Bentonite supply and demand in

drilling
Suzanne Shaw
Senior Analyst
Roskill Information Services
Summary

 Overview of global bentonite supply and demand

 Bentonite supply and demand in drilling mud

 The role of bentonite in drilling mud

 Trends in the oilfield drilling industry

 Trends in energy demand

 Future supply and demand of bentonite

 Overview of global
bentonite supply and demand
Bentonite supply in 2014
• Global bentonite production of 17.51Mt
• plus an additional 3.65Mt of fuller’s earth
• USA and China are the largest producers

World: Production of bentonite by country, 2014 (%)

Others USA
24% 27%

Turkey
3%

Russia
3%

Mexico
5% China
Greece 23%
7% India
8%

Source: Roskill Bentonite: Global Industry Markets and Outlook, 12th edition 2015
Historical production of bentonite
• Increasing production in China and India
• Production in USA and Europe fairly steady in recent years

World: Production of bentonite by region, 2004 to 2014 (kt)

20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
NAFTA Asia Europe CIS Africa and Middle East South and Central America Oceania

Source: Roskill Bentonite: Global Industry Markets and Outlook, 12th edition 2015
Historical demand for bentonite
• Demand growing at 2%py - strongest in Asia and South America at 4-5%py
• North American demand much lower but still the largest consuming region

World: Demand for bentonite by region, 2004 to 2014 (kt)

25,000

20,000

15,000

10,000

5,000

0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Asia Europe North America Central and South America Africa and Middle East

Source: Roskill Bentonite: Global Industry Markets and Outlook, 12th edition 2015
Bentonite demand by application, 2014
• Global demand of around 20.43Mt plus an additional 5.30Mt for fuller’s earth
• Drilling mud is the fourth largest market, behind foundries, pet litter and IOP

World: Demand for bentonite by application, 2014 (%)

Industrial Agriculture Other

Absorbents 1% 5%
Foundry Sands
2%
Refining 34%
4%
Civil engineering
10%

Drilling Mud
11%

Pet litter
11%
Iron Ore
Pelletising
22%

Source: Roskill Bentonite: Global Industry Markets and Outlook, 12th edition 2015
Historical demand for bentonite by application
• Demand from drilling muds increased by 3-4%py over the last decade
• One of the largest growing end-uses

World: Demand for bentonite by end-use, 2004 to 2014 (kt)

25,000

20,000

15,000

10,000

5,000

0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Foundry Sands Iron Ore Pelletising Pet litter
Drilling Mud Civil engineering Other
Refining Industrial Absorbents Agriculture

Source: Roskill Bentonite: Global Industry Markets and Outlook, 12th edition 2015
Bentonite supply and demand in
drilling mud
Bentonite demand by application and region, 2014
• Bentonite demand varies widely with region
• Demand from the drilling market is largest in North America

World: Demand for bentonite and fuller’s earth by application and region,
2014

North America

Asia

Europe

Central and South America

0% 20% 40% 60% 80% 100%

Foundry Sands Pet litter Iron Ore Pelletising
Drilling Mud Civil engineering Refining
Industrial Absorbents Agriculture Other

Source: Roskill Bentonite: Global Industry Markets and Outlook, 12th edition 2015
Focus on North America
• Drilling consistently accounted for just over 20% of US bentonite consumption until recent
increases lifted its share to over 30%; this is expected to fall in the future
• The USA represents around a third of the global supply of bentonite
• Supply assured
• Drilling activity fallen off in 2015

USA: Demand for bentonite by end-use, 2004 to 2014 (kt)

6,000

5,000

4,000

3,000

2,000

1,000

Consumption in drilling mud Consumption in other applications

Bentonite production

Source: USGS
Focus on North America – USA bentonite production and exports

USA: Bentonite production and exports,

2004-2014 (kt) • The USA is the second-largest
1,600 6,000 exporter, accounting for 19% of
1,400 global bentonite exports – it was
5,000 overtaken by India for first time
1,200
in 2013

Production
4,000
1,000
Exports

800 3,000 • It accounts for 18% of world

600 bentonite consumption
2,000
400
1,000
200 • The USA consumes the majority
0 0 of what it produces – around
3.6Mt

Canada Japan Saudi Arabia • Rise in tight oil and gas

China Other US production
production from late 2000s

Source: GTA, Roskill

The role of bentonite in
drilling mud
Why is bentonite used in drilling?

 Cool and lubricate the drill-bit, tubing and rig

 Remove cuttings from the bottom of the well and

transport them to the surface

 Hold cuttings in suspension if drilling is halted

 Control subsurface pressure

 Seal the borehole by depositing low-permeability

filter cake on the walls of the well bore to prevent
Source: 3M
the loss of circulation fluids

 Stabilise the well bore without damaging the

formation
Specifications for drilling-grade bentonite
 Set by API, OCMA

API specification 13A for bentonite and allied clays, 18th edition August 2010
Bentonite
Viscometer dial reading @ 600rpm 30 minimum
Yield point/plastic viscosity ratio 3 maximum
Filtrate volume 15.0ml maximum
Residue >75µm 4.0% maximum mass fraction
OCMA bentonite
Viscometer dial reading @ 600rpm 30 minimum
Yield point/plastic viscosity ratio 6 maximum
Filtrate volume mm 16.0 maximum
Residue >75µm 2.5% maximum mass fraction
Non-treated bentonite
Yield point/plastic viscosity ratio 1.5 maximum
Dispersed plastic viscosity millipascal-seconds 10 minimum
Dispersed filtrate volume mm 12.5 maximum
Attapulgite and sepiolite
Viscometer dial reading @ 600rpm 30 minimum
Residue >75µm 8.0% maximum mass fraction
Moisture 16.0% maximum mass fraction

Source: Industrial Minerals

Where is bentonite used in drilling?
• Bentonite is mainly used in water-based drilling muds – easier to dispose of /more ‘natural’ –
used in most traditional wells

• Increasing use of oil-based muds in deeper wells - much smaller amounts of bentonite are
used in the form of organophilic clays

Water-based muds Oil-based muds Synthetic-based muds

Water/brine 76% Non-aqueous fluid 46% Dry gas
Baryte 14% Baryte 33% Mist
Clay/polymer 6% Brine 18% Foam
Other 4% Emulsifiers 2% Gasified mud
Gellants 1%

• Increasing drilling for unconventional oil and gas resources

• These may require alternative drilling products to be developed – increasing use of artificial
materials?
• Hectorite is an example of alternative natural product that may be used in harsher
conditions, at higher depth and temperature – current market is very small

Source: S&M Industrial Minerals

Trends in the oilfield drilling
industry
Global distribution of oil and gas production
World: Oil and gas production, 2013
(7.2Bnt oil equivalent)

South and
Central
America
7%
Africa Middle East
8% 26%

Asia Pacific
12%

North America Europe and

22% Eurasia
25%

Source: BP Statistical Review of World Energy, June 2014

Global production of oil and gas – North America and ROW

North America and ROW: Production of oil and gas, 2003 to 2013 (Mt oil
equivalent)
8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Oil (ROW) Oil (N. America) Natural gas (ROW) Natural gas (N. America)

Source: BP Statistical Review of World Energy, June 2014

Global rig count

World: Average monthly oil and natural gas rig count by region, 2000 to 2015 ytd
4,000 (number of rigs) 2,500

3,500
2,000
3,000

Bentonite consumption (kt)

2,500 1,500
Rig count

2,000

1,500 1,000

1,000
500
500

0 0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
ytd
USA Middle East South and Central America
Canada Asia Pacific Europe
Africa Bentonite consumption

Source: Baker Hughes

Notes: Mexico included in South and Central America; 2015 ytd Jan. to May
Focus on North America – oil and gas production
Year-on-year change in oil and gas production, 2004 to 2013 (%py)

7%
6%
5%
4%
3%
2%
1%
0%
-1%
-2%
-3%
-4%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

North America World

Source: BP Statistical Review of World Energy, June 2014

Focus on North America - US crude oil production
USA: Field production of crude oil, 1981 to 2013 (thousand barrels)

3,500,000

3,000,000

2,500,000

2,000,000

1,500,000

1,000,000

500,000

1998
1999
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997

2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Gulf Coast (PADD 3) Midwest (PADD 2) West Coast (PADD 5) Rocky Mountain (PADD 4) East Coast (PADD 1)

Source: US Energy Information Administration

Focus on North America – trends in tight oil consumption

Sources: US Energy Information Administration tight oil and shale gas production estimates, Canadian
National Energy Board
Focus on North America – increased horizontal drilling

USA: Average annual drilling rig activity by type, 2000 to 2015

1,400
1,200
1,000
800
600
400
200
0

Directional Horizontal Vertical

Sources: Baker Hughes

Focus on North America – increased horizontal drilling

USA: Average monthly rig count and consumption of bentonite in drilling mud, 2000
to 2013

2,500

2,000

1,500

1,000

500

Average monthly rig count Consumption of bentonite (kt)

Sources: Baker Hughes; USGS, Roskill estimates

Trends in energy demand
Global distribution of oil and gas consumption
World: Oil and gas consumption, 2013 (7.2Bnt oil equivalent)

South and
Central Africa
America 4%
6% Asia Pacific
Middle East 28%
11%

Europe and
Eurasia North America
25% 26%

Source: BP Statistical Review of World Energy, June 2014

Global consumption of primary energy
Global energy consumption has increased by 52% over the last 20 years and by 30% over the
last 10 years

World: Historical consumption of primary energy by type, 2003 to 2013 (Mt oil
equivalent)
14,000

12,000

10,000

8,000

6,000

4,000

2,000

0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Oil Natural gas Coal Nuclear Hydroelectricity Other renewables

Source: BP Statistical Review of World Energy, June 2014

Focus on North America – trends in oil/gas consumption

Oil and gas as a proportion of primary energy consumption, 2003 to 2013 (%)

70%

65%

60%

55%

50%

45%

40%

35%

30%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

World Asia North America

Source: BP Statistical Review of World Energy, June 2014

Future distribution of oil and gas consumption

World: Forecast consumption of primary

• Global energy consumption to rise by 37% energy by type
in total to 2035. Slower than in previous
decades – increasing energy efficiency.
• 96% of consumption growth will come from
emerging economies (more than half from
China and India).
• Consumption in mature economies of North
America and Europe forecast to grow slowly
and decline in the long-term.
• Fossil fuels (oil, natural gas and coal)
expected to account for 81% of demand by
2035.
• Natural gas - strongest growth in demand of
the fossil fuels at 1.9%py to 2035.
• Coal - weakest growth in demand of the
fossil fuels at 0.8%py to 2035.

Source: BP Energy Outlook 2035, January 2014

Significant energy production growth in India and China

• Overall global energy production is World: Forecast production of primary

forecast to grow at 1.5%py. energy by region, 1990-2035 Mnt oil equiv.

• Growth concentrated in non-OECD 30,000

countries, accounting for nearly 80%

of the volume increases. Fastest 25,000

growth in Asia-Pacific at 2.1% py

20,000

• Middle East and North America next

15,000
largest growth areas. North American
energy production will grow by 1%py 10,000
to 2035, and it is on the path to
achieve self-sufficiency by 2021. 5,000

• Growth in all regions except for 0

1990 1995 2000 2005 2010 2013 2015 2020 2025 2030 2035
Europe
OECD Non-OECD Europe FSU USA China India

Source: BP Energy Outlook 2035, January 2015

Future supply and demand of
bentonite
 Bentonite supply and demand in 2020

• Global production could rise at a rate World: Demand for bentonite by application,
of 4%py to reach 22.3Mt of bentonite 2020 (%)
and 4.2Mt of fuller’s earth by 2020.
Industrial Agriculture Other
• China is expected to become the Absorbents 1% 5% Foundry
2%
largest producer of bentonite Refining Sands
4% 35%
worldwide, overtaking the USA.
Pet litter
10%
• Global demand for bentonite
is forecast to reach 25.1Mt
plus an additional 6.1Mt for
fuller’s earth by 2020 Civil
engineering
10%
• Drilling mud could become
the third-largest application Drilling Mud
11% Iron Ore
Pelletising
22%

Source: Roskill Bentonite: Global Industry Markets and Outlook, 12th edition 2015
Demand for bentonite by application and region, 2020
• Drilling will continue to be an important market for bentonite in North America
• Consumption of bentonite in drilling will increase in Asia and South America

World: Demand for bentonite and fuller’s earth by application and region,
2020

Asia

N. America

Europe

C and S. America

0% 20% 40% 60% 80% 100%

Pet litter Foundry Sands Iron Ore Pelletising

Drilling Mud Civil engineering Agriculture
Industrial Absorbents Refining Other

Source: Roskill Bentonite: Global Industry Markets and Outlook, 12th edition 2015
Summary

• Global energy demand increasing at 1.4%py

• Growth in natural gas and oil still be strong. New exploration and production rigs will
increase demand for bentonite by ~3%py

• North America will continue to be the largest bentonite consuming region in drilling

• The jury is still out on the future of unconventional fields. This could drive changes in drilling
product specifications to adapt to harsher environments – bentonite may loose some ground
to alternative products

• Bentonite is still the best material for the job in most cases – relatively cheap, ‘natural’ and
consistent.
Are you facing major decisions
involving metals or minerals?

Roskill Consulting.
Approachable. Independent. Expert.

Contact Suzanne Shaw

suzanne@roskill.co.uk
Disclaimer

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