Sand

Part two of a two-part NGI report. (Part One)

Emerge Energy Services LP said Monday it plans to expand a sand facility south of San Antonio, TX, to serve proppant needs of oil and gas customers in the Eagle Ford Shale and Permian Basin.

Two days after Mammoth Energy Services Inc. snapped up key onshore oilfield assets, including a major sand supplier, the Oklahoma City-based company on Thursday picked up substantially all of the assets of Chieftain Sand and Proppant LLC for $35.25 million.

As the oil and natural gas recovery takes hold in North America, proppant operators are seeing better-than-expected demand, which in turn is driving up sand pricing and tightening the transportation market.

Houston-based Hi-Crush Partners LP, which reported a sharp increase for proppant sand during the fourth quarter, is slapping down $275 million to buy out a Permian Basin sand supplier in its biggest deal ever.

As U.S. onshore operators hone their skills to extract more oil and natural gas from onshore basins, “sand intensity” should fuel an unprecedented growth in proppant demand, Raymond James & Associates Inc. analysts said in a note Monday.

The oilfield services industry has been mangled, chewed up and spit out since commodity prices began tumbling in late 2014. Like a champ, operators picked themselves up and fought back by revamping customer contracts, improving efficiencies and costs, and as they have always done, delivering ever-better technology.

U.S. proppant operators, which provide sand and ceramic materials to fracture onshore oil and natural gas wells, began raising prices and pulling railcars out of storage during the third quarter because of increased demand.

Halliburton Co., which performs more pressure pumping in North America than any other oilfield services provider, said it moved with U.S. Silica Holdings Inc. the largest sand unit train of its kind to date, traversing a route from Illinois to Texas.