NEW YORK, July 01, 2020 (GLOBE NEWSWIRE) -- Major oil and gas companies, including Royal Dutch Shell plc, BP plc, Chevron Corporation, and ConocoPhillips, are quickly getting the license to produce oil and gas from new wells. With the increase in E&P activities, the global low strength proppants market is predicted to reach $5,294.8 million by 2030, from $3,713.3 million in 2019, at a 9.8% CAGR between 2020 and 2030. This is because proppants help increase the production of gas and oil, by keeping the hydraulic fractures in the rock bed open, according to the market research study published by P&S Intelligence

However, the impact of the coronavirus pandemic has been quite negative on the oil and gas sector. With a partial or complete lockdown on industrial activities and public transit imposed in numerous countries, in order to contain the virus, the demand for petroleum products has fallen sharply. Between December 31, 2019 and April 30, 2020, the trading price of crude oil fell from $61.0 to $18.8 per barrel, according to the West Texas Intermediate (WTI) Crude Futures.

Moreover, due to the low demand, a large number of onshore wells and offshore rigs have stopped production; compared to 2,073 rigs in January 2020, 1,514 rigs were operational in April 2020. This has severely ill-affected the demand for low strength proppants, but, with the ongoing research to find an effective antiviral and adoption of plasma therapy, the lockdown is predicted to be lifted gradually, thereby leading to the resumption of E&P activities.

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The crude oil category, under segmentation by end use, is expected to generate the highest revenue in the low strength proppants market during the forecast period. This would be a result of the increasing demand for this commodity and large number of reserves of unconventional oil, which are predicted to be rapidly explored in the coming years. The volume of shale oil, which can be recovered from the earth, is around 400 billion barrels, which is why the U.K., the U.S., Russia, and Saudi Arabia have shifted their focus on unconventional oil. As per the International Association for Energy Economics (IAEE), unconventional-oil production is expected to reach 3.75 million barrels per day (mbd) by 2030, thereby driving the demand for low strength proppants.

Presently, the largest demand for such materials comes from the oil and gas industry of North America, and the situation is expected to remain the same till 2030. This is ascribed to the rising number of oil wells and increasing E&P activities for unconventional oil and gas in the region. In 2017, the U.S. housed 990,677 oil and gas wells, and the number is set to increase, with the rising E&P investments by BP plc, ConocoPhillips, Royal Dutch Shell plc,and Chevron Corporation. In addition, the focus of regional energy firms on tight gas and shale gas, primarily in the U.S., is surging.

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Though North America was home to only 13.3% of the global crude oil reserves and just 7.0%of the worldwide natural gas reserves in 2018, as per the BP Statistical Review of World Energy 2019, it accounted for 20.7% crude oil and 26.2% natural gas production in the world, owing to its advanced technologies, such as horizontal drilling and hydraulic fracturing. Apart from advanced drilling methods and better frack designs, the use of proppants is also instrumental in driving the regional oil and gas production.

Facility Expansions Being Seen as Key Move for Growth by Industry Players

To make the most of the high demand for oil and gas, companies offering proppants are expanding their production capacities, so they can supply as much of the material as possible to E&P firms.

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For instance, Alpine Silica announced plans to construct a frac sand processing facility each in Fay, Oklahoma, and Van Horn, Texas, in June 2018. Apart from this expansion in the U.S., the company also secured nearly 51 million tons of frac sand reserves for the Oklahoma facility.

The most prominent players in the global low strength proppants market are Fairmount Santrol Holdings Inc., Superior Silica Sands LLC, U.S. Silica Holdings Inc., CARBO Ceramics Inc., Badger Mining Corporation, Preferred Sands, Saint-Gobain Proppants Inc., JSC “Borovichi Refractories Plant”, Black Mountain Sand LLC, Hi-Crush Inc., Atlas Sand Company LLC, Wisconsin Proppants LLC, GongyiTianxiang Refractory Materials Co. Ltd., and TEXAS SILICA.

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