Sand boom from oil boom – and some of the economics of fracking

The boom in oil is creating a boom in mining sand.

The Wall Street Journal reports in Midwest Sees a Sand Rush that the huge amount of oil and gas exploration is creating a boom time in pulling sand out of the ground.

Sand mined in the Midwest is used in places such as North Dakota and Pennsylvania to tap oil and gas reserves. The U.S. producers’ demand for sand reached 28.7 million tons in 2011, up from six million tons in 2007, according to independent laboratory PropTester Inc. and consultancy Kelrik LLC.

The surging demand is making sand the Midwest slice of a national energy boom.

Why the huge demand?

Fracking needs lots of sand. The water/sand/chemical mixture is pumped into the well at high pressure which forces the water and sand into the cracks in the hard rock. The sand keeps the fissures open so the oil or gas can flow out for many years.

How much is needed? This report, North Dakota Oil , says on page 4 that about 200 tanker truck deliveries are needed for the water alone.  Page 5 says

  • Drilling companies use more than 3 million pounds of steel casing and cement to construct wells that typically reach 6,000 feet or more below ground.
  • 2 to 4 million gallons of water and 2.4 to 3.3 million pounds of sand are used in this process
  • Fracking fluid is a mixture of 99% water and sand (sometimes ceramic material is added to the sand) and 1% chemical additives.
  •  Efficiencies have brought Sanish field wells down to a cost of $6.5-8.5 million.

So those 200+ rigs running in North Dakota now will need 2 or 3 million pounds of sand each.

(I actually read this in the WSJ before I saw it at Carpe Diem.  Someday when I grow up I wanna’ describe something cool in the energy industry before the good professor covers it.)

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