While the potential of international shale plays such as those in Argentina, Australia, China, the Middle East and Mexico are high, the size of the frack sand market in these areas are extremely small.

But activity remains plentiful in North America, where frack sand demand is expected to increase 24% per annum through 2016 driven by robust drilling and completion activity in plays such as Canada’s Montney and Duvernay as well as the U.S. Appalachian, Permian and Eagle Ford, according to Chris Robart, partner for PacWest Consulting Partners.

Speaking during the first-ever meeting of the newly formed International Frac Sand Association founded by Peter Cook, Robart could not go without saying early on how the fluctuating oil price—which has dropped dramatically since this summer—could alter forecasts for the frac sand market in North America.

PacWest forecasts an oil price of between $80 and $85 per barrel for first-quarter through third-quarter 2015, “but if it starts to get into the $75 [to] $70 range then you will definitely see reductions in capital spending in the industry that will likely result in reductions in well counts and the demand for sand and other proppants,” Robart told attendees Oct. 28 at the sold-out event in downtown Houston.

However, regardless of what the oil price does, he added that the trend of pumping more proppant in horizontal wells will continue.

In North America, total proppant consumed is predicted to increase from 82 billion pounds to 153 billion pounds between 2013 and 2016, with the average volume of proppant pumped jumping 23% from third-quarter 2013 to second-quarter 2014.

In the last four to six quarters, the amount of proppant pumped per well on average has increased by 40% in the Permian, 21% in the Eagle Ford and 12% in the Bakken, he noted.

“These are huge growth figures in this particular metric. We do expect this particular trend to continue regardless of what oil price does,” Robart said. “People are finding that bigger wells equal bigger IPs and better economics, so at the very least that growth metric will remain. That provides a little bit of residual benefit to the industry.”

But challenges remain as pointed out by panelists Bill Zartler, CEO of Solaris Oilfield Infrastructure, and Mark Ellis, president of the National Industrial Sand Association (NISA).

Environmental and public concerns top the list for Ellis, who spoke from a risk and reputation standpoint saying “the industry is only as good as its poorest performer.”

“The environmental community and largely the public that has been listening to that environmental community are very suspect of hydraulic fracturing, and that is translating itself to concerns about the mining of sand that is used in hydraulic fracturing,” Ellis said. “We see environmental concerns and public concerns presenting a risk that needs to be managed and how the companies choose to do that is a threat.”

Zartler added that the industry has gone through a transformation in the last five to eight years, with new players joining and communities facing issues they are not accustomed to such as more truck traffic. It’s incumbent upon sand producers and sand logistics handlers to abide by and focus on the same kind of safety that a company hauling potentially explosive materials does, he said, and “make sure that our communities are supportive of what we do in this industry.”

There is also a need to address any shortcomings amongst sand producers and others involved in the sand value chain in engaging stakeholders.

“Those more experienced players understand the game. They’ve been engaged in the game for decades. The newcomers are challenged. They are very much interested in getting a return on their investment and doing that in a short term,” Ellis said. “But part of that is being in the game for a long sustainable future, and that necessitates that they pay attention to things like safety and health and environmental concerns and public consent to operate in those communities.”

The panel, moderated by Robart, also addressed logistics and the impact future LNG exports could have on the frack market, among other topics.

“With respect to LNG, we think that is going to be a huge driver although it is still a few years away from being meaningful to the market,” Robart said, noting Cheniere’s Sabine Pass facility is scheduled to go online sometime in the late fourth-quarter 2015. “Whether it is 2015 or 2016, we don’t expect the actual volume being exported to increase into something meaningful until 2017-2018. However, starting in 2017-2018 we do expect to see gas prices respond accordingly and increase.”

And this, he said, will stimulate more gas-focused drilling and completion activity, especially in plays such as the Marcellus, Fayetteville and Haynesville.

“It will have an impact and it should be a positive impact. We obviously have too much gas today,” Zartler added. “We all hope for a cold winter and to see the supplies go down. … There will continue to be additional consumption from the chemicals industry in North America and in some gas-to-liquids plants. So there is a lot of infrastructure and consumption of natural gas that will come along with the exports in the next two to five years.”

The industry is also still coping with another issue, one in which Robart doesn’t believe will go away for another couple of years—logistics.

“Clearly, the volume growth and the ability to move that many railcars down the rail system in the U.S. and that many trucks on small local roads, depending on where you are, is an enormous challenge,” Zartler said. “Our view, and it’s a little self-serving, is around the ability to have adequate storage to buffer and keep transportation in rolling stock whether it’s a railcar or truck rather than sitting and waiting. That is a solution to help challenge what is a continually growing bottleneck. We know it takes a very long time for the rail network to overcome any type of disruption, whether it be weather or an accident or another problem.”

Ellis pointed out that the need for companies to have contingency plans in place, given that disruptions on transportation lines can have ripple effects across the minerals distribution network.

“With the huge increases of volume of sand and other types of proppants out there, the industry needs to continue building its supply chain management capabilities,” Robart added. “A lot of the companies that are doing very well on the hydraulic fracturing services side are those that have really exceled at managing the supply chain and planning their demand effectively.”

Contact the author, Velda Addison, at vaddison@hartenergy.com.