The Unbelievable Amount Of Frac Sand Consumed By U.S. Shale Oil Industry

By the SRSrocco Report,

The U.S. Shale Oil Industry utilizes a stunning amount of equipment and consumes a massive amount of materials to produce more than half of the country's oil production.  One of the vital materials used in the production of shale oil is frac sand.  The amount of frac sand used in the shale oil business has skyrocketed by more than 10 times since the industry took off in 2007.

According to the data by Rockproducts.com and IHS Markit, frac sand consumption by the U.S. shale oil and gas industry increased from 10 billion pounds a year in 2007 to over 120 billion pounds in 2017.  This year, frac sand consumption is forecasted to climb to over 135 billion pounds, with the country's largest shale field, the Permian, accounting for 37% of the total at 50 billion pounds.

Now, 50 billion pounds of frac sand in the Permian is an enormous amount when we compare it to the total 10 billion pounds consumed by the entire shale oil and gas industry in 2007.

To get an idea of the U.S. top shale oil fields, here is a chart from my recent video, The U.S. Shale Oil Ponzi Scheme Explained:

(charts courtesy of the EIA - U.S. Energy Information Agency)

As we can see in the graph above, the Permian Region is the largest shale oil field in the United States with over 3 million barrels per day (mbd) of production compared to 1.7 mbd in the Eagle Ford, 1.2 mbd at the Bakken and nearly 600,000 barrels per day in the Niobrara.  However, only about 2 mbd of the Permian's total production is from horizontal shale oil fracking.  The remainder is from conventional oil production.

Now, to produce shale oil or gas, the shale drillers pump down the horizontal oil well a mixture of water, frac sand, and chemicals to release the oil and gas.  You can see this process in the video below (example used for shale gas extraction):

The Permian Region, being the largest shale oil field in the United States, it consumes the most frac sand.  According to BlackMountainSand.com Infographic, the Permian will consume 68,500 tons of frac sand a day, enough to fill 600 railcars.  This equals 50 billion pounds of frac sand a year.  And, that figure is forecasted to increase every year.

Now, if we calculate the number of truckloads it takes to transport this frac sand to the Permian shale oil wells, it's truly a staggering figure.  While estimates vary, I used 45,000 pounds of frac sand per sem-tractor load.  By dividing 50 billion pounds of frac sand by 45,000 pounds per truckload, we arrive at the following figures in the chart below:

Each month, over 91,000 truckloads of frac sand will be delivered to the Permian shale oil wells.  However, by the end of 2018, over 1.1 million truckloads of frac sand will be used to produce the Permian's shale oil and gas.  I don't believe investors realize just how much 1.1 million truckloads represents until we compare it to the largest retailer in the United States.

According to Walmart, their drivers travel approximately 700 million miles per year to deliver products from the 160 distribution centers to thousands of stores across the country.  From the information, I obtained at MWPWL International on Walmart's distribution supply chain, the average one-way distance to its Walmart stores is about 130 miles.  By dividing the annual 700 million miles traveled by Walmart drivers by the average 130-mile trip, the company will utilize approximately 5.5 million truckloads to deliver its products to all of its stores in 2018.

The following chart compares the annual amount of Walmart's truckloads to frac sand delivered in the Permian for 2018:

To provide the frac sand to produce shale oil and gas in the Permian this year, it will take 1.1 million truckloads or 20% of the truckloads to supply all the Walmart stores in the United States.  Over 140 million Americans visit Walmart (store or online) every week.  However, the Industry estimates that the Permian's frac sand consumption will jump from 50 billion pounds this year to 119 billion pounds by 2022.  Which means, the Permian will be utilizing 2.6 million truckloads to deliver frac sand by 2022, or nearly  50% of Walmart's supply chain:

This is an insane number of truckloads just to deliver sand to produce shale oil and gas in the Permian.  Unfortunately, I don't believe the Permian will be consuming this much frac sand by 2022.  As I have stated in several articles and interviews, I see a massive deflationary spiral taking place in the markets over the next 2-4 years.  This will cause the oil price to fall back much lower, possibly to $30 once again.  Thus, drilling activity will collapse in the shale oil and gas industry, reducing the need for frac sand.

Regardless, I wanted to show the tremendous amount of frac sand that is consumed in the largest shale oil field in the United States.  I calculated that for every gallon of oil produced in the Permian in 2018, it would need about one pound of frac sand.  But, this does not include all the other materials, such as steel pipe, cement, water, chemicals, etc.

For example, the Permian is estimated to use 71 billion gallons of water to produce oil this year.  Thus, the fracking crews will be pumping down more than 1.5 gallons of water for each gallon of oil they extract in 2018.  So, the shale industry is consuming a larger volume of water and sand to just produce a smaller quantity of uneconomic shale oil in the Permian.

Lastly, I have provided information in several articles and videos explaining why I believe the U.S. Shale Oil Industry is a Ponzi Scheme.  From my analysis, I see the disintegration of the U.S. shale oil industry to start to take place within the next 1-3 years.  Once the market realizes it has been investing in a $250+ billion Shale Oil Ponzi Scheme, the impact on the U.S. economy and financial system will be quite devastating.

Check back for new articles and updates at the SRSrocco Report.

Comments

hannah Stuck on Zero Sun, 06/03/2018 - 19:15 Permalink

my family owned a sand and gravel pit for 100 years and the fracking period has been the biggest money maker...gobs and gobs of cabbage made. fond memories.....before it was mainly gravel for temp roads to the well or mud but this fracking shit is crazy......

In reply to by Stuck on Zero

NoWayJose Sun, 06/03/2018 - 12:43 Permalink

Horrors, the amount of gasoline  produced jumped 10x once the Model T was introduced!

Horrors, the amount of yellow mystery sponge in use increased 10x once Twinkies were introduced!

Horrors, the amount of smartphone use increased 100x once the iPhone was introduced.

Can society survive?

 

jmack Sun, 06/03/2018 - 13:48 Permalink

Sand, a material so abundant, you could not give it away, but now, it has worth, thanks frackers.     His article a week or so back was claiming that all the sand had to be shipped out of michigan,  a blatant lie, or perhaps he really is just that ignorant.

 

        A fellow in west texas bought some sparse land a few years back for about $40,000, it was 10's of acres.  He was offered $13,000,000 recently, which he lept at.  then he found out the people that bought it from him, flipped it to a sand company for $200,000,000.  Now he wants to sue.

 

    the point being that technology can make formally useless things, worth more. This is the fundamental reason that economies grow.  Knowledge adds value, making the pie larger for everyone.

 

     Oil may be a ponzi scheme, who knows, if a trade war crashes the global economies and energy usage plummets by 20-50%, I would expect the deflationary environment he is talking about.  On the other hand if that does not happen, and oil goes to $100 or $200 then we will hear a bunch of whining, but everything will keep chugging along.

     and if graphene filters allow for the energy efficient filtration of salts from produced water, and those salts are then processed for the elements such as lithium found in them, and produced water becomes net profit stream instead of a net cost stream, then the whole equation changes, technology adding value.

 

      A lot of if's, that is what makes the future interesting. 

webmatex Sun, 06/03/2018 - 14:45 Permalink

Permium 1.1 million truckloads per day and + 71 billion gallons of water per year!

People in North America will be in serious need of fresh water soon, however, with fracking spoiling water nationally and the combined effect of increased earth tremors/potholes in vast areas, well mother nature is calling in the cards.

Combine that with GM food hidden in most products plus the millions of pharmaceutical lovers, poisoning their own water supplies and effecting most native species and perhaps a little radiation from Nukes and the Sun and the cell towers and a few miles of chem trails  i don't give much hope for a sustainable North American future.

What you think?

snblitz webmatex Sun, 06/03/2018 - 15:46 Permalink

You can make fresh water from sea water for about $2000 per acre foot using expensive california power.  I think that comes to $60 per month for a family of 4 using the fairly high rate of water consumption by california residents.

(desalination plants already exist in Santa Barbara and San Diego, CA and there are desal plants all over the world)

80 gallons per day * 4 people * 365 days / 330000 gallons * $2000 / 12 months = $60

An acre foot of water is about 330,000 US gallons.

Reverse osmosis in the home runs about $75 per year and cleans up most of the problems.

In reply to by webmatex

Angry Plant snblitz Sun, 06/03/2018 - 19:13 Permalink

Now what about the cost of distributing that? See that the thing about getting water the old fashioned ways. Water actually cost nothing to make. The cost is building a system to distribute the free water. It also come with gravity assist moving water from high to low. That way you use natural property of water to flow from high places to lower ones. Now in your system you take sea water and have to move that up from sea level. That cost is addition to cost of converting sea water to fresh water.

In reply to by snblitz

OCnStiggs webmatex Sun, 06/03/2018 - 17:15 Permalink

Maybe we could substitute illegal aliens, or Obama-ites convicted of felonies for much of the frac-sand?

Think of how much money that would save vs incarceration costs!

If we moved up to insane Liberal idiots who were about to explode anyway because their Liberal world is crashing down, we'd further save the environment from all the silly electric cars they drive. Its a win-win!

Thanks for pointing out alternatives we never thought of before!

 

In reply to by webmatex

snblitz Sun, 06/03/2018 - 15:38 Permalink

I have been to a few deserts.  There looks to be a lot of sand.

Is whatever the author is going on about really a concern?

The article reads like someone trying to fill up space with verbiage and without a point.

OCnStiggs snblitz Sun, 06/03/2018 - 17:20 Permalink

SHHHHH!

You are taking away a virtue-signalling opportunity for the ignorant liberals! They need to be free to rise to their own level of banality and blatant stupidity! Tell them the volcano in Hawaii has been going on for millions of years and thousands will scurry to their safe spaces to ponder how the federal government should outlaw volcanoes. Or, at least make evil Conservatives pay for the environmental damage caused by these flatuous burping bullies! Everyone knows that FRACKING causes volcanoes! 95% of scientists agree!

 

In reply to by snblitz

pparalegal Sun, 06/03/2018 - 17:22 Permalink

Meh. Someone needs to get the oil to run the machines that mine the lithium, make and form the steel and plastic, then transport it all to one place to build the Toyota Prius. So people can buy them and claim eco bragging rights.

Of course the real eco friendly bone in the nose barefoot hut dwelling savages have no need of a Prius and probably won't buy one.

truthalwayswinsout Sun, 06/03/2018 - 17:41 Permalink

Yeah shale oil production is so uneconomical that it is now $15 per barrel down from $70 four years ago and soon to go to around $5 per barrel.

Soon the US will be producing 15 million barrels of oil per day and exporting more oil and gas than anyone else in the world. So much in fact that even if our trade deficit stays the same it will be cut in half if not more. 

We will have so much natural gas that the government should seriously consider going to natural gas powered cars. It would be cheaper and we could export almost all our oil production at that point and still also be the leader in natural gas exports as well.

MrBoompi Sun, 06/03/2018 - 19:01 Permalink

Humans need to adjust to alternative sources of energy because in a few years the fossil fuel extraction business and their customers will start to feel the squeeze.  

Gator05 Sun, 06/03/2018 - 19:19 Permalink

Permian sand supplies are coming on right now.  We are running 50 - 70% Permian sand on our fracs today.  100% in some areas.

Water recycling of formation and non potable water accounts for 30% of current frac operations.  This can and will be 100% in the near future.

Low interest rates are undeniably responsible for the pace of growth in the oil patch some of it poor investment.   Yet we can drill and complete a horizontal well that pays out its entire cost in 1 - 3 years at 50-60$ oil.  These wells have rate of returns in excess of 100%.

Fracing isn't going anywhere, there is always a bust coming, but we will be here to help keep the country running.

Permian Frac Engineer...

 

Lazane Sun, 06/03/2018 - 22:33 Permalink

Frack sand RR depot here in the St Croix Valley is filling and rolling rail cars 24/7, 2 times over last years pace which is good, these cars heading to drill baby drill, should facilitate a price to drop very soon.