Most people, whether they work in the industry or not, know that global demand for commodities such as oil and natural gas is keeping pace with growth in industrial production. However, as the world’s fossil-fuel resources dwindle and prices rise, there are more companies turning to shale oil and fracking to meet these demands.
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| Permian Basin Proppants Inc |
History of Recent Shrinking Oil Markets
Ever since the introduction of hydraulic fracturing in the U.S., previously difficult to extract oil reserves have become economically viable. This, combined with the shale gas boom, has created an oversupply in our global market. The oil industry is now facing lower prices because Europe’s economy is slower due to the worst refugee crisis in decades.
Barriers to Entry for New Oil Producers
In recent years, a handful of new producers has been able to make inroads in the oil industry. In particular, shale producers in the U.S., such as Anadarko Petroleum Corporation and Continental Resources, have been able to use horizontal drilling and hydraulic fracturing to extract more oil from these fields. However, even if a company was interested in trying to compete in this market - which would be unlikely for small operators due to lack of large reserves - they're going to have a hard time breaking into an industry made up by major international energy companies.
Demand Factors (ICFs)
The graph shows the 12-month moving average of US demand factors, which is a measure of how sensitive domestic oil production is to changes in US demand. From 2007 to the onset of the global recession, demand factors were on an upward trajectory, reflecting surging demand for petroleum products during this period. With brief exceptions related to hurricanes and other natural disasters, these levels fell steadily over 2010-2011--reflecting both reduced demand due to reduced economic activity (such as reduced gasoline consumption) and increased production (successful drilling techniques) in response to tight supplies--and then began modestly rebounding in 2012. This reflects growing concern that recent rises in global oil prices could lead to the return of much higher international cost curves for crude--reflected by the high world.
Trends to Expect in 2019
U.S. oil production increased by 2 million barrels a day in 2018 and is expected to increase further in 2019 as new pipelines open up. One of the key drivers of the U.S.'s production boom has been Alaska, which is eyeing an unprecedented 3 billion barrels.
Initiatives Taken By Permian Basin Proppants Inc
Permian Basin Proppants Inc has undertaken various initiatives to meet the rising demand for oil now and in the future. Some of these include implementing new vertical drilling methods, through technology-defined vertical wells, with lower costs. It also opened up its facilities so it can better support customers with additional services necessary for their operations.
How does the proppant company work?
A proppant company is a company that provides the sand, ceramic, or some other material to be injected into the wellbore. Sometimes they also provide equipment for drilling, pressure control, and fluid disposal. There are many companies who offer proppants for different types of wells. Some will specialize in a certain type of proppant while others offer a more generic selection. Choosing the right proppant company can depend on what you need and how much you’re willing to spend.
Why does a proppant matter?
Proppants are crucial components of hydraulic fracturing. They're what prop open the cracks created during the process so that they can release their natural gas or oil reserves. Without them, the whole system might not work. The proppant that's used determines how effective the fracturing process is--the right proppant will create fractures that let more gas escape, whereas the wrong one could scratch and weaken the rock, letting precious resources seep out.
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