Frac sand prices boom

Frac sand prices have boomed as a result of high demand and tight supply.

The price of frac sand in 2013 increased to a national average of about $63 (avewrage 2013) per ton FOB plant from about $50 (average 2013) per ton FOB plant in 1990, according to the US Geological Survey,1991-2014).

The major factors that determine the cost and application for frac sand include: (1) grain strength, which is based on its SiO2 content and internal structure; (2) grain sphericity; (3) grain size; (4) grain size distribution; (5) and overall purity.

In general, the relatively clean, coarse and high-silica high-strength “white” sands mined in Arkansas, Illinois, Minnesota, and Wisconsin bring the highest prices, averaging about $55 per ton FOB plant. The coarser-cleaner fractions bring premium prices of approximately $70 per ton FOB plant, because of higher conductivity which is especially desirable for the recovery of oil.

In most cases, rail is the primary form of transportation to get sand from the mine to a transfer point and then, from there, trucked to the well site, and represents the highest post-mine cost. Adding to the cost burden of transportation some suppliers and consumers of frac sand are affected with logistical “bottlenecks” that result from the: lack of available hopper cars, limitations of branch lines to accommodate rail traffic, weight, and speed; complications associated with moving sand through the network of rail freight carriers that traverse the Midwest United States; shortages of truck drivers and truck availability; and constrained capacity at trans loading terminals.

Depending on the modes of transport, distances traveled, and number of transfer points, the cost of white frac sand may reach $170 per ton by the time it arrives at the well site. In 2013, brown sand represented about 35 percent by weight of the untreated sand used for fracking. In general, the brown sands mined in Louisiana and Texas are finer grain-sized, less spherical and lower purity quartz than Northern sand.

They are generally considered lesser quality because of lower silica content with commensurate lower-strength and lower conductivity. Their relatively low resistance to pressure generally limits their use to a fracking depth of about 2,400 m.

The sands are priced at about $65 per ton FOB plant. On average, they are burdened with higher mining costs than mines in the Great Lakes Region, but experience significantly lower transportation costs because of the shorter distance and fewer transit points necessary to reach the well site.

Source

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