Energy Prospectus

Every part of the shale drilling supply chain, from initial exploration to drilling and completions has been hugely impacted by the scale back in the number of active drilling rigs. Year over year the number of onshore rigs is down about 50%. Ouch. Stands to reason that demand for proppant -- sand and ceramic beads used in fracking a well -- would also be down about 50%. But that's not the case. Proppant demand is down--but only around 20-25%. Why? The wells that are being drilled have longer laterals with more stages, and drillers use more sand per stage. Plus, a number of DUCs ("drilled but uncompleted wells") are also impacting the demand for proppant.

Dexter Steis
Executive Publisher
Natural Gas Intelligence (NGI)