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Monday, March 18, 2013

Truckers, Why Fracking Is Important To You

truckinginfo.com
Nice informative piece thanks to and written by Neel Perry of Truckgauge.com A link to the site is provided below:

Overview If you read the business or environmental press you have heard of the energy drilling process called fracking. During the past ten years, engineers have perfected a procedure called hydraulic fracturing, or “fracking,” for use in oil and gas deposits locked in layers of shale rock. Using drills that curve to the horizontal in the deep underground shale formations, the rig operators inject a mixture of water and sand into perforated drilling pipe at high pressure. The water/sand slurry spurts out into the shale fracturing it. Shale is a soft layered rock that breaks easily. Once fractured the shale releases its crude oil or natural gas to be sucked back into the perforated pipe to be pumped up to the ground. Because there is more natural gas locked in shale than oil, the media usually labels this a natural gas opportunity. It works for crude, too, and is expected to increase U.S. recoverable crude reserves by 20%.
Why It’s Important To Trucking Here’s why this is important to trucking. The fracking process uses lots of water, a good amount of sand, thousands of feet of pipe, and some bulk chemicals. Because the wells are in remote locations those materials have to be trucked in, sometimes for a hundred miles or more. Moreover, much of the used water has to be pumped out of the well and disposed of. That can mean a journey of several hundred miles to a properly designed disposal facility. Between the movements in and out, a large well can generate 1,500 truckloads of work. In a good year, the U.S. drills over 20,000 wells. That multiplies out to about 30,000,000 truckloads per year.
This is a very big number. It equals 4.5% of the total number of U.S. truckloads and 26% of the tank loads. What makes these proportions all the more important is that this volume is largely unreported. With FTR’s statistics, the historical drilling- service truck volumes are implicitly included in our numbers. It is that comprehensiveness that makes the FTR work so uniquely valuable. However, the recent two-fold increase in the amount of drilling and the increase in truck volume per rig from contemporary fracking are not in the FTR numbers.
Explaining Recent Market Trends Factoring in this invisible volume helps us more fully explain recent market trends. Here are three examples:
  1. In 2006 through 2008, drilling continued to expand after over-the-road trucking peaked in early 2006. That truck volume contributed to the relative strength of truckload pricing during those years, including a short peak in pricing early in 2008, just before the market collapsed.
  2. In 2009, the drilling market fell by half. This contributed at least 100 basis points to the overall truck shrinkage. It also helps explain why pricing was relatively slow to recover this upturn, and why driver pay took such a big hit.
  3. In 2010, the drilling market started to expand aggressively again. By early this year, that pressure helped pricing start moving up.
Used Trucks and Drivers The conventional statistics tell us little about the fate of the older half of the used truck market. There appears to be a lingering surplus of equipment (not drivers) in this segment. We know that the more visible younger half of the used market is tight now. The fracking application is a good one for older equipment because of its short haul and modest service requirements. The fracking market could account for as much as 10% of used truck demand. Maybe that is where those phantom trucks are going.
Finally, this market segment, with its short haul nature, is attractive to drivers. They are home most nights. It’s increase in requirements the last two years helps explain the driver shortage.
Summary In summary, it is clear that an unconventional trucking application can have a measurable effect on trucking as a whole. It is not enough to simply track what the big dry van carriers are doing. One has to look comprehensively across the many segments that make up this wonderful market. FTR’s research, its industry models, and its statistics do exactly that.
http://www.truckgauge.com/2011/11/11/why-fracking-is-important-to-you/

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