Austin Skyline

Raymond James Energy Stat of the Week
by J. Marshall Adkins

Energy Stat: Logistic Challenges and the North American Sand Rush
September 2, 2014

Over the past decade, the energy industry has seen a shale revolution driven by hydraulic fracturing, or fracking-a technique where a slurry of water, proppant, and a small quantity of various chemicals are pumped into wells. The increasing amount of overall activity (particularly horizontal activity) has led to an approximate 30-fold increase in sand consumption over the past decade, and a doubling of sand demand over the past three years! While recent growth has been steep, we expect future sand demand growth to continue at a breakneck pace on the back of increasing proppant intensity. However, this ever-increasing sand demand has seen one primary concern: a strain on the logistics front in moving high quality sand geographically concentrated in the Northern Midwest States to oil and gas plays scattered throughout the country. Today's Stat of the Week is a summarization of a recent report done in collaboration with our transportation teams, North American Sand Rush, and will discuss the solid demand outlook along with the potential infrastructure challenges.


This is a summary of a much more detailed commentary. Please contact your financial advisor for the full report.

There is no assurance any of the trends mentioned will continue in the future. Past performance is not indicative of future results. Investing involves risk and investors may incur a profit or a loss. Specific sector investing can be subject to different and greater risks than more diversified investments. Investing in commodities is generally considered speculative because of the significant potential for investment loss. Commodities are volatile investments and should only form a small part of a diversified portfolio. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising.

The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The S&P 500 is an unmanaged index of 500 widely held stocks. The Oil Services Index (OSX) comprises 15 of the largest oil service companies. The S&P SuperComposite Oil and Gas Exploration & Production Index (S&P Oil and Gas E&P) consists of all oil and gas exploration and production stocks included in the S&P SuperComposite 1500 Index. Investors cannot invest directly in an index. Additional information is available upon request.