Improvements in oil and gas drilling activity in North America have paved the way for recovery in demand for oilfield minerals such as frac sand, barite and bentonite, but as Kasia Patel, IM Correspondent, reports, the rebound has tested suppliers' ability to respond.
Since the end of last year, improving rig counts, particularly in North America, have prompted industrial mineral suppliers to the oil and gas sector to cautiously suggest that market recovery is imminent. Although the uptick in exploration and production (E&P) activity since 2016 has so far not translated into increases in profit across the board for oilfield mineral producers, analysts anticipate that a year of stable oil prices in 2017 could bolster industry margins.
The oil and gas sector consumes a range of industrial minerals including barite (barytes), bentonite, calcium carbonate, graphite, gilsonite and proppants made from kaolin, bauxite and silica (frac) sand.
While rig counts have traditionally been a solid indicator of mineral consumption by the sector, changes in technology have changed the way oilfield minerals are used.
This is most clearly reflected in the use of proppants, which have seen various sharp shifts in usage trends over recent years. Frac sand production capacity was being pulled offline as recently as last year in response to low demand and prices, but market participants are now concerned about potential shortages in the US.
North America
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