Service Companies Anticipate Sand Shortage and Plan Ahead | Russell T. Rudy Energy LLC
The shale revolution has increased the demand for hydraulic fracturing or fracking services. “Rigzone” reports that some wells can require a trainload of sand during a frack job. Even with oil prices dropping recently, the demand for fracking, and consequently sand, continues unabated.
The three largest service companies, Halliburton, Schlumberger, and Baker Hughes, all realize that in spite of strong demand, operators will balk at continually increasing prices driven by escalating costs for sand and its delivery to well sites.
Consequently service companies are stockpiling sand and entering into long term contracts with sand suppliers in order to lock in current prices. They are also increasing their investment in rail cars and longer term commitments for additional capacity. For example, Halliburton, the world’s largest provider of fracking services, is doubling its railcar fleet and the capacity at its terminals for transferring sand from rail cars to trucks. To put this in perspective, at mid-year 2014 the company had approximately 3,500 rail cars under management. It has committed about $100 million this year to upgrade infrastructure for handling frack sand.
Service companies not only face the challenge of insuring adequate supplies of sand at competitive prices, but also how to deal with shipping bottlenecks such as those resulting from last winter’s severe weather.
To read the article in its entirety, please go to www.rigzone.com/news/oil_gas/a/135547/Halliburton .
