New sand mines are changing frac sand pricing and logistics dynamics. The mines are concentrated in and around Winkler county in the heart of the Permian Basin.
With 28% growth in Permian rigs, service companies and operators are reducing costs with new sand supply coming online in West Texas. Permian and SCOOP/STACK are leading the rig count growth (see sample page below). Drilling rigs targeting continue to dominate the drilling market. Will the in-basin frac sand trend continue to other plays?
Logistics Hold the Key to Unlock Cost Savings
Assuming a 50% adoption rate of locally mined sand, incumbent suppliers will see a material decline in non-contracted volumes by 3Q18. Beginning in the second half of the year, in-basin sand will make major inroads into the current supply chain. As operators reduce the delivered to wellsite frac sand cost, several mines will have a cost advantage due to mine location. Each mine is profiled with drive time analysis, current capacity, and production timeframe similar to Vista Proppant’s profile page below.
