Resin Coated Proppant Market Analysis and Latest Trends
The Resin Coated Proppant market consists of two main types: Curable Resin-Coated Proppant and Precured Resin-Coated Proppant. Curable Resin-Coated Proppant refers to proppants that contain a resin coating that can be hardened upon exposure to certain conditions, such as heat or pressure. Precured Resin-Coated Proppant, on the other hand, refers to proppants that already have a resin coating that is fully cured before being used. Both types of resin-coated proppants are used in the oil and gas industry to enhance the productivity of hydraulic fracturing operations.
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The Resin Coated Proppant Market Industry Research by Application is segmented into:
The resin-coated proppant market application includes various sectors such as the oil and gas industry, as well as others. In the oil sector, resin-coated proppants are used in hydraulic fracturing to prop open fractures and facilitate the extraction of oil. In the gas sector, they play a similar role in the extraction of natural gas. Apart from oil and gas, resin-coated proppants find applications in other industries like construction, mining, and water treatment, where they are utilized for enhanced performance, stability, and efficiency.
In terms of Region, the Resin Coated Proppant Market Players available by Region are:
The resin coated proppant market is expected to witness significant growth across various regions, including North America (NA), Asia Pacific (APAC), Europe, the United States (USA), and China. North America is projected to dominate the market, owing to the extensive shale gas exploration activities in the region. It is estimated to hold a considerable market share percentage valuation. The APAC region, driven by industrial development and rising energy demand, is expected to emerge as a prominent market player. Europe, the United States, and China are also anticipated to contribute substantially to the market growth, further consolidating their positions in the resin coated proppant industry.
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The phrase “building on sand” has an unfortunate ring of reality to those ceramic proppant suppliers striving to attain some purchase on the wave of recovery currently sweeping the North American hydraulic fracturing market today.
Proppant producers and oilfield service companies are enjoying a most buoyant recovery period from the oil price decline doldrums of 2015/16, driven not only by a moderate recovery in oil prices but by impressively increased proppant loading levels, longer laterals, and more frac stages per lateral.
Evidence from first quarter performances of proppant suppliers and users has signalled a strengthening trend, commencing in Q4 2016, in increasing fracking and proppant use which is expected to continue through 2017 and into 2018.
Early estimates of US proppant consumption for the year of around 55m short tons, with the potential to rise to 80m tons in 2018 have been blown away by more recent figures of 75m tons for 2017 and >100m tons for 2018.
However, this is mostly all demand for frac sand, ceramic proppants simply do not get much of a look-in. Indeed, proppant and fracturing expert Pickard Trepess, Managing Director, FRAC PT FZE, will be explaining just why silica sand successfully substitutes ceramic proppant in some shale fracs at Oilfield Minerals & Markets Forum Houston, 21-23 May, The Houstonian Hotel (click for programme and details).
For many years, and during the last golden period 2010-12, the proppant market share was in the order of 80% frac sand, and 10% each for ceramic proppants (CP) and resin coated sand (RCS).
Owing to E&P companies pursuing innovative and lower cost fracturing treatments using sand, this ratio has shifted to around 95% frac sand, with 5% shared by CP and RCS.
The market downturn and continuing trend of using more volumes of frac sand rather than CP has naturally prolonged the early 2015 idling of most of the USA’s CP production capacity (see Proppants: Carbo Ceramics idles US & China plants in 18% capacity cut; Proppant prospects postponed? Be patient).
Few, if any of the idled plants of Carbo Ceramics, Saint-Gobain, and Imerys are expected return to production any time soon, although whether they will suffer the same fate as Oxane Materials and Shamrock Proppants remains to be seen.
The upshot is that around 80% of US CP production capacity is not operational, leaving a potential 680m lbs/yr capacity active, although even some of this maybe underutilised. Precise numbers are difficult to acquire owing to undisclosed outputs and changing production levels at reduced rates, but see the accompanying table for a guide.
During 2016, Carbo’s overall total CP plant utilisation was as low as 18% of stated capacity (total capacity 1,900m lbs/yr, including the Kopeysk, Russian plant at 100m lbs/yr). The company does not expect any significant improvements to capacity utilisation in 2017.
The Millen plant remains mothballed, the “majority of production” at New Iberia idled, the Toomsboro plant is idled, and there is “very limited production primarily to supply pellets to the industrial market” at the McIntyre plant, initially mothballed in 2015. The majority of Carbo’s CP production is now from Eufaula, Alabama and Kopeysk, Russia.
Carbo has suspended completion of the second production line at Millen, Georgia, and also the second phase of the retrofit at New Iberia with its KRYPTOSPHERE® technology.
Carbo ceased operations at its Luoyang, China plant in early 2015, sold off inventories, and does not intend to resume operations in China.
During the Carbo Ceramics Q1 teleconference call there was revealed “an interest level in the market” for some of the company’s international assets. Presumably this includes the Chinese and Russian CP operations, and we shall have to await the outcome, if any, of this.
Another ramification of the CP market malaise for Carbo in Q1 2017 was an impairment charge of $1,065,000 on bauxite CP feedstock raw material inventories.
In its Q1 statement, CP world leader Carbo Ceramics Inc. admitted the oil price recovery had still not encouraged a move away from low cost completions, with their existing or target customers continuing to use more third party raw frac sand than CP or RCS as a percentage of overall proppant consumption. Carbo expects this trend to continue.
This trend, together with an oversupplied CP market that is liquidating imported inventory, directly impacted Carbo’s sales volumes for Q1 2017.
North American CP sales volume decreased 35% compared to the same period in 2016, while international CP sales volumes decreased 23%. The average selling price per pound of all proppant sold by Carbo was $0.06, compared to $0.14 for the same period in 2016, reflecting the drop in higher value CP sales.
As notable as the drop in CP sales volumes was the almost 400% increase in frac sand sales to 370m lbs during Q1 2017.
Carbo’s Marshfield, Wisconsin frac sand plant (raw sand is purchased) was idled in early 2016, but by the fourth quarter, sand volumes sold more than tripled on a sequential basis from 46m lbs to 149m lbs pounds. Carbo is in the process of bringing the plant to full utilisation during 2017 (1,500m lbs/year or 750,000 tpa).
Overall, Carbo was able to put on a brave face with a 19% sequential increase in revenue experienced in the first quarter of 2017 owing to an increase in technology product sales, the increase in frac sand sales, and an increase in environmental product sales.
Carbo is clearly accepting the situation with regard to CP demand and is focusing its efforts not only in frac sand production but in diversification into new product markets (ceramic grinding media, mineral processing, and foundry markets), partly using its idled CP plant assets.
Gary Kolstad, President and CEO, Carbo Ceramics, said: “Our strategy is to reduce our reliance on base ceramic proppant. We believe the worst of the industry down cycle is behind us. While imports of low quality Chinese ceramic have been virtually zero over the last eight quarters, it appears some competitors are still pricing below cost. However, this is not a sustainable strategy over the long term.”
“We are focusing on the foundry, the grinding, and the mineral processing industrial market segments because they are very large, they are less cyclical than the oilfield, and they fit our technology, people and asset base very well.”
“We expect to see continued expansion of our technology products, industrial ceramic media, frac sand, and environmental businesses. We believe our 2017 revenue will show strong double digit growth of at least 40% increase over 2016” said Kolstad.
Carbo is expanding its ceramic media product portfolio. With regard to mineral processing, the company is entering into agreements with other companies to produce products for them.
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