Making the Switch to Natural Quartz and Resin Coated Proppant. Fabian Ros & Joey Chbeir

Transcription

1 Making the Switch to Natural Quartz and Resin Coated Proppant Fabian Ros & Joey Chbeir

2 IS THERE A CASE FOR USING SAND AS A PROPPANT IN LA VACA MUERTE?

3 IS THERE A CASE FOR USING SAND AS A PROPPANT IN LA VACA MUERTE? When it comes to proppant, there is a consensus in the O&G industry that the best product should be: Stronger than diamond; Lighter than water; and Cheaper than dirt.

4 SAND IS AVAILABLE THROUGHOUT THE WORLD Naturally occurring non-metallic mineral Sandstone: Cemented silica sand particles Sandstone was deposited nearly 500 million years ago Easily mined (if closer to surface) Silica sand or quartz is regularly used as proppant It is available in Argentina

5 Sand: Primary ingredient in several industries Glass manufacturing Water filtration & treatment Building structures & roads Turf & Landscape Sand blasting Paint Oil & Gas

6 HISTORY OF SAND USE IN HYDRAULIC FRACKING 1940 s 1947: First experimental fracturing (sand from Arkansas River). 1949: Halliburton got exclusive license to pump Hydrafac process lb of sand was used s 1981: George Mitchell started horizontal drilling techniques. Barnett Shale formation in Texas. 1988: Hydraulic fracturing was applied nearly one million times 1990 s 1990: Horizontal drilling technology perfected. 1999: Frac sand technology was perfected.

7 HISTORY OF SAND USE IN HYDRAULIC FRACKING Emphasis on exploration of natural gas formations in Texas, Pennsylvania, West Virginia, Wyoming, Utah and Maryland. EPA: Hydraulic fracturing NOT a threat to underground drinking water supplies NOW HF exempted from the Energy Policy Act of 2005 About 35,000 wells of all types (vertical and horizontal, oil and natural gas) are being fractured every year. Sand is the primarily proppant.

8 HYDRAULIC FRACKING IN THE TWENTIETH CENTURY Sand is the preferred proppant: Abundant Economic Not every sand can be used as a proppant Average well takes several MM tons of sand U.S. consumption of sand has increased exponentially 2010: Silica sand production exceeded $ 1 billion 2011: 24.3 million tons of sand was used 2012: Frac sand used exceeded total U.S. consumption of sand & gravel in 2009

9 GOOD FOR U.S. = GOOD FOR ARGENTINA U.S. Sand Production (MMT) U.S. Sand Production (MMT)

10 GOOD FOR U.S. = GOOD FOR ARGENTINA Consumption of Sand In Hydraulic Fracking Total Consumption of Sand & Gavel

11 WHAT, IF ANY, IS THE COST ADVANTAGE? Sand Based Products Ceramic Based Products Price

12 WANT v. NEED Coated Ceramic Ceramic Resin Coated Sand Frac Sand

13 BEST PRODUCT PRICE Ceramic Natural Sand Coated Ceramic Resin Coated Sand CONDUCTIVITY STRENGTH PERFORMANCE COST, COST, & COST

14 CAN SAND AND RESIN-COATED PROPPANT PLAY A ROLE IN THE EXPANDED DEVELOPMENT OF ARGENTINA S SHALE INDUSTRY? La Vaca Muerte Shale ( ): Wells drilled & stimulated (Massive hydraulic fracturing): Thirty-one (31) vertical and four (4) horizontal wells. Proppant: Mixture of 50/120, 40/80, 30/50, & 20/40 mesh. Number of stages per well: varies, one to four for vertical wells and seven to 11 for horizontal wells. Ceramics & RCS (due to high initial shut-in pressures). Average treating pressure: Approx. 7,200 psi Range: 2,800 to 10,300 psi Analysis to Characterize an Unconventional Reservoir, Journal of Petroleum Technology, February 2013 p. 131.

15 PRODUCTION INCREASE IN U.S.

16 GOOD FOR U.S. = GOOD FOR ARGENTINA Cause: Horizontal drilling Multi-stage hydraulic fracturing Additional technological and management improvements

17 GOOD FOR U.S. = GOOD FOR ARGENTINA ECONOMIC REWARD OF SHALE OIL & GAS IN U.S.: O&G industry employment increased by 65,000 to 971,000 in 2012; $237B of growth to the US economy in 2012; US production of NG & NGL are at all time record highs; Crude oil production is headed back to levels not seen since the early 1980s; High production led to lower crude prices; improved the competitiveness of refiners; Prior to 2008 the US was a net importer of both diesel and gasoline. Exports of diesel and gasoline were close to 1 MMb/d and 500 Mb/d in 2012; Significant new infrastructure investment; In 2013, as much as $45 billion may be spent on transportation infrastructure (pipelines, rail cars, rail terminals and other projects); Huge investments in secondary processing facilities; Multi-billion dollar petrochemical plants over the next 5 years to process NGL and produce byproducts; Refineries on the east cost that were scheduled for closure came back online; Increased interest in using NGL for truck transportation and proposals to build prototype NGL locomotives; Work for the army of investors, analysts and consultants needed to finance, inform and navigate the industry through all the changes.

18 GOOD FOR U.S. = GOOD FOR ARGENTINA After all, the impacts of the shale revolution we are all involved in are far broader than the energy business. They are leading to a renaissance in US manufacturing and the prospect of US energy independence. The economic and geopolitical impacts of those developments will start new games rather than change existing ones. Sandy Fielden s article is found at:

19 Argentina Produces Silica Sand or Quartz Argentina: Production of Mineral Commodities U.S. Geological Survey (May 2012) 600, , , , , , Silica Sand

20 ARGENTINA S PRODUCTION OF MINERAL COMMODITIES ACCORDING TO U.S. Geological SURVEY (MAY 2010) 60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000,000 Silica Sand Gravel Construction 0

21 SAND IS AVAILABLE IN ARGENTINA

22 Is the appropriate sand available?

23 API RP56 s Recommendation for Testing Sand Used in Hydraulic Fracturing Operations: Sand Size (US Mesh) Sphericity & Roundness Maximum Acid Solubility Silt Test (Turbidity) Crush Resistance Test (KSI) Sand Mineralogical Analysis (Si O 4 %)

24 Recommended Sand Size: A minimum of 90 % of the tested sand sample should fall between the designating sieve sizes; i.e., 16/30, 20/40, 30/50, etc. Not over 0.1 % of the total tested sand sample should be larger than the first sieve and not over 1.0 % should be smaller than the last sieve size. RECOGNIZED FRAC SAND SIZES Frac Sand Size Designation Mesh Mesh Mesh Mesh Mesh Mesh Mesh Mesh 6/12 8/16 12/20 16/30 20/40 30/50 40/70 70/140 Nest of U.S.A. Sieves. Recommende d for Testing Pan Pan Pan Pan Pan Pan Pan Pan.1 % 90% 1.0 %

25 SPHERICITY & ROUNDNESS

26 Maximum Acid Solubility: The acid-soluble material in frac sand should not exceed the values shown in the table below: RECOMMENDED MAXIMUM ACID SOLUBLE MATERIAL Sand Size (mesh) 6/12 through 30/50 40/70 through 70/140 CONTENT IN FRAC SAND Maximum Solubility (Weight percent)

27 SILT TEST: Several methods could be used to test the turbidity Method I: Turbidity Measurement of Silt- and Clay- Size Particulate Matter The turbidity of tested frac sand should be 250 FTU or less Method II: Field On-Site Turbidity Test Method III: Centrifugal Measurement of Clay and Soft Particle Content Frac sand clay and soft particle content should not exceed 1 percent, for example, 0.1 milliliters of sediment in a 10-milliter sand sample

28 CRUSH RESISTANCE TEST: Stress to Be Applied and Suggested Maximum Fines for Frac Crush Resistance Tests Mesh Size Load On Cell (lb force) Stress on Sand (PSI) Suggested Maximum Fines (%by Weight) 6/12 6,283 2, /16 6,283 2, /20 9,425 3, /30 9,425 3, /40 12,566 4, /50 12,566 4, /70 15,708 5, /140 15,708 5,000 6

29 SAND MINERALOGICAL ANALYSIS: 99% SILICA

30 Sand Meeting API RP 56? NO YES Mine Sand Wet Process Dry Process Imported Washed Sand Domestic API Sand Domestically Process API Sand

31 Domestic or Domestically Processed API Sand Resin Coating Process Proppants Transload Facility Resin Coating Sand Mobile System NO YES IPS (MSS) IPS (MPT)

32 Resin Coating: MYTH OR FACT? RC corrects grain s sphericity & roundness problems Resin coating improves crush strength Resin coating improves conductivity Ceramic should be used at closure pressures > 9,000 psi RCS can be used at closure pressures up to 12,000 psi MYTH FACT FACT MYTH FACT

33 WHAT ARE THE LOGISTICAL CHALLENGES ASSOCIATED WITH SAND AND RESIN COATED PROPPANT S ENTRY INTO ARGENTINA S FRAC SAND SUPPLY CHAIN? Availability of sand Supply should cover demand Average well requires approx. 3MM lbs per treatment. Transportation cost Ideally, proppant should be within 60 miles from well site

34 ADVANTAGES SAND AND RESIN COATED PROPPANT S ENTRY INTO ARGENTINA S FRAC SAND SUPPLY CHAIN Cost effective alternative Unprecedented economic development Less contamination Less delays* No tariffs, duties, or Ad Valorem* No import fees*

35 WHAT ARE THE LOGISTICAL CHALLENGES ASSOCIATED WITH SAND AND RESIN COATED PROPPANT S ENTRY INTO ARGENTINA S FRAC SAND SUPPLY CHAIN? SAME CHALLENGES FOUND IN THE U.S. Importance of adequate & sufficient storage Minimize proppant degradation Reduce contamination exposure Eliminate multiple handling of product Warranty proppant supply

36 WHAT ARE THE LOGISTICAL CHALLENGES ASSOCIATED WITH SAND AND RESIN COATED PROPPANT S ENTRY INTO ARGENTINA S FRAC SAND SUPPLY CHAIN? SOLUTIONS IMPLEMENTED IN THE U.S. Large storage trans-load facilities at the port of entry to offset shipping lead-time Modular movable trans-loads systems near shale plays Large stationary trans-load facilities in strategic areas

37 WILL SAND NEED TO BE IMPORTED, AND IF SO, HOW WILL THAT AFFECT OPERATOR S BOTTOM LINE? SAND IS STILL THE MOST ECONOMICAL ALTERNATIVE DOES LOCAL SAND MEET INDUSTRY STANDARDS & NEEDS? YES Industry will import frac sand until the infrastructure is developed NO Should be imported and coated Cost of shipping will fluctuate with oil prices, tariffs, duties, and taxes imposed on imported products

38 WI Washed Sand Washed Sand TX U.S. Port Puerto de Bahia Blanca

39