Once heavily reliant on imports, the US is now the world’s undisputed leader in oil and gas production, according to the International Energy Agency’s Executive Director, Faith Birol in a recent statement.
The title comes as the result of advancements that have allowed drillers to exploit unconventional shale deposits that were previously not economic. The move has brought another industry to the forefront as well: the sand used in the hydraulic fracturing process, or rather, frac sand.
Argentina is now looking to follow in the footsteps of the US by cashing in on the country’s Vaca Muerta shale oil and gas deposit (among others), but up until recently, obtaining the proppant sand needed in the hydraulic fracturing process at an economically feasible price remained a key challenge. However, two factors look to be turning the frac sand challenge around with an optimistic outlook, which could allow Argentina to replicate the US’s success and overcome their plaguing energy deficit.
Argentina’s Shale Resources
According to the Energy Information Administration, Argentina may host some of the world’s most promising shale resources outside of North America, located in the following basins:
- Neuquen
- Golfo San Jorge
- Austral
- Paraná
Argentina’s Vaca Muerta shale formation, located in the Neuquen Basin, is considered to be one of the largest deposits in the world and has attracted significant attention in recent years, and most recently, substantial investment.
According to state-run company YPF, which recently announced plans for significant investment in the Vaca Muerta, the development of even a small portion of the deposit, which is about 30,000 km2, would be enough to alleviate the country’s energy deficit. But part of successfully developing the Vaca Muerta relies on an economic source of sand.
Reducing Frac Sand Costs
As US drillers know well, frac sand has the potential to be a significant cost in the drilling process. At the onset of the US shale revolution, drillers were paying top dollar to bring in premium sand from the Midwest, but the industry has shifted to rely on in-basin frac sand supplies at a much lower cost instead.
The same challenge is seen in Argentina, where drillers have primarily been importing sand at a high cost, but two factors are pushing Argentina toward their shale development goals:
Rail Transport
Inadequate infrastructure has plagued the Vaca Muerta with high transportation costs, up to 50% of the sand cost, according to YPF official Pablo Bizzotto in a recent discussion with Reuters.
Imported sand is currently brought in to drilling sites from the Bahia Blanca port via truck – a very costly expense. A new rail line, however, could change all that; Argentina is in the process of commissioning the North Patagonia Train – a rail line that would connect the Vaca Muerta with the port and improve existing rail infrastructure, substantially decreasing the costs to get sand from the port to wells.
Locally Available Sand Supplies
Argentina has been relying on frac sand imports coming from China, Brazil, and the US, which has been extremely costly and makes hydrocarbon production at a competitive price a challenge. Finding a more affordable sand source closer to home has been, and continues to remain, a key focus in the country’s shale development efforts.
Fortunately, recent discoveries of sand suitable for fracking have made domestic supply a reality. As a result, YPF built a frac sand plant near the Vaca Muerta that mines local sand, reducing costs. And while the frac sand source is domestic, but still far away enough to not be ideal; for this reason, the company is still looking for a closer source that will reduce costs even further.
Other domestic sand projects are being sought as well; In 2014, U308, a uranium-focused company, vended their Carina property to South American Rare Earth Corp to extract the property’s silica sand for potential use in fracking as well.
Frac Sand Plants Needed
Frac sand is not ready to be used right out of the ground; it requires washing, drying, and screening to optimize it for use as a proppant. Much like in Texas, where frac sand plants can’t be built fast enough, sand processing infrastructure will have to catch up in Argentina as well if demand explodes.
“We have been supplying sand dryers to the industry since hydraulic fracturing started using frac sand in wells, but they’ve all gone toward the shale revolution in North America,” says FEECO Process Sales Engineer Shane Le Capitaine. “Now we’re getting an increasing number of inquiries in Argentina from producers looking to set up plants. A lot of people are expecting the frac sand industry to really take off down there and we’re ready for it.”
Conclusion
Frac sand is a critical component in hydraulic fracturing, and one that has stood as a key barrier in the development of Argentina’s vast shale resources. And while frac sand is only one component in the Vaca Muerta’s (and other shale resources) success, the implementation of a new rail system, combined with the discovery of local frac sand sources, already looks to be a catalyst for investment and further development. This could see Argentina follow in the footsteps of the US’s mega success in shale oil and gas.
FEECO provides custom frac sand dryers that provide a long-term, reliable processing solution with a high throughput. For more information on our drying systems, contact us today!