Since 2008, when the bottom fell out of the economy, the North American aggregates industry has been on a slow and steady climb back to profitability. With most signs pointing in a positive direction, the industry heads into 2015 with more optimism than at any time in nearly a decade. So, what’s on tap for the coming year? It kicks off this month with the announcement of the 2015 class of the Pit & Quarry Hall of Fame. You may have already read the news in our P&Q Weekly Report newsletter or on our website. You will also see it in the February issue of Pit & Quarry.
In March, Baltimore will be the site of the AGG1 Aggregates Academy & Expo and the National Stone, Sand & Gravel Association’s annual convention. Already, more than 130,000 sq. ft. of exhibit space has been reserved for AGG1 and the co-located World of Asphalt. (More about the events on page 54.)
At the end of May, current transportation funding expires, so we will watching the new Congress with the hope legislators will pass a substantial multi-year highway bill. And we’ll have our eye on the merger of Lafarge and Holcim this year to see how it affects operations in North America.
We’ll also be watching the fate of frac sand producers as OPEC makes an attempt to weaken the North American shale industry in what is amounting to a war for the global energy market. But it won’t be easy to derail the shale industry. CNN Money cites a report from the International Energy Agency: “Most producers in North Dakota’s Bakken formation, an area that’s been a key contributor to the shale revolution, can remain profitable even if oil falls to $42 per barrel.”
The CNN article says OPEC appears to be following its 1986 script, when Saudi Arabia ramped up production and sent prices tumbling. The strategy forced many oil drillers in Texas, Oklahoma and Louisiana out of business and allowed the Saudis to clinch more market share. But the article notes that the North American energy industry is more resilient this time around.
How will this affect frac sand producers? Aggregates industry consultant Alan Maio, a partner at Q4 Impact, told me, “I don’t think it will have any effect until 2016, as most large customers of the top five sand producers have a high percentage of their volume under contract. From what I’m hearing, the oil services companies haven’t changed their volume predictions for 2015.”
