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Frac Sand Production Predicted To Rise In 2016

Industry Analysts Say As Oil Prices Increase, So Will Need For Frac Sand

frac sand piles
MPCA Photos (CC-BY-NC)

Despite oil prices hitting their lowest point in more than a decade, some frac sand market analysts expect prices to improve and demand for Wisconsin sand to build this year.

For the first time since 2003, the price of crude oil dipped below $27 a barrel last week, sending stock prices tumbling with it. But Samir Nangia, an oilfield services analyst, said in that things are looking up in the long term.

“You don’t just look at the spot price. You look at the next 18-to-24 months’ prices, and those do show an upward sloping price for oil,” he said.

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Nangia said his firm, IHS, has forecast oil prices to average above $40 a barrel through 2016. At that price, he said, fracking oil wells in Texas and parts of North Dakota can still be profitable, meaning demand for Wisconsin frac sand could be on the rise. He said if prices exceed their forecast, energy producers will respond.

“So, as soon as oil prices hit $60 a barrel, most people expect that the U.S. will turn the production back on, and within a period of 12 months to 18 months, after that you’ll have a serious supply response,” said Nangia.

In the last year, layoffs have been common at mining operations, with some in places like Barron and Eau Claire counties shutting down completely. Currently, frac sand producers say they’ve cut back around 40 percent.