North American proppant demand has risen sharply since 2002, rising from $250 million to nearly $5 billion in 2012, according to a new study from The Freedonia Group Inc. While growth is expected to slow from the heady early years, stellar double-digit annual gains are still expected, with overall demand reaching over 100 billion pounds in 2017, valued at $9.4 billion.

Raw sand is expected to continue to account for the lion’s share of proppant demand. Although it generally cannot be used in wells with high-closure pressures, raw sand performs suitably in most conditions. Due to their higher cost, ceramic proppants will be limited to areas requiring high-performance products, especially as improved fracturing techniques have allowed sand to be used in applications previously thought to be beyond its performance range. However, these production areas include some of the main centers of upstream activity, such as the Eagle Ford Shale in Texas and the Bakken Shale in North Dakota, where sand and ceramics are often used together. Coated sand proppants are expected to increase their market presence, as they offer cost advantages over ceramic proppants and performance advantages over raw sand. These different product types (and sizes) are often used in combinations that maximize well productivity. 

Development of unconventional resources such as shale oil and gas has been the driving force behind growth in proppant demand over the past decade. While significant demand began with drilling in the Barnett Shale, more recent growth has been in liquids-rich plays such as the Bakken and Eagle Ford Shales. Demand in these and similar formations is reportedly being driven by high oil prices, which spurs drilling activity, and by the depth and challenging geology of these wells, which require larger amounts of proppant to complete as they involve more fracturing stages. The expected recovery of natural gas prices should renew gains in important higher value proppant markets such as Louisiana’s Haynesville Shale, which produces mostly dry gas. Gains will also result from further development of fields in the Marcellus and Utica plays, with other large potential markets like the Monterey Shale probably a decade away.

For additional information, visit www.freedoniagroup.com.