The plunge in the price of oil has hit demand for frac sand in the US, just as many companies approach record output in the wake of the North American fracking boom. Meanwhile, fracking has come under renewed criticism in Maryland and California, while ONSOL Energy and Halliburton are seeking to improve the industry’s image with new low-emissions technology.
Low oil prices and reduced drilling in US shale exploration regions like North Dakota are pinching growth in the nation’s $4.2bn fracking grade silica sand (frac sand) industry, slashing demand and prices and forcing some frac sand producers to cut jobs.
According to a report by the Star Tribune, US sand mines, including 63 in Wisconsin and six in Minnesota, are projected to ship significantly less sand to oil drillers in 2015, compared with last year.
This pullback in deliveries comes at a time when producers including Fairmount Santrol, US Silica and Superior Silica Sands expect to set annual production records, having aggressively ramped up capacity in the last two years to meet demand from the North American fracking boom.
“This whole ripple effect has taken hold and it is going to continue,” Richard Shearer, CEO of Texas-based Superior Silica Sands, which operates mines in Wisconsin, told the Star Tribune. “There are peak cycles and trough cycles, and we have hit a trough.”
The US oil and gas sector now buys about 72% of the country’s silica sand output, which has more than doubled in the last five years, leaving the industry vulnerable to fluctuations in the price of hydrocarbons.