceramics/glass metallurgical slag mine tailings

    Source: Carbo Ceramics

    Carbo Ceramics, Toomsboro, GA, 1,000m lbs/y

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    Bauxite 70% Al2O3 for IDC grade

    70% Al2O3, 25.5% SiO2, 0.61% Fe2O3, 3.82% TiO2

    55-71% Al2O3, 7-16% SiO2, 1.5-19% Fe2O3, 2.5-3.8%TiO2

    Bauxite (calcined)

    +Kaolin

    +Bayer alumina fines

    (dust collector by-product)

    82%Al2O3, 7% SiO2 (Australia)

    52% Al2O3, 45% SiO2

    99% Al2O3

    Calcined kaolin (75-90%)

    +Calcined diatomaceous earth

    (5-10%)

    45.60% Al2O3, 51.21% SiO2, 0.96% Fe2O3

    4.37% Al2O3, 87.51% SiO2, 1.91% Fe2O3

    Bauxite (55%)

    +Kaolin (45%; + iron oxide, 7%)

    85% Al2O3, 7% Fe2O3 45% Al2O3, 1% Fe2O3

    Bauxite/kaolin blend 72% Al2O3 total for IDC grade

    Kaolin 48% Al2O3 for LWC grade

    45-50% Al2O3;

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    3. Ceramic proppants

    Grades categorised by density and strength

    Grade Density SG Al2O3 % Feedstock

    Ultra High

    Strength

    3.9 >98 Alumina

    High Strength 3.5 80-85 Bauxite

    Intermediate

    Strength

    3.2 70-75 Bauxite

    Low Strength 2.7 45-50 Kaolin

    In general, increasing alumina content is proportional to increasing strength

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    3. Ceramic proppants

    Traditional grades

    Ceramic proppant

    grade examples

    (Carbo Ceramics)

    LWC

    Lightweight

    ceramic

    proppant

    IDC

    Intermediate

    density

    ceramic

    proppant

    HDC

    High density

    ceramic

    proppant

    Raw material kaolin bauxite bauxite

    Apparent SG 2.71 3.27 3.56

    Bulk Density (g/cm3) 1.57 1.88 2.00

    Alumina % 51.0 72.0 83.0

    Silica % 45.0 13.0 5.0

    Iron % 1.0 10.0 7.0

    Titania% 2.0 4.0 3.5

    Source: Carbo Ceramics

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    Proppant Feedstock Size Avg.

    US$/lb

    Volume

    (lbs)

    Cost

    m$/well

    Carbo Econoprop kaolin 20/40 $0.32 6,000,000 $1.92

    Imerys ProLite LWC kaolin 20/40 $0.32 5,769,231 $1.84

    Chinese LWC bauxite 20/40 $0.26 6,230,769 $1.62

    Carbo CarboProp bauxite 20/40 $0.42 7,230,769 $3.03

    VersaProp ISP bauxite 20/40 $0.42 7,230.769 $3.18

    3. Ceramic proppants

    Examples of typical cost and consumption in Bakken 2014

    Source: Coretrack Ltd

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    3. Ceramic proppants

    Raw abrasive bauxite grade feedstock

    % Abrasive Refractory Chemical Metallurgical

    Al2O3 min. 55.0 min. 59-61.00 min. 55-58.00 50-55.00

    SiO2 max. 5.00 max. 1.50-5.50 max. 5-12.00 0-15.00

    Fe2O3 max. 6.00 max. 2.00 max. 2.00 5-30.00

    TiO2 min.2.50 max. 2.50 0-6.00 0-6.00

    Source: Errol Sehnke, USGS, 1995 Al2O3 content 55-70%; increases with calcination to 85-90% not as strict as refractory grade flexibility with iron, not critical low silica and alkalies (CaO

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    3. Ceramic proppants

    Kaolin feedstock % Calcined kaolin for LWC

    Al2O3 45.60

    SiO2 51.21

    Fe2O3 0.96

    CaO 0.05

    MgO 0.07

    TiO2 1.86

    Na2O 0.07

    K2O 0.17

    Typically calcined kaolin

    with min. 40% Al2O3

    Kaolin has been used containing:

    45-55% Al2O3

  • Extrusion

    Calcining Kiln

    Cooling Drum

    Milling

    Classification

    Binder Mixing

    Pelletization

    Green Pellet Screen

    Sintering Kiln

    Cooling Drum

    Grading Screen

    Feedstock

    mineral(s)

    Proppant

    Source: AJ DeCenso, M-I Swaco 2013

    Dry process

    Calcined ore,

    HS grades.

    Wet process

    Uncalcined ore, IS and LS grades;

    slurrying prior to binder mixing;

    fluidizer sprays slurry onto seed

    particles prior to sintering

    Proppant prospects for industrial minerals Ceramic proppants

    3. Ceramic proppants

    Manufacturing

    IMFORMED 2015 | imformed.com

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    3. Ceramic proppants

    Primary sources, production, & raw material feedstock

    Company Plant Capacity

    (m. lbs/yr) Feedstock

    Carbo Ceramics Inc.

    Carbo Ceramics Inc. Eufaula, Alabama 275 kaolin

    McIntyre, Georgia 275 kaolin & bauxite

    Toomsboro, Georgia 1,000 kaolin

    Millen, Georgia 250

    (+250 Q3 2015) kaolin & bauxite

    Carbo Ceramics (China)

    Co. Ltd Luoyang, Henan, China 100 kaolin & bauxite

    Carbo Ceramics Eurasia Kopeysk, Chelyabinsk,

    Russia 100 bauxite

    Carbo total 2,000

    Saint-Gobain Proppants

    Saint-Gobain Proppants Fort Smith, Arkansas 180-200+ bauxite

    Bryant, Saline, Arkansas 330 bauxite

    closed 2011 Puerto Ordaz, Venezuela 110.2 bauxite

    Saint-Gobain Proppants

    (Guanghan) Co. Ltd Guanghan, Sichuan, China 198.4 bauxite

    S-G total 730

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    3. Ceramic proppants

    Primary sources, production, & raw material feedstock

    Company Plant Capacity

    (m. lbs/yr) Feedstock

    Imerys

    C-E Minerals Mulcoa Plant 5,

    Andersonville, Georgia 220.4 kaolin

    (formerly PyraMax

    Ceramics LLC) Wrens, Georgia

    500

    kaolin

    Treibacher

    Schliefmittel SpA Domodossola, Italy 13-22

    bauxite

    (?andalusite)

    Imerys total 740

    Minerao Curimbaba,

    Ltda

    Pocas de Caldas, Minas

    Gerais 661.2 bauxite

    Fores LLC Sukhoy Log, Chelyabinsk,

    Russia 550

    magnesium silicate

    from asbestos

    mining waste

    JSC Borovichi

    Refractories Plant

    Borovichi, Novgorod,

    Russia 440.8 kaolin

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    3. Ceramic proppants

    China: leading producer, modernising Total production capacity est. 10bn lbs/y. Production est. 1m tonnes;

    40-50% of output; mostly to USA

    ~100 plants producing ceramic proppants 10% >220m lbs/y

    20% 132-220m lbs/y

    70% 441m lbs/y: Gongyi Tianxiang Ceramic Proppant Co. Ltd

    Hebei Haihua Petroleum Proppants Ltd

    Xinmi Wanli Industry Development Co. Ltd.

    Addressing quality and inefficiency issues

    Companies investing in modern capacity

    Xinmi Wanli Industry Development Co. Ltd

    Yangquan Changqing Petroleum Fracturing

    Propping Agents Co. Ltd

    Luoyang Maide Ceramics Co. Ltd

    Yixing Orient Petroleum Proppant Co. Ltd

  • Source: Bauxite province map Hill & Sehnke 2007

    Bauxitic kaolin: Alabama

    Bauxite: Arkansas

    Kaolin: Georgia Carbo Ceramics, AR, AL

    Imerys, GA

    Saint-Gobain, AR

    Bauxite, Minas Gerais Mineracao Curimbaba, MG

    Bauxite: Henan,

    Guizhou,

    Shanxi, Sichuan ~100 producers

    Kaolin:

    Novgorod Borovichi,

    Novgorod

    Serpentinite (MgSiO2):

    Sverdlovsk Fores, Chelyabinsk

    Bauxite:

    Komi Carbo,

    Kopeysk

    Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    3. Ceramic proppants

    Primary sources & production: proximity to feedstock deposits

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    4. Trends & developments

    January 2015 US plant closures

    Saint-Gobain Proppants

    Temporarily closed Ft Smith, AR

    plant 21 January 2015

    $15m upgrades 2010-2011

    180-260m lbs/yr cap.

    Started 1979 as Norton Proppants

    Oxane Materials Inc.

    Closed Van Buren, AR plant 23 January 2015.

    Developed HS/IS/LW advanced ceramic proppant; a sprayed mixed-metal oxide shell over a hollow sphere included fly ash in coating; launched 2013

    End-2013, production rising 1.8m lbs/month

    to 4.0m lbs/month; expected to

    produce 40m lbs in 2014 end-2014.

    Ultimate objective was 2 x 100m lbs/year

    lines at Van Buren.

    Source: Fives

    Source: Oxane Materials

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    4. Trends & developments

    Expansions and investments

    Curimbaba Group, Brazil

    Oil price impact has placed on hold

    planned 70,000 tpa (154.2m lbs/yr)

    expansion with new plant originally

    scheduled end-2015/early 2016

    Source: Sintex

    Prime Meridian/Hallmark Minerals

    Prime Meridian Resources Corp., Canada LOI for 55% stake in

    Hallmark Minerals (I) Pvt. Ltd, India

    Aims to add 25,000 tpa (55m lbs/yr) to 10,000 tpa (22m lbs/yr) plant using

    bauxite/clay blends.

    Carbo Ceramics Inc.

    Deferred completion of Millen Line 2

    (250m lbs) until Q3 2015/2016

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    4. Trends & developments

    Developing projects

    Baltic Ceramics SA

    Building initial 60,000 tpa (132m

    lbs/y) plant at Lubsko, western

    Poland, expected on stream by the

    H2 2015.

    135,000 tpa (298m lbs/y) full cap.

    production.

    Feedstock:

    captive 4.8m tonnes high alumina kaolin resource close to plant

    bauxite from Greece kaolin from the Czech Republic fly ash from power stations.

    Source: Baltic Ceramics SA

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    4. Trends & developments

    Developing projects Ecopropp Pty Ltd/Coretrack Ltd

    Building 250kg/hr pilot plant using fly ash, at

    Clontarf, near Brisbane, Queensland.

    Production expected Q2 2015.

    Highly positive results of testing fly ash-based proppants at 15,000 psi.

    Aim to sell technology licences to third parties

    to build satellite plants near coal fired power

    stations and oilfields.

    Claimed low processing cost factor: Ecopropp

    fly ash proppant at US$0.26/lb = US$0.06-

    0.18 cheaper than US/Chinese proppants

    Source: Ecopprop Pty Ltd

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    4. Trends & developments

    Developing feedstock projects

    Latin Resources Ltd

    Developing the Guadalopito heavy minerals project 25km from Chimbote,

    northern Peru. Seeking j-v partners.

    Contains estimated 14-16m tonnes andalusite; 15m tpa conventional dredge

    mining operation envisaged to yield 155,000 tpa andalusite.

    Envisage proppant potential with andalusite blended with kaolin or other.

    First Bauxite Corp.

    Developing Bonasika bauxite deposit

    60km south-west of Georgetown,

    Guyana.

    Evaluating revised plan for bauxite

    mining and beneficiation in Guyana;

    150,000 tpa calcining and sintering

    plant in south Louisiana aimed at

    ceramic proppant and refractory

    makets. Source: First Bauxite Corp.

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    4. Trends & developments

    Developing projects: Where did they go?

    Shamrock Proppants LLC

    In 2013, acquired Mid America Brick & Structural Clay Products plant, Mexico, MO.

    Planning started 2013 2x 36.8 tph rotary kilns Wellsville, MO.

    Feedstock: own kaolin resource (affiliated with Christy Minerals Inc.)

    Applied Minerals Inc.

    October 2013 agreement with OPF to

    formulate ceramic proppants based on

    halloysite clay from AMIs developing Dragon Mine, Utah.

    March 2014 clay process plant

    commissioned

    Brownwood Clay Holdings LLC

    Since 2011, developing with OPF Enterprises LLC a deposit in Brownwood, TX,

    reportedly >10m s.tons inferred resource of proppant grade clay.

    March 2014 secured property for plant build in Brownwood, but no construction

    expected for a couple more years.

    Source: Applied Minerals Inc.

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    4. Trends & developments

    Developing projects: Bubbling under?

    Kaolin AD, Bulgaria: kaolin Pasek Minerales, Spain: dunite

    Source: Pasek Minerales

    Source: Kaolin AD

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    4. Trends & developments

    Ultra High Strength Proppants clash of the giants

    2013: a new upper tier category of ultra-high strength ceramic proppants based

    on high-alumina raw materials introduced for ultra-deep wells eg. 30,000 ft in

    Lower Tertiary, Gulf of Mexico offshore fracking a new frontier

    Carbo Ceramics

    Kryptosphere: >98% Al2O3; 3.9 SG; 0.9 S/R

    25#; Feedstock: ?kaolin, Inner Mongolia

    High conductivity at 20,000 psi

    HD/LD grades

    Retrofit of existing plant to produce 250m

    lbs/y Kryptosphere LD, on schedule for

    completion by end-Q2 2015. Source: Carbo Ceramics

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    4. Trends & developments

    Ultra High Strength Proppants

    CoorsTek Inc.

    February 2014: opened 5m lbs/month plant

    in Golden, CO; were plans to double cap. in

    2015

    CeraProp: lightweight, 2.67-2.72 SG; 0.9 S/R

    16/30, 20/40, 30/50, 40/70#

    Feedstock: kaolin

    Saint-Gobain

    Titan: 30/50#

    Feedstock: bauxite

    Worlds only 30k proppant

    Source: CoorsTek

    Source: Saint-Gobain

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    4. Trends & developments

    Innovations

    HiWay Schlumberger

    Slugs of proppant pumped down well

    Synthetic fibres bond proppants together

    Creates flow-channels

    Enhances conductivity

    Uses 40% less proppant!

    Source: Schlumberger

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    4. Trends & developments

    Innovations

    Propel SSP Fairmount Santrol

    Proppant transport technology

    Proppant coating swells upon contact with water to form hydrogel layer

    Decreases proppant's effective specific gravity, eg. 2.6 to 1.3 for frac sand

    Allows proppant to go further and higher into the formation.

    The increased stimulated reservoir volume reduces cost per barrel of oil

    equivalent

    solves decades-old problem of uniformly distributing proppant

    throughout the full length of a created

    hydraulic fracture

    Unique polymer coating swells to

    3x original particle size

    Source: Fairmount Santrol

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    4. Trends & developments

    Innovations

    Propynite Imerys Oilfield Solutions

    Produced in Italy; bauxite feedstock

    Rod-shaped design exhibits strength and proppant permeability far in excess of conventional HSP.

    Greater fracture conductivity and flowback control

    Permits high well productivity at closure stress levels >15,000 psi.

    Higher pack permeability improves the mobility of the residue from high

    viscosity fracturing fluids, and therefore

    improves fracture clean-up.

    Source: Imerys

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    4. Trends & developments

    Innovations

    In-situ proppant formation Oil Chem Technologies

    fracturing fluid itself forms the proppant

    little or no material is carried back to be treated or disposed of

    size of proppant can range 20 mm by modifying fracturing fluid composition.

    No polymer is required to suspend the proppant, hence no breakers are required

    proppants are perfectly spherical particles with hardness equal or exceeding conventional proppants.

    Highly permeable solid masses can also be formed within the fracture using hydraulic fluids containing no solids.

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    4. Trends & developments

    Proppant application: trend to using more frac sand

    2013-14 E&P practice of using higher volumes of frac sand, and only tailing in ceramic proppants

    In softer, ductile formations like Eagle Ford, Permian, rock wraps around proppant reducing conductivity solution to overload with proppants to plug short, wide fractures = using more lower cost FS rather than CP

    Major players switched to FS-only in Eagle Ford: EOG, Pioneer, Anadarko, ConocoPhillips

    EOG also intensive FS use in Bakken wells increased productivity

    Q2 2014; Rosetta Resources Inc. revised completion design in Eagle Ford by increasing FS volumes against CP volumes = cost savings $0.5m/well or

    250-500m lbs CP

    But after initial high well productivity, it declines steeply soon after, therefore perhaps only a short term solution CP will always outperform FS

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    1,358 active US land rigs 13/2/15

    weekly drop of 98, one of the biggest

    declines in the past three decades

    Source: Fuel Fix; data based on Baker Hughes, Bloomberg

    5. Outlook

    Market situation: oil drilling market in doldrums

    WTI oil price jumped $1.68 to $52.89/bbl

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    5. Outlook

    Cyclical market: a similar recovery to 2008-09 recession?

    Source: After Schlumberger Dec 2014

    2015-16/17

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    most shale operations are profitable at $70/bbl

    improved efficiencies of drilling and lower cost prices could result in more shale

    projects becoming profitable at $50/bbl [Goldman Sachs: margin of profitability of

    majority of shale operations is $45-40/bbl.]

    New CEO at Total: Patrick Pouyanne

    Speaking at the World Economic Forum,

    Switzerland, 22 January 2015

    5. Outlook

    A cyclical market: higher prices will return

    widespread industry investment cuts may not necessarily be long term:

    There is a natural decline of 5% a year from existing fields around the world. That means by 2030 more than half of the existing global oil production will

    disappear. There is an enormous amount of money that needs to be invested

    to get another 50 million barrels per day of new production. The cycle will

    come back and higher prices will come back.

    Source: Reuters/Andrew Winning

  • Proppant prospects for industrial minerals Ceramic proppants

    5. Outlook

    Demand driver: forecast future for gas + shale gas as source

    IMFORMED 2015 | imformed.com

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    5. Outlook

    Demand driver: US energy production to 2040: gas 38%

    Source: EIA Sept 2014

    (quadrillion BTU)

  • China

    USA

    5. Outlook

    Demand driver: US shale gas contribution to grow to c.50%

    Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

  • China

    USA USA Latin

    America India

    Asia

    Australia

    Proppant prospects for industrial minerals Ceramic proppants

    5. Outlook

    Demand driver: regional market growth

    IMFORMED 2015 | imformed.com

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    5. Outlook

    World proppant consumption: increasing trend comparison of research organisation estimates

    Research and

    Markets

    2013

    45.12m tons

    2019

    84.20m tons

    ($19bn)

    10.7% CAGR

    BCC Research 2014

    $49.0bn

    2019

    $83.2bn

    11.2% CAGR

    Grand View

    Research

    -- 2020

    96.03m tons

    --

    Freedonia 2012

    37m tons

    2017

    65m tons

    12% CAGR

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    5. Outlook

    IHS (PacWest Consulting) US onshore proppant demand

    20

    21

    22

    23

    24

    25

    26

    27

    14Q1 14Q2 14Q3 14Q4 15Q1 15Q2 15Q3 15Q4 16Q1 16Q2 16Q3 16Q4

    Source: based on 2014 data from IHS (PacWest)

    million

    lbs

    consumption to rise 2% p.a. through 2016 from 80bn lbs in 2013 to 111bn lbs in 2016 most growth in FS RCS decline at 5% p.a. CP decline at 17% p.a.

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    5. Outlook

    Demand drivers: more horizontal wells, more frac stages, more proppant consumed per well; up to 16m lbs/well

    Source: IHS (Pac West)

    5m lbs

    10-16m lbs

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    5. Outlook

    Demand driver: pad drilling practice = much reduced footprint

    Source: Statoil

  • Proppant prospects for industrial minerals Ceramic proppants

    5. Outlook

    Demand driver: world shale gas resource potential

    IMFORMED 2015 | imformed.com

  • 5. Outlook

    Regional emerging shale gas markets for proppants in estimated order of commercial development (ex-onshore USA/Canada)

    Proppant prospects for industrial minerals Ceramic proppants

    1

    1

    1

    2

    2 2

    3

    3

    1 GoM/Mexico - South America - Middle East

    2 N. Africa Australia - China/SEA 3 Europe - Russia

    IMFORMED 2015 | imformed.com

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    6. Conclusions CP are high performance proppants with a premium price

    There are relatively few producers worldwide

    Feedstock raw material traditionally bauxite/kaolin, but new lower cost alternative raw materials are emerging

    Critical to secure quality material and correct process route/expertise

    Several new players emerging outside USA; many in China

    Established producers have heavily invested in new capacities in recent years and near term market climate has cooled some projects for now

    New grades of CP are being developed for a new era of application trend to drill more HPHT wells using ultra-high strength CP grades

    Despite competing with low priced FS, CPs higher performance ensures future demand

    Long term demand assured by anticipated world gas demand

    Volume consumption improved by more wells, longer laterals, more stages, greater volumes used per stage and thus per well

    Anticipated growth markets outside USA to evolve at contrasting rates

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    6. Conclusions CP are high performance proppants with a premium price

    There are relatively few producers worldwide

    Feedstock raw material traditionally bauxite/kaolin, but new lower cost alternative raw materials are emerging

    Critical to secure quality material and correct process route/expertise

    Several new players emerging outside USA; many in China

    Established producers have heavily invested in new capacities in recent years and near term market climate has cooled these projects for now

    New grades of CP are being developed for a new era of application trend to drill more HTHP wells

    Despite competing with dirt (FS), CPs high performance ensures future demand

    Long term demand assured by anticipated world gas demand

    Volume consumption improved by more wells, longer laterals, more stages, greater volumes used per stage and thus well

    Anticipated growth markets outside USA

    Proppant

    prospects for

    industrial

    mineralsare good!

  • Proppant prospects for industrial minerals Ceramic proppants

    IMFORMED 2015 | imformed.com

    Sponsors Media

    Partner

  • Proppant prospects for industrial minerals Ceramic proppants

    Brazilian proppants: Curimbaba Group

    past, present, & future

    Peter Muira Nakachima, Manager

    Research & Development

    Curimbaba Group, Brazil

    Proppant market demand outlook

    Samir Nangia, Principal

    IHS (PacWest Consulting Partners), USA

    Oilfield minerals: supplying the market

    Dave Frattaroli, Chief Commercial Officer

    Unimin Energy Solutions, USA

    Frac sand: US exploration and

    production wheres it heading? Mark Zdunczyk

    Consultant Geologist, USA

    IMFORMED 2015 | imformed.com

    The future of ceramic proppants in the

    unconventional shale market

    Jack Larry, General Manager

    Saint-Gobain Proppants, USA

    Chinese proppants supply & markets

    Gene Kim, CEO

    AM2F Energy Inc., USA

    Ceramic proppant development using

    fly ash as raw material

    Siegfried Konig, Executive Director,

    Coretrack Ltd, Australia

    Frac sand developments for the

    Argentinean shale gas market

    Richard Spencer, President & CEO

    South American Silica Corp., USA

    SAVE

    $300 WITH

    EARLY

    BIRD

    RATE

    Presenting in Proppants session as of 15 February 2015

  • Thank you for your attention.

    If you have any questions or comments,

    or would like more information, please contact me.

    Proppant prospects for industrial minerals Ceramic proppants

    imformed.com

    [email protected] | +44 (0)1372 450 679 | mobile +44 (0)7985 986 255