Recently Proppant Today caught up with Brian Leeners, the CEO and Director of Phoenix Metals Corporation, (TSXV: PHC and Q: AKAVF). We asked Brian to tell us about Phoenix Metals Corporation, his vision for the company as a global proppant supplier, trends in proppant demand and the growing worldwide market.
Phoenix Metals Corporation: a global proppant vision
Phoenix Metals Corporation is acquiring frac sand reserves and proppant assets while energy prices are low. We currently have a reserve in northwestern Alberta called the Peace River Frac Sand Project and are in the midst of targeting frac sand reserves in the Western US to serve the local basins. Phoenix Metals has a joint venture with Hallmark Minerals, a ceramic proppant producer, with one plant in Pune, India. We are also looking in other countries to locate reserves and proppant assets to deliver to developing unconventional oil and gas resources around the world.
What trends are you observing in proppant demand?
Currently proppants and guar are sourced independently and prices for each are negotiated with the oil service company, not the E&P company, to minimize cost of well development. This forces proppant to be priced as a commodity. To differentiate going forward, producers who work with the oil and gas companies to develop a customized proppant recipe will have a value added service. This customization allows the proppant supplier to partner with the operator to develop the science behind the exact specifications of frac sand, ceramic and coated proppants and even guar powder to yield optimal production. The future approach will enhance the repeatability of well performance, simplify the procurement structure, and improve yield.
Where do you see the global proppant market going?
In the US there has been strong growth in the past five years, however, the industry is nascent in terms of its understanding the science of how to remove hydrocarbons with hydraulic fracturing. Because the US has an extensive rail network that happens to cross through the frac sand reserves in Wisconsin, Minnesota and Illinois, vast amounts of frac sand have been moved to the oil and gas fields. This in-country transportation of frac sand will not be as easily repeated in other places including Canada, Australia and also in Africa and South America where oil and gas reserves are being identified.
New plays are being evaluated and announced with frequency. Canada has active plays in the Bakken and also in the Duverney and Montney in northern Alberta. In May 2015, Canadian government agencies announced oil and gas reserves in two new plays, the Canol and the Bluefish, in the central Northwest Territories. These reserves are not currently reachable by the rail system.
Australia will be turning to fracking as the LNG facilities are built. The country is in the midst of a boom in development of seven LNG facilities to supply the Asian market. Australia will supply natural gas from its offshore drilling and will need to frack its onshore coal bed methane plays to meet design capacity. At present, the known location of frac sand resources in Australia are not in proximity to the country’s unconventional basins and a potential import of proppants is indicated.
Phoenix Metals Corporation will remain focused on growing a global proppant supply to serve our clients in both established and emerging oil and gas fields.
About Proppant Today, LLC
Thanks to Brian Leeners for taking a moment to share his vision for Phoenix Metals Group and the global proppant market. Please visit Brian’s blog at Nexvu Capital.
Proppant Today, LLC serves the proppant market by providing deep insights into proppant use and demand in the unconventional oil and gas industry. We provide a daily news update at www.proppant.today. We blog on frac sand, manufactured and coated proppant and its role in the supply chain of the unconventional oil and gas industry. Proppant Today will release the US Proppant Market and Forecast Report: 2015 to 2020 in June 2015.
– Holly Bellmund, President, Proppant Today, LLC