by Erik Freitag, Primary Vision
As we all know 2015 has been a tough year for most in the oil and gas industry. Primary Vision estimates that D&C activity is down roughly 40%. While proppant has been impacted significantly there have been a few trends the downturn less severe for proppant companies, and provide a large upside as we exit the downturn.
Average proppant volumes have been increasing significantly.
As seen in the chart above there has been significant increases in the average proppant per well. In 2015 alone average proppant mass increased 41% from roughly 4.4 million pounds to 6.3 million pounds. Average proppant volumes have more than doubled since the end of 2013.
| 2011-Q1 | 100 |
| 2011-Q2 | 99 |
| 2011-Q3 | 100 |
| 2011-Q4 | 98 |
| 2012-Q1 | 91 |
| 2012-Q2 | 89 |
| 2012-Q3 | 93 |
| 2012-Q4 | 102 |
| 2013-Q1 | 103 |
| 2013-Q2 | 106 |
| 2013-Q3 | 108 |
| 2013-Q4 | 118 |
| 2014-Q1 | 131 |
| 2014-Q2 | 145 |
| 2014-Q3 | 159 |
| 2014-Q4 | 174 |
| 2015-Q1 | 194 |
| 2015-Q2 | 209 |
| 2015-Q3 | 245 |
| 2015-Q4 | 246 |
If these trends continue there is a tremendous upside for the proppant industry as D&C activity recovers. Volumes would quickly surpass the historic highs of 2014.
Historically EOG has been seen as the company that has been pushing for higher proppant volumes.
EOG has been using nearly 15 million pounds of proppant per well in the fourth quarter of 2015. EOG’s average proppant per well has gone up ~56% in 2015 and by ~90% since 2013.
The chart above shows that there is still a lot of upside in average proppant per well continuing to increase. The industry could easily return to 2014 proppant volumes with continued quarter over quarter per well proppant mass increases.
Additionally, when activity ramps up (expected to begin increasing in late 2016/ early 2017) then total proppant mass will shortly be at an all-time high. Of course, there are other considerations to look at such as how the proppant types have changed, and of course pricing/costs. Those topics and more will be covered in future articles.
To learn more about Primary Vision, visit www.pvmic.com. You can also meet with Primary Vision representatives at the 2016 Frac Sand Industry Update on March 10 in Houston, Texas, where Primary Vision will be participating on a panel discussion. Visit http://www.petroleumconnection.com/conferences or call (888) 906-9898 to learn more or to register.