Bad news for frac sand

Two recent reports paint a negative picture of the frac sand market for the foreseeable future. The first, from the U.S. Geological Survey (USGS), says the number of man-made earthquakes is on the rise owing to the boom in oil and gas drilling.

Citing the USGS report, CBS News says, “The spike in seismic activity is mainly caused by the oil and gas industry injecting wastewater deep underground, which can activate dormant faults. A few instances stem from hydraulic fracturing, in which large volumes of water, sand and chemicals are pumped into rock formations to free oil or gas.”

CBS News says that while many studies have linked the rise in small quakes to the injection of wastewater into disposal wells, the USGS report takes the first comprehensive look at where the man-made quakes are occurring — and the hazard is high in these areas.

The man-made quakes are rocking many states, especially Oklahoma, which is experiencing more magnitude-3 quakes than California. The report could lead to stricter regulations on the industry.

The other report, from Oil & Gas 360, says low oil and gas prices mean businesses selling sand for fracking are feeling continued pressure. ‘Many frac sand companies are choosing to cut or maintain their distributions as a part of an overall strategy to manage costs during the price downturn.”

The report says the effects could be lasting, “and could put a lid on the low sand prices for 12-18 months, even if oil prices stage a convincing recovery.”