Halliburton Co., one of the largest onshore oilfield services providers, has obtained a long-term agreement through 2018 with Hi-Crush Partners LP for sand to use in hydraulic fracturing (fracking) operations.
Halliburton Energy Services Inc. signed the contract with Hi-Crush Operating LLC. The updated agreement increases the annual minimum committed volumes under previous agreements, extends the term and requires Halliburton to pay a specified price for a specified minimum volume of fracking sand each month. No financial details were disclosed.
In addition, the agreement provides for “further significant increases in annual volumes dependent on Halliburton’s aggregate annual demand for Northern White frack sand,” said Hi-Crush management.
“Halliburton has been an important partner with Hi-Crush since the inception of our operations,” said Co-CEO James M. Whipkey. “Halliburton’s commitment for these new volumes further underscores the demand for Hi-Crush sand as we bring on new production capacity this year.”
Houston-based Hi-Crush Partners produces and supplies premium monocrystalline sand, a specialized mineral that is used as a frack sand proppant. Reserves consist of Northern White sand, predominantly found in Wisconsin and limited portions of the upper Midwest region of the United States.
Sand used to frack wells is forecast to account for two-thirds of the growth in proppant market value going forward, according to a PacWest Consulting Partners study earlier this year (see Shale Daily, Feb. 5). Sand use should increase by 12% from 2013 to 2015. Premium ceramic proppants over the period are expected to see 11% growth, followed by a 2% increase in resin-coated sand demand.
An average fracking job last year required 5,000-8,000 tons of sand per well, but many operators are increasing the number of fractures per well to improve estimated ultimate recoveries.
Halliburton is one of the top onshore oilfield services providers. CEO Dave Lesar said in April he was more enthusiastic for this year’s U.S. oilfield services market than he had been for a few quarters (see Shale Daily, April 21). In March, Halliburton had record levels of revenues on the backs of extended laterals, increased fracking and improved efficiencies in the onshore.
“I see no problem for the frack calendar for the rest of the year,” Lesar told analysts during a conference call.
Halliburton on Monday also released an update to Cypher, its seismic-to-stimulation service that is designed to optimize unconventional reservoir development. The engineering system first was used as a pilot project in 2012 to help Devon Energy Corp. increase output from the Grasslands area in the northern part of the Barnett Shale (see Daily GPI, May 9). Devon has incorporated Cypher in its Eagle Ford Shale drilling program, Halliburton said.
Cypher 2.0, powered by Landmark’s DecisionSpace earth modeling solution, builds on the original software system and is capable of updating dynamically and iteratively with the seismic and well data required to model the structure, rock and fluid properties. The technology defines the distribution of hydrocarbons in the unconventional reservoir to aid well placement, while an integrated formation evaluation module identifies the sweet spots for optimizing the spacing of perforation clusters.
Advancements in the updated model include interaction with the reservoir’s natural fracture networks with the fractures induced by the proppant process. Critical operational factors can then be adjusted in real time between stages during the frack treatment to further optimize well performance, according to Halliburton. Anotheradvancement is the ability to evaluate, predict and alter perforation cluster efficiency.
“Since we released the Cypher service in September 2013, we have seen tremendous customer interest and uptake,” said Halliburton’s Jim Brown, president for the Western Hemisphere. “Projects on shale assets in several North American basins have delivered a 35% production increase on average.”
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