Frac Sand Demand Falls Short Of Expectations

Energy analysts say demand for Wisconsin frac sand is much lower than expected this year and they expect the market to continue declining.

Stagnant oil prices continue to impact demand for frac sand along with prices paid by oil and gas companies. Last year, Samir Nangia, a principal with consulting firm PacWest, and other analysts predicted demand for Wisconsin sand would be flat in 2015, but new data show it’s falling while companies flood the market.

“So, minus 15 percent on demand, and let’s just say plus 10 percent to 20 percent on supply, equals a weak market. And that’s how you go from an undersupplied market to an oversupplied market and much weaker prices,” Nangia said.

Nangia said it costs companies $25 to produce a ton of frac sand, while the price at the mine is now $45 per ton. But he expects that to drop unless oil prices and shale drilling pick up.