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Ceramic Proppant Vs. Natural Proppant

 

The North American proppant industry has experienced a massive shift from ceramic proppant to natural proppant in oil and gas hydraulic fracturing operations over the last several years. This began as a means of generating faster ROI with little concern about production down the road, but with oil prices hovering between $40-50 per barrel, keeping wells economically viable has added increased pressure on costs. We would argue that the strategy of sacrificing quality for quicker ROI and cost savings in the short-term is not the ideal method to survive through a depressed commodity market and more importantly to transcend competition when prices recover.

In many formations across the country, including the Bakken, Eagle Ford, Permian and Niobrara the down hole stresses are simply too great for natural proppant to remain intact for long periods of time. Most wells will perform strongly even with the weakest proppant for a period of 6 months or so. It is the 5-20+ years down the road that will prove disappointing if sacrifices are made during the well completion.

A lower volume of ceramic proppant can provide similar or even better results compared to a well where 3-4 times the volume of natural proppant is used. This eliminates the need for extra logistical costs, increased pumping costs and the extra time it will take to complete the well. In the past, one could argue that the ceramic proppant cost was 5-8 times more expensive than natural proppant, but that is simply not the case today.

Prices for ceramic proppant have dropped considerably due to oversupply, decreased demand and in the case of Fores’s product line, due to a huge advantage in the exchange rate compared to a year ago. With prices for higher quality ceramic proppant at nearly half what they were several years ago the case for using them instead of natural proppant is a strong one.

The dilemma facing oil and gas companies today of whether to develop their acreage or wait until commodities prices recover is understandable. However, with the narrowing difference in cost between ceramic proppant versus natural proppant, coupled with the long-term EUR advantages of ceramic proppant, it does not make sense for operators to choose a natural proppant when the formation characteristics warrant a stronger, more conductive ceramic proppant.