Lack of sand helps explain well costs gap -Kodiak
* Kodiak at $9.5 mln per well vs $6 mln each for Whiting
* Flooding delayed shipment of sand for fracking -Abraxas
SAN FRANCISCO, Sept 26 (Reuters) - A big difference in well expenses around North Dakota's shale is largely due to variable costs of a key ingredient in the hydraulic fracturing process, the CEO of Kodiak Oil & Gas Corp said on Monday.
Sand is a common "proppant" used to keep fractures in shale rock open after a frac job is complete. But a pricier ceramic substitute, such as that made by , is used in its place to varying degrees, depending on either the nature of the well or the availability of sand.
Executives say getting their hands on sand in North Dakota's remote Bakken shale region can be hard, while a wider U.S. fracking boom in some cases has led to shortages of the stuff that cannot be easily resolved.
Kodiak CEO Lynn Peterson said much of the difference between his company's $9.5 million per-well cost in North Dakota and the $6 million of Whiting Petroleum Corp had to do with Whiting's greater use of sand.
Peterson also said trucking costs in the region contributed to inflation in the oil-rich region, which saw a surge in activity as crude oil jumped to as high as $100 per barrel.
"Some of these costs, quite frankly, have gotten out of control," he told investors at a conference hosted by the Independent Petroleum Association of America.
Peterson said the problem with trucking costs would be solved once more infrastructure was built in the area, which he believed could not handle many more trucks.
As for the ceramics mix, Abraxas Petroleum Corp CEO Robert Watson said he aimed to use an average of 40 percent ceramics on Bakken wells. But on a recent well, Abraxas was forced to inject 60 percent ceramics because flooding had prevented a shipment of sand from arriving in the region.
Whiting believes it is the largest customer for Halliburton Co's white sand in the region, since it has their crews committed to its wells, Whiting CEO James Volker told Reuters on the sidelines of the IPAA conference in San Francisco.
At $6 million per well, and $80-per-barrel oil, he told investors that Whiting could expect at least a 3-to-1 return
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Anybody ever hear of Carbo Ceramics Inc? Stock has had a nice run.
EKS
CARBO Ceramics Inc. (CRR)
finance.yahoo.com
CARBO Ceramics Inc. manufactures and supplies ceramic proppants primarily used in the hydraulic fracturing of natural gas and oil wells in the United States and internationally. The company offers five ceramic proppants, including CARBOHSP and CARBOPROP designed for use in deep gas wells; CARBOLITE used in medium depth oil and gas wells; CARBOECONOPROP, a lightweight ceramic proppant; and CARBOHYDROPROP used to improve performance in slickwater fracture treatments. It also sells fracture simulation software, as well as provides fracture design, engineering, and consulting services to oil and natural gas companies. In addition, the company provides a range of technologies for spill prevention, containment, countermeasures, and geotechnical monitoring, as well as offers monitoring systems and services for bridges, buildings, tunnels, dams, slopes, embankments, volcanoes, landslides, mines, and construction projects primarily serving various spectrum of customers in auto racing teams to surveyors, experimental physicists, radio astronomers, and naval architects markets. It sells its products and services to operators of oil and natural gas wells, and oilfield service companies. The company was founded in 1987 and is headquartered in Houston, Texas. |
