U.S. shale oil companies are pulling back on the amount of sand they use to hydraulically fracture new wells, responding to rising prices of the material that are driving up costs.
Investors worry a slowdown in sand use, combined with new mining capacity coming online, could lead to a glut of the material and bring down prices. The worries have pressured shares of sand companies.
Sand prices soared in the last year as oil companies ramped up shale drilling and production.
But with crude LCoC1CLC1 prices below where they started the year, oil producers are employing new well designs and chemical agents that lessen the use of sand that represents around 12 percent of the cost of drilling and fracturing.
The price of frack sand is expected to rise 62 percent this year to average $47 a ton, according to researcher IHS Markit. That is expected to drive oilfield service price inflation to 15 percent over 2016, according to researchers at Wood Mackenzie.Click here to read more.
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