FocusUS shale boom fuels growth in proppants market

15 August 2011 20:59  [Source: ICIS news]

By Bobbie Clark

HOUSTON (ICIS)--The resurgence of oil and gas drilling in the US over the last few years has fuelled tremendous growth in the proppant market, industry experts said on Monday.

Proppants are used in the oil and gas industry for hydraulic fracturing (fracking), which is used to extract oil and natural gas from shale formations deep underground.

Proppants prop open fissures in shale rock, releasing oil and gas and maximising flow capacity from the reservoir to the wellbore.

While proppants have been used in the oil and gas industry for over 30 years, they have recently surged in popularity because of the current shale boom, said James Ely, the president of petroleum engineering consulting firm Ely & Associates, which is based in Houston, Texas.

Conventional vertical wells only require one fracturing stage, whereas horizontal wells can have up to 14, with each stage using about 300,000 lbs (136 tonnes) of proppants.

“Instead of running 200,000 to 300,000 lbs, companies might pump 5m lbs,” Ely said.

As long as companies drill horizontally, proppants are going to be in high demand, Ely said.

Several companies have benefitted from the increased demand for proppants, including Momentive Specialty Chemicals, which specialises in the resin-coated variety.

Momentive on Monday announced yet another proppant plant expansion, this time for its Brady plant in Texas.

This is the third proppant-related announcement this year for the company.

Momentive had previously announced an expansion at its Cleburne proppants plant in Texas, as well as the opening of a new plant in Arkansas.

“This is a very important business for Momentive,” said Jerry Borges, the vice president of Momentive’s Oilfield Technology Group (OTG). “It is certainly a growth business.”

Without divulging specific numbers, Borges said the company’s proppant business has experienced a yearly double-digit growth rate since 2003.

Yet there are obstacles looming that could hinder future growth.

They are the same obstacles that threaten the oil and gas industry as a whole, like the availability of a workforce and a limited supply of water, which is needed to drill horizontal wells.

The possibility of the US sliding into another recession would also affect the proppants market.

“Proppants are tied to a broad range of industry segments, including energy, automotive and electronics,” said Peter Loscocco, the vice president of public affairs for Momentive Specialty Chemicals.

“So if the economy slides back into a recession, then demand would drop off broadly,” he added. “That said, people are still going to need cars, electronics and energy to power their homes.”

For more on Momentive visit ICIS company intelligence
Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy

By: Bobbie Clark
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