In a sign suggesting that the U.S. unconventional boom is not abating, Halliburton Co. has extended an agreement with Hi-Crush Partners LP to increase through 2018 its annual Northern White sand volumes.
Hi-Crush Operating LLC had agreed in June to supply sand to Halliburton Energy Services Inc. for hydraulic fracturing (fracking) operations (see Shale Daily, June 24). Houston-based Hi-Crush produces and supplies premium monocrystalline sand, a specialized mineral that is used as a proppant in fracking. Reserves consist of Northern White sand, predominantly found in Wisconsin and parts of the upper Midwest.
"We continue to broaden our relationship with Halliburton by increasing the volumes we sell to them," said Hi-Crush Co-CEO James M. Whipkey. "This most recent contract announcement brings our total aggregate contracted volumes in 2015 to 6.6 million tons.
"As previously announced, our sponsor has started the permitting process for development of a fourth Northern White frac sand production facility to meet the growing demand for our sand. In addition, we are adding expanded silo storage capacity at several of our distribution facilities to allow for even more efficient delivery of frack sand to our customers."
Average proppant jobs in 2013 required 5,000-8,000 tons/well of sand, but some operators have begun increasing the number of fracks, and therefore pounds of proppant/well, to increase estimated ultimate recoveries (see Shale Daily, Oct. 1; Sept. 19; July 3).
The amendment to Halliburton's June agreement requires the oilfield services operator to pay Hi-Crush a specified price for a specified minimum volume of frack sand each month. The figures were not disclosed. The amended contract also increases the annual minimum committed volumes through 2018 and provides for "further significant increases in annual volumes dependent on Halliburton's aggregate annual demand for Northern White frack sand."
Since the start of the year, Hi-Crush has increased committed volumes under long-term contracts to 6.6 million tons from 2.4 million tons. All of the Hi-Crush agreements are for specified volumes of frack sand at specified prices, known as take-or-pay contracts. The average remaining life of the contracts has been extended to 4.5 years from 2.8 years.