As the development of unconventional oil and gas plays continues to ramp up across North America, the race to supply the resources necessary for hydraulic fracturing (fracking) is heating up. In addition to water supplies, the hunt for sand, with certain properties that make it ideal for fracking, is reaching far and wide.
Earlier this month, Rainmaker Resources Ltd. announced an agreement with Arkansas Silica LLC (ASL) to acquire an option to purchase the 304-acre Bray Frac Sand property, located in northeast Arkansas. ASL had previously secured the purchase option on the property from the landowners. The option is to purchase the property outright for US$1.1 million by Jan. 5, 2015.
Rainmaker CEO Rick Patmore said the Bray Frac Sand property is ideally situated to service the Eagle Ford, Fayetteville and New Albany shale plays, with an eye on Mexico shales as development ramps up. "With Mexico now lifting their moratoriums this is another avenue Rainmaker could have for a client base. We...believe that the size of this property could turn Rainmaker into a real contender in this arena for years to come."
The Bray Frac Sand property is in Izard County, AR, approximately 30 miles north of the city of Batesville, AR, which provides rail access with several potential loading sites already present. Calgary-based Rainmaker noted that the currently operating Bluebird Sand LLC frack sand operation is located approximately five miles southwest of the Bray property.
"The market is expecting double-digit growth in 2014, Rainmaker said. "While Canadian suppliers are attempting to offset the quality and amount of product coming from the U.S. Midwest and making some inroads, the U.S. is still by far the largest supplier of premium sand with 30 million tons currently used per year and 3.5 million tons in Canada."
The company has engaged BRS Inc. of Denver, led by Doug Beahm, to complete a technical report on the Bray Frac Sand, with a resource estimate. Rainmaker said it could be shipping sand in less than two years, which is significantly less than the nearby property, which took more than three years to get through the permit process.
Prior to securing the property, Rainmaker drilled three initial holes and found sand thicknesses of 80, 90 and 120 feet. The quality of the initial tests showed that approximately 80% was top quality sieve cuts of 40/70 (58%) and 70/140 (33%). While there is a market for all sieves, Rainmaker said the higher cut product is exactly the quality in highest demand by the oil and gas industry.
"The particle size distribution will result in good revenue streams and value for application for fracture stimulations in Canada, the US and Mexico," Rainmaker Director Alan Young said. "Compared in particular to proppant from Canada, this product is stronger and has a better particle distribution, making it applicable to more stimulation applications."
The use of sand in fracking is growing exponentially. Speaking at a recent energy conference in Pittsburgh, Robert Fulks, Weatherford International Ltd.'s director of Strategic Marketing, said his company has seen sand usage grow at a compound rate of 32.5% over the last two years in the Appalachian Basin, while in the first three months of this year, it's increased another 50% over that. Some operators, he said, have gone from using about 2.4 million pounds of sand in their wells to as much as 11 million pounds (see Shale Daily, June 11).
"What's happened is yes, you are getting better production out of that and it works in certain areas better than others," Fulks said. "But it has cost in the logistics and supply chain to do this. Let me just clear this up, there is not a shortage of sand. There's plenty of sand out there, that's not the issue, it's the logistics part of getting it there."
An increase in drilling and more demand for services, panelists said, have led to a small increase in the cost it takes to get things such as sand and solvents to well sites.