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A surge in the technique known as hydraulic fracturing, or fracking, to extract oil and natural gas from shale has created a whole new series of complexities for providers of transportation to the domestic energy market, Hudspeth said. "There are corners of the country seeing tremendous activity not seen in a generation, or ever," he said. What tends to get overlooked is the accompanying need for additional transportation services to support extended bills of material (BOMs).
Numerous commodities need to be delivered to well sites, not the least of which are millions of pounds of sand, carried in bulk hopper trailers by rail and then truck. Between 80 and 150 loads of sand might be required for a single fracking operation that runs from two to five days. "The cost of equipment is very high," he said. "The goal is to get in and out of the well quickly, then move to the next well." As a result, equipment and drivers need to be able to mobilize quickly.
Transportation networks are scrambling to catch up with demand, which is being met through a combination of "mom-and-pop" operations and equipment controlled by traditional oil field services companies. In addition, Hudspeth said, there's a ripple effect on other commodities that require the same kind of networks and equipment. The demand for hoppers, for example, threatens to create scarcity for movers of cement and water. The water used in fracking must also be taken away after the procedure is complete.
The situation gives rise to some major safety concerns. A typical well site will be located in a rural area that's difficult to access, Hudspeth said. To get there, trucks often must pass residences and livestock. Yet another issue is driver training, which must focus on activities that are specific to the delivery of commodities to a well site. In response, shippers are beginning to deploy techniques that are common to the movement of dry and reefer products, but less so in the energy sector, such as carrier scorecarding.
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Keywords: supply chain, supply chain management, global logistics, transportation management, energy supply chain, energy logistics, logistics management, supply chain planning
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