According to the study “World Industrial Silica Sand Market” by the Freedonia Group, although the hydraulic fracturing industry has struggled for the past year or so, it will remain the fastest growing market for silica sand on a global basis through 2020. Given silica sand's importance in industrial applications, however, there are other stories about the mineral that are worth telling, particularly in regions outside North America.
The study noted these key developments:
Hydraulic fracturing is an expanding market. Through 2020, silica sand used in hydraulic fracturing (frac sand) will represent the fastest expanding market for industrial sand and account for nearly as much additional demand as the much larger glass manufacturing segment.
North America will continue to dominate the hydraulic fracturing market for silica sand, accounting for more than 90 percent of the 2020 segment total. However, the most rapid frac sand demand growth will be recorded in Central and South America, where Argentina's Vaca Muerta shale basin is undergoing rapid development, spurred by extensive foreign and domestic investment.
The North America and Asia/Pacific regions will show most rapid gains. Both North America and the Asia/Pacific region will post market increases over five percent annually through 2020.
In North America, gains will primarily be spurred by healthy sales growth in hydraulic fracturing applications. In recent years, an explosion in horizontal drilling activity fueled double-digit gains. As drilling began to slow in 2014 and 2015, oil and gas drilling firms used more sand per well to stimulate greater productivity out of existing wells. This trend will continue bolstering frac sand demand through 2020.
However regulatory developments may affect suppliers. Two important regulatory developments are expected to affect silica sand suppliers in the near term. In the United States, the Occupational Health and Safety Administration (OSHA) has halved the permissible exposure limit for respirable crystalline silica.
Meanwhile, in Western Europe the European Commission announced in December 2015 that it had grown region-wide recycling targets, with 75 percent of glass expected to be recycled by 2025. Both the more stringent silica dust exposure limit and the European recycling targets are projected to have a modest negative impact on demand.
These regulations are expected to accelerate the ongoing trends of reduced abrasive sand-blasting and increased glass recycling in the developed parts of the world.