Ceramics versus Resin Coated Supply Dynamics

Transcription

1 Ceramics versus Resin Coated Supply Dynamics Frac Sand Logis:cs and Supply Chain 2013 November 20 th and 21 st Houston, Texas Confiden)al 1

2 Overview Understanding dynamics in proppant pricing Benchmarking ceramic and resin coated supply chains against sand Analyzing whether ceramic and resin coated proppants currently offer a cost- effec)ve alterna)ve to natural sand. Forecas)ng the future trends of resin coated and ceramic proppants Confiden)al 2

3 A Thought I know everything I know I have very lifle idea of, or are not very comfortable with understanding, what I do not know Confiden)al 3

4 Conven:onal versus Non- Conven:onal Wells We are in the world of non- conven)onal wells The conven)onal world has not gone away (but is certainly currently in the background) Confiden)al 4

5 Proppant Selec:on - Considera:ons 1) Technical 2) Logis)cs 3) Preferences 4) Quality 5) Risk 6) Economics Confiden)al 5

6 1) Technical - Reservoir Strengths or stresses Pressures Temperatures Fracturing fluid chemistry Downhole chemistry Other Confiden)al 6

7 1) Technical - Reservoir Strengths or stresses Pressures Temperatures Fracturing fluid chemistry Downhole chemistry Other Confiden)al 7

8 1) Technical - Reservoir Strengths or stresses Pressures Temperatures Fracturing fluid chemistry Downhole chemistry Other Confiden)al 8

9 1) Technical - Reservoir Strengths or stresses Pressures Temperatures Fracturing fluid chemistry Downhole chemistry Other Confiden)al 9

10 1) Technical - Reservoir Strengths or stresses Pressures Temperatures Fracturing fluid chemistry Downhole chemistry Other Confiden)al 10

11 1) Technical - Reservoir Strengths or stresses Pressures Temperatures Fracturing fluid chemistry Downhole chemistry Other Confiden)al 11

12 Technical cont d Not Good

13 Technical cont d Much BeFer

14 1) Technical cont d - Proppant Conduc:vity Strength Sustainability Durability Size Confiden)al 14

15 1) Technical cont d - Proppant Conduc)vity Strength Sustainability Durability Size Confiden)al 15

16 1) Technical cont d - Proppant Conduc)vity Strength Sustainability Durability Size Confiden)al 16

17 1) Technical cont d - Proppant Conduc)vity Strength Sustainability Durability Size Confiden)al 17

18 1) Technical cont d - Proppant Conduc)vity Strength Sustainability Durability Size Confiden)al 18

19 1) Technical cont d Proppant Types Sand Ceramic Resin Coated Sand Resin Coated Ceramic Confiden)al 19

20 1) Technical cont d Proppant Selec:on Well Depth, 000 feet versus Closure Pressure, psi Tier Tier 3 and 4 Sand Tier 1 Resin Coated Sands Intermediate Economy Premium Ceramics Economy Intermediate Confiden)al Bauxite Resin Coated Ceramics Increased Cost and Performance Proper;es 20

21 2) Logis:cs Origin Des)na)on In- Between Handling How Confiden)al 21

22 Proppant Selec:on 3) Preferences 4) Quality 5) Risk Confiden)al 22

23 Proppant Selec:on 3) Preferences 4) Quality 5) Risk Confiden)al 23

24 Proppant Selec:on 3) Preferences 4) Quality 5) Risk Confiden)al 24

25 Proppant Pricing ) Economics US$/Ton High Low Average 0 Sand Resin Coated Sand Ceramic Resin Coated Ceramic Confiden)al 25

26 6) Economics cont d Proppant Pricing Average Price 2010 and 2013 Average Pricing Per ton Per Pound Proppant Type Sand Resin Coated Sand Ceramic Resin Coated Ceramic 1, Confiden)al 26

27 6) Economics cont d Proppant Price Changes 2010 to Sand Resin Coated Sand Ceramic Resin Coated Ceramic - 20 High - 30 Low - 40 Average Confiden)al 27

28 6) Economics cont d Price Changes 2010 to 2013 Price Change (2010 to 2013) Proppant Type Low High Average Sand % % % Resin Coated Sand % % % Ceramic % % % Resin Coated Ceramic % % % Confiden)al 28

29 6) Economics cont d Logis)cs Compara)ve Shipping Costs - $ / Ton A to D B to D C to D Barge Rail Road Confiden)al 29

30 North America Sand, Resin Coated Sand, Ceramics, and Resin Coated Ceramics In Thousand Tons per Year 60, , Sand 40, , , , Resin Coated Sand Ceramic Resin Coated Ceramic Total Confiden)al 30

31 Proppants as a Percentage of the Market % Sand Resin Coated Sand Ceramic Resin Coated Ceramic Confiden)al 31

32 Produc)on Capacity Proppant Produc)on Capacity (and Usage) Produc:on Capacity and Usage Tons Proppant Type Capacity Usage Sand 45,000 29,136 Resin Coated Sand 2,680 2,688 Ceramic Unknown 2,694 Resin Coated Ceramic As Needed 6 Confiden)al 32

33 Conclusions 1. Understanding dynamics in proppant pricing - How much has the price of ceramics been impacted with the introduc)on of suppliers from China and is this significant compe))on to frac sand? The price has been impacted, but not significantly different from other proppant types. It is not a significant compe)tor to frac sand. Confiden)al 33

34 Conclusions 2. Benchmarking ceramic and resin coated supply chains against sand - How do they compare in rela)on to costs, capacity and security of supply? Costs are unique. Capacity is likely not an issue. Security from a produc)on stand point is low risk, logis)cs is the challenge. Confiden)al 34

35 Conclusions 3. Analyzing whether ceramic and resin coated proppants currently offer a cost- effec)ve alterna)ve to natural sand. Not cost- effec)ve alterna)ves. Confiden)al 35

36 Conclusions 4. Forecas)ng the future trends of resin coated and ceramic proppants - Will demand increase, remain stable or fall away? Demand will increase. Confiden)al 36

37 Confiden)al 37