Consultant firm sees seismic shift in Permian sand supply chain. Not all the frac sand mines proposed for the Permian Basin are online yet, but some operators are already reporting plans to source their sand locally. A study just released by Energent, an energy market research consultancy, supports that trend, predicting operators will increasingly turn to in-basin frac sand. By doing so, they will be able to save 40 to 50 percent on the cost of sand. This will result in potential savings of $500,000 or 10 to 20 percent per well. “If you can cut the costs by sourcing sand and getting it to the site in the range we expect, you’ll see more E&P companies buy local sand and cut their transportation costs,” said Todd Bush, founder of Energent. Speaking with the Reporter-Telegram by telephone from his Houston office, he said a handful of E&P operators have begun showing results from that shift and sharing them with their peers. His report says West Texas mines are producing sand of the required standards and volumes to meet expected demand growth of 2.5 million tons per quarter over 2018 and 2019. By the end of this year, Energent anticipates over 7 million tons per quarter of sand capacity inside the Permian Basin. This will remove approximately 800,000 tons of sand requiring long-haul rail logistics in the fourth quarter of this year as compared to the first quarter of the year. That anticipated growth in demand has mining companies eyeing the Permian Basin, he said. His company estimates over 800 exploration and production operators, 25 pressure pumpers and 30 frac sand producers are active in the Permian Basin. An inventory of 2,430 drilled uncompleted wells and increased capital expenditures means sand demand is expected to rise. New and existing sand companies are spending about $850 million to open facilities in West Texas, he said.
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