Earlier this month Halliburton and U.S. Silica Holdings shipped a trainload of nearly 19,000 tons of frac sand from U.S. Silica White’s mine in Ottawa, Illinois, to Halliburton’s facility in Elmendorf, Texas, just south of San Antonio. The record-breaking shipment took five days to build and was loaded with 30/50 and 40/70 U.S. Silica White frac sand.
What’s the significance of this?
It is an indicator that the nearby Eagle Ford play, which relies heavily on hydraulic fracturing, or fracking, is looking to ramp up again after a prolonged drilling slowdown brought on by low oil prices.
Oil prices of $100 a barrel two years ago slumped to the low $20s early in 2016 as a slowing global economy and an oil glut severely pinched oil prices, forcing many US drillers (including in the Eagle Ford) to shut down production.
However, with oil prices recently cresting at $50 a barrel (and the World Bank predicting $55 a barrel for oil in 2017), the break-even point for successful commercial drilling in several Eagle Ford fields is getting closer.
And with the growing importance of frac sand in the fracking process (20% of the fracking fluid mix, up from less than 10% a few years ago), Halliburton is doing its part to drive down the costs of drilling. By using long sand unit trains, it can deliver cost-efficient sand on location to secure the lowest cost per barrel of oil equivalent for drillers.
The record frac sand shipment was received at the Halliburton Elmendorf South Texas Sand Plant (Halliburton’s largest sand unit in the world, which opened last year at a cost of $35.7 million). This location can handle two 115-car unit trains simultaneously and can hold 40,000 tons of frac sand in its eight silos. This new site is primed and ready to support Eagle Ford drillers.
As Eagle Ford fracking operations ramp up again, Halliburton is doing its best to make sure that it gets its sand in the works.
British editorial veteran Stuart Hampton has been covering oil and gas companies for Hoover’s since the Neogene-Quaternary period. Well, actually, since the early 1990s. For the best overview of the oil industry and its history he recommends Peter Doran’s “Breaking Rockefeller” and Daniel Yergin’s “The Prize.” You can also follow Stuart on Twitter.