My ears perked up, like an old dog hearing the car keys, "Saaay...."
From OilPrice, February 17:
- The energy sector is facing shortages on all sides, with commodity prices soaring around the world and very little hope that it will be solved in the near term.
- Frac sand is the latest vital material that the energy industry can’t get enough of, a shortage that will hinder the ability of U.S. shale producers to increase production and bring down oil prices.
- This global energy shortage of everything is a result of years of bad planning and underinvestment, and consumers could suffer the consequences for years to come.
Energy-related news has been filled lately with reports about shortages of, well, everything. Oil prices have spiked into the mid-$90s per barrel as explosive demand outstrips supply. Global supplies of diesel are shrinking as the refining industry lacks the capacity to keep up with demand.
The price for natural gas in the U.S. is up 25% over the past week, largely as a result of Europe’s thirst for the commodity now creating shortages in Asia and other parts of the world. We see daily reports of supply shortages impacting key minerals like copper, lithium, as well as commodities like steel and aluminum, all of which are critical elements for facilitating supplies of fossil fuels and renewables.
The situation has become so dire that it prompted Jeff Currie, global head of commodities research at Goldman Sachs, to warn on Monday that “I’ve been doing this 30 years and I’ve never seen markets like this...This is a molecule crisis. We’re out of everything, I don’t care if it’s oil, gas, coal, copper, aluminum, you name it we’re out of it.” In January, Currie warned that oil prices could rise above $100 per barrel by summer due to the tight market. With prices already approaching that level in mid-February, it now seems he was being overly optimistic.
On top of all these mineral shortages, it seems the domestic U.S. oil and gas industry can now add frac sand to its list of materials in low supply. Reuters reported Tuesday that drillers in the Permian Basin and elsewhere are experiencing difficulties in obtaining enough of the stuff to keep their fracking programs moving ahead according to plan.
"We can't get enough sand,” the story quotes Michael Oestmann, CEO of Permian operator Tall City Exploration as saying, “We're running less than the number of (fracking) stages we could pump in a day because we've run out of sand every day. Ultimately it will slow everyone down if it doesn't resolve itself."
Rystad Energy said that spot prices for quality frac sand are now between $50 and $70 a ton, 2 to 3 times the price drillers were paying in 2021. Rystad Researcher Artem Abramov speculated that tight supplies will probably push sand prices higher in the coming weeks and months....
....MUCH MORE
U.S. Silica Holdings one-year chart via BigCharts:
But. like the old dog realizing those weren't car keys but keys to the room where they keep the $600 cat furniture climbing thing, I just lay down and think of chasing the cat....
It might be best to keep an eye on the $12 price level where the stock has run into some resistance. $11.45 Thursday close, up 5.14% on what was a very down day.
Previously (waay too much):
Nov 2016
Commodities: The Next Big Thing Is Sand
....The link that starts this piece goes to Sand Wars: Beijing’s Hidden Ambition in the South China Sea a 22 page PDF, hosted at the College of William & Mary.
Now back to my secret shame. After the jump to the Bloomberg sand article my commentary continued:
We were on the story from the publicly traded get-go (almost), going back to April 2012's "What the Frack? U.S. Silica Up 24% since Feb. 1 IPO (SLCA)". Followed by "Commodities: "Midwest Sees a Sand Rush"". In 2013 growth was so good that a little Ouroboros turnabout was fair play, "More Natural Gas Needed For Frack Sand Suppliers"
By 2014 they were fine, strapping businesses:
"Sand: The Hot New Investment Opportunity" (SLCA)
State of Sand, 2014
What the Frac: "The Past Year’s Hottest IPO Is… " (EMES; SLCA)
From MoneyBeat:
The hottest initial public offering from 2013 isn’t a cloud technology stock, or a biotech company with a promising cancer drug.
The company behind the top-performing IPO in the past 18 months digs sand.
Through Friday, sand-mining company Emerge Energy Services LP has rallied 462% since its debut on May 8, 2013, for the biggest share-price gain since its IPO among companies that went public last year, according to Dealogic....
Having concluded that oil and gas were just a passing fad, this is what we were posting the month Emerge came public:
The Internet of Things: Huggies App Sends You a Tweet Whenever Your Kid Pees...
The Ethics of Torturing Robots
British Psychologists Bashing British Psychiatrists
I so wish I were kidding.
By January of that year we knew it was ending:
What the Frack: "Good Times Run Out for Sand Producers" with, maybe a bit of forced jollity in March:
Basic Materials: What's New In the Sand Business? (SLCA; EMES)
But there was nothing new, it's sand.
