Outlook for Drilling Minerals & API Specifications

William Miles, Ph.D. Miles Industrial Mineral Research

1244 N Columbine Street Denver, CO 80206

Industrial Minerals for Drilling

• Industrial minerals provide desired functions

• Barite – weighting agent • Bentonite – viscosity and suspension • Frac sand – proppant increases permeability

of producing formation

Barite Physical Properties

• Barite chemistry = BaSO4 • Specific Gravity = 4.50 g/ml pure BaSO4 • Hardness = 3 – 3.5 • Inert and insoluble in water and organic

solvents • Solubility Product = 0.87 x 10-10

Beneficiation of Barite Ore

• Simple methods - jigging - tabling - washing

• More complex methods - flotation - heavy media - magnetic separation

Barite Industrial Markets

• Filler, extender, weighting agent in paints, plastics and rubber

• Special application in brake and clutch pads • Cement jacket for under water petrol lines • High atomic weight blocks x-rays & gamma rays

– hospitals, nuclear power plants. research • Source of barium for other chemicals • In 21st Century, estimated 78,000 metric tons/year

Barite for Drilling

• 1926 patent for oil well drilling • Used in drilling mud for oil, gas • Now major end use • In 1970, USA became leading petroleum

well drilling country, driving demand for barite and other industrial minerals

• Drilling rigs increased dramatically after 2009 recession

Barite Functional Properties

• Weights drilling fluid to increase pressure/force at drill bit as it rotates

• Low hardness and fine grind minimizes drill string abrasion

• Insolubility in water protects formation

Barite Ore Beneficiation

• Simple beneficiation -Jigging, tabling, washing • Complex beneficiation -flotation -heavy media separation -magnetic separation

USA Barite Mining & Processing

• Nevada has 4 mines near Battle Mountain for gas drilling market

• All USA mined barite used in western states of Colorado, Utah and Wyoming

• Georgia has 1 mine for industrial markets

World Barite Production 1000 ton units

Year World 2006 7,910 2007 7,910 2008 8,570 2009 6,430 2010 7,850 2011 7,800

USA Imported Barite for Drilling

Year USA Production Total Imports China 2006 589 2,550 2,388 2007 455 2,600 2,536 2008 648 2,620 2,516 2009 383 1,430 1.328 2010 662 2,110 1,924 2011 640 2,200 NA

Other Import Countries

• China provides ~95% of USA imports • India provides 44 to 83 thousand tons/year • Morocco, Mexico, Canada, other import

countries

API 13A Barite Specifications

Specific Gravity, g/ml 4.20 4.10 Water Soluble Alkaline Earth metals, mg/kg max 250 250 >75um residue, maximum 3% 3% <8um fines, maximum 30% 30% Cadmium, max 3ppm 3ppm Mercury, max 1ppm 1ppm

Bentonite for Oil/Gas Drilling

• Bentonite = montmorillonite clay mineral • 3 layer sheet silicate structure • Has negative charges within octahedral

layer structure and positive edge charges • Requires cations outside structure to

neutralize • Sodium bentonite disperses rapidly in water

Drilling Bentonite Properties 1000 metric ton units

• Na bentonite swells ~20 times dry volume • Na bentonite slurry viscosity thins under flow • At rest, bentonite sheets form house-of-cards

structure that suspends drill solids • Sheet structure seals well and protects formation

permeability • Ca bentonite = nonswelling poor dispersion no suspension properties useless for drilling

Bentonite Beneficiation

• Add Na2CO3 to increase Na/Ca ratio • Extrusion delamination • Polymers to improve viscosity and reduce

fluid loss • Grit removal • Mill type with or without flash drying and

air classification

USA Drilling Bentonite 1000 ton units

Year Production Exports Average $/ton 2005 945 120 $46 2006 1,030 76 $48 2007 912 204 $52 2008 954 149 $53 2009 587 105 $57 2010 (~750) 160 $59 2011 ~830 200 $60

API 13A Bentonite Specifications

Section 9 Section 10 Section 11 bentonite untreated OCMA 600rpm, min 30 30 YP/PV ratio, max 3 1.5 6 Dispersed PV, max 10 Filtrate Vol, max 15ml 12.5ml 16ml >75um Residue, max 4% 2.5%

Hydraulic Fracturing Sand

• Frac sands injected into pressure induced fractures within producing formation

• Pressure reduced • Carrier fluids removed • Remaining frac sand maintains fracture

gaps and increases permeability of formation for gas/oil

• Gas/oil recovery begins

Frac Sand Characteristics

• Rounded quartz grain formed from abrasive action

• Source = Glacial sands and river sands • Structural strength of grain maintained • Other bauxite and ceramic beads used at

greater depths, and pressures

Frac Sand Processing

• Shaker tables • Sieve/screen separation to size range • Acid treatment to remove carbonates • Magnetic separation

Frac Sand Technology

• New application for release of natural gas from shale

• In 2009, USA natural gas resources increased to 284 trillion ft3

• Demand for frac sand increasing since 2006

Industrial Sand & Gravel Consumption

• Frac sand is 41% of total production • Other drilling uses: - Well packing - Cementing • Proppant competition

– Bauxite – Ceramic beads

USA Frac Sand Consumption, million ton units

Year Fracturing $/ton 2006 4.21 $44 2007 5.26 $49 2008 7.39 $49 2009 6.53 $49 2010 12.1 $48 2011 16.0

Major Frac Sand Producers

• Unimin – Arkansas deposit and plant • US Silica – Illinois • Preferred Rocks of Genoa (entered in 2010) • LaFarge not in this market • Several smaller operations

API Frac Sand Specifications

• Sphericity >0.6 • Roundness >0.6 • Solubility in Acid 2% and 3% maximum • Silt Test clear of turbidity • Xray diffraction mineral composition • Crush Resistance:

Frac Sand Crush Resistance

6/12 mesh 2000psi 20% fines, max 8/16 mesh 3000psi 18% fines, max 12/20 mesh 3000psi 16% fines, max 16/30 mesh 3000psi 14% fines max 20/40 mesh 4000psi 14% fines max 30/50 mesh 4000psi 10% fines max 40/70 mesh 5000psi 8% fines max 70/140 mesh 5000PSI 6% fines max

Thanks to Sources

• T. Dolley at USGS for industrial sand • M. M. Miller at USGS for barite • R. Virta at USGS for bentonite and clays • USGS Annual Minerals Yearbooks • USGS Mineral Commodity Summaries