BY ALL estimates, 2012 should be another very good year for US oil and gas exploration and production. That should come as great news for the diverse tank truck fleets that support those operations.
Current estimates suggest that 2012 drilling activity should grow by about 4% in the United States and more than 11% in Canada. Oil and gas shale plays will remain the focal point for much of the activity, and horizontal drilling and hydraulic fracturing will be a big part of the activity.
A recent survey found 40% of US oil and gas company chief financial officers predicting that their companies will increase investment in the exploration of non-traditional areas, including shale plays. The survey was conducted by BDO USA LLP.
“The shale plays have been very good for trucking,” says Les Findeisen, director of policy at the Texas Motor Transportation Association. “It's always great when we can keep the fleets busy, keep the trucks loaded, and keep up revenues.”
Jim Runk, President of the Pennsylvania Motor Trucking Association, says some of his members are busier than they have been in the past 10 to 12 years. “The Marcellus shale is generating hundreds of loads a day just in Pennsylvania,” he says. “
We believe 2012 will be just as busy or busier than last year.”
The projected increases in oilfield activity follow one of the best years for US oil and gas producers in many decades. In fact, refined petroleum products topped the list of US exports for the first time in more than 60 years. In the first 10 months of 2011, the United States exported 848 million barrels of refined fuels, while importing 750 million barrels of refined product.
The last time the United States was a net exporter of refined fuels was in 1949. That year, the United States exported 86 million barrels of product and imported 82 million barrels.
The United Sates also exports sizable amounts of natural gas, and the volumes could increase significantly over the next few years. Some projections suggest US natural exports of around 12% of US daily production as more natural gas liquefaction facilities come on line.
Energy independence
While US export growth of natural gas and refined fuels is a good sign, it is not an indication that the United States has achieved energy independence. That goal is getting closer, though.
Current estimates indicate that the various US formations hold an estimated 200 billion barrels of crude oil and well over 1,000 trillion cubic feet of natural gas. These are conservative estimates.
A recent report prepared for the US Congress puts US proved crude oil reserves at 19.1 billion barrels, natural gas reserves at 244.7 trillion cubic feet, and natural gas liquids reserves at 9.3 billion barrels. Undiscovered technically recoverable crude oil (essentially an estimate) in the United States is 145.5 billion barrels, and undiscovered technically recoverable natural gas is 1,162.7 trillion cubic feet.
Shale source
Shale formations spread across the United States are the source for much of the increased oil and gas production and the undiscovered technically recoverable resources that are just now being developed. Some of the most active shale formations include the Marcellus (US northeast), Antrim (Michigan, Indiana, and Ohio), Fayetteville (Arkansas), Barnett (Texas), Eagle Ford (Texas), Woodford (Oklahoma), Bakken (North Dakota), Niobrara (eastern Colorado and Wyoming), Green River (Colorado, Utah, and Wyoming), and Uinta (Colorado and Utah).
Reaching the shale oil and gas requires wells that are drilled vertically as much as two miles down and then horizontally for several miles. These are very sophisticated processes, but US exploration and production companies have become very adept with the technology.
Once a well is drilled, workers use hydraulic fracturing — a proven technology — to open up the shale formation and allow recovery of the oil and gas. Hydrofracking involves pumping a mixture of fluid, solid proppant, and chemicals down the well under high pressure to create fractures in the gas- or oil-bearing rock.
Water and sand are the most commonly used fracking materials. However, production companies can exchange water with the following fluids: gels, foams, nitrogen, carbon dioxide, and even compressed air. In addition to filtered sand, proppant materials can include resin-coated sand and man-made ceramics. Chemical additives can include acids, anti-bacterial agents, clay stabilizers, corrosion inhibitor, friction reducer, gelling agents, pH adjusting agents, scale inhibitor, and surfactants.
Plenty of work
Such a complex operation takes an enormous support structure. So it is no wonder that droves of companies and workers are flocking to the shale areas to join in the latest energy sector boom times. Truck fleets of all sorts are among the companies that have been drawn to the shale plays, and there is plenty of work for the truckers.
Put simply, trucking is a critical part of today's gas and oilfield operations. Trucks haul in everything needed to drill a well and bring it on line, and then they haul away water and other drilling and fracking materials, crude oil, and condensate that are pumped out of the well.
Well site preparation can require upwards of 270 loads of gravel for the pad that the drilling rig sits on. Hundreds of loads of drilling mud and water are needed during the drilling process. Wells also consume tons of cement.
“Fracking can take as much as 750 loads of water (hauled in 130-barrel vacuum trailers),” says Mark Smith, Heckmann Water Resources operations manager for the Haynesville shale region. “Once the well is in production, we begin pulling the water out and hauling it for recycle or to one of our disposal facilities. About 20% comes out right away as flowback, and the rest occurs over 10 to 20 years. On average, a producing well can generate around 14 loads of process water a week.”
Sand and other proppants are used in large volumes in the fracking process — often as many as 40 trailer-loads per stage on a horizontally drilled well in an oil or gas shale formation. A well may have 12 to 16 stages.
Finally, all of those drilling rigs and the vehicles that support them need fuel — millions of gallons of it. Petroleum haulers deliver to the rigs, construction equipment sites, and truck fleet terminals.
It is a high-pressure, high-demand business for truck fleets and their drivers. Drilling operations in the oilfield never stop. There is no end of the day and no holidays. It is critical for drilling and fracking operators to get materials and equipment on time.
Driver shortage
Driver supply is a critical factor in the oilfield. The driver shortage is just as much a factor there as it is in other sectors of the economy.
“One of the biggest challenges we face is finding enough good drivers,” says Donnie Childers, general manager of Kent Services & Trucking, a mud hauler operating in the Haynesville shale region. “There is plenty of work in this business and simply no reason for the high unemployment we hear about in this country. We pay well, and some of our best drivers are earning six-figure paychecks.
Those high wages are having a spillover effect on the cities and towns on the edges of the shale regions. For instance, San Antonio, Texas, fleet operators say drilling operations in the Eagle Ford shale formation are draining away their supply of truck drivers.
Some smaller San Antonio fleets report losing as many a half their drivers. It's not just drivers being pulled to the oilfield. Truck mechanics also are in high demand. The fleets simply can't compete with the oilfield wages.
Housing shortage
While high wages draw many drivers to the oilfield, working and living conditions send some of them packing in short order. Severe housing shortages exist in many of the oil and gas shale regions, especially the Bakken and Eagle Ford areas. Many oilfield workers are forced to live in travel trailers and tent cities.
Work hours are long even though most hauls are relatively short. Drivers might spend a day or more waiting to unload at a rig site. With the high oilfield traffic, rough roads have become the norm in many of the oil and gas shale region. Weather conditions can be extreme in many of these areas.
All of this takes a toll on drivers and vehicles. However, the oilfield industry is working hard to improve safety and reduce as much of the risk as possible.
In many areas, the exploration and production companies require SafeLandUSA certification for everyone working on a well site, and that includes truck drivers. An exploration-and-production-sector-driven program, the training can cost in the range of 1,000 per driver and includes at least 37 separate tests.
Key topics covered in the SafeLandUSA program include confined spaces, rigging, hydrogen sulfide, lockout/tagout, fall protection, hazardous materials, hazard communication, personal protective equipment, hearing conservation, emergency response, defensive driving, Hazwoper, fire protection, electrical safety, Terrorism Response Awareness Program (TRAP), and back safety.
Fleet operators say the programs like SafeLandUSA make the oilfield a much safer work environment than it was in the past. The oilfield isn't any less busy, though, and there is no indication of a slowdown anytime soon. ♦
