Wednesday, April 23, 2014
Hydrochloric Acid Shortage Minimize

Update: 14-May-2012

According to ICIS, HCl prices remain high but stable, however demand is expected to increase from fracking use in the oil and gas industry.  To read more about use of HCl in the oil and gas industry, click here.


Update: April 2012 The Hydrochloric Acid shortage continues and inventories are not expected to recover until the third quarter of 2012. Prices are likely to remain on the higher end through the first half of 2012. However major distributers assure constant supply in the short to medium term due to high inventory levels.

Rx-360 has partnered with Beroe to publish a report that contains a detailed analysis of the Hydrochloric Acid Supply Chain. 

To view of download the report, click here.

 

Hydrochloric acid may be manufactured by several different processes, although over 90 percent of the Hydrochloric Acid produced in the U. S. is a byproduct of a chlorination reaction.  It seems the shortage is a result of decrease production and increasing demand. 

The slowing of the economy has decreased production leading to fewer chlorination byproducts, and a significant increase in demand from the oil and gas industry has resulted in a shortage of Hydrochloric Acid.  Large quantities of Technical Grade Hydrochloric Acid  (25% of the US supply) is now used in hydraulic “fracking”, and the use of "fracking" is expected to grown in popularity.

Man-made Hydraulic fracturing or fracking is the propagation of fractures in a rock layer caused by the presence of a pressurized fluid to release petroleum, natural gas, coal seam gas, or other substances for extraction.

The energy from the injection of a highly-pressurized fluid, such as water, creates new channels in the rock which can increase the extraction rates and ultimate recovery of fossil fuels. The fracture width is typically maintained after the injection by introducing a proppant into the injected fluid. Proppant is a material, such as grains of sand, ceramic, or other particulates, that prevent the fractures from closing when the injection is stopped.

The shortage has occurred with Technical Grade Hydrochloric Acid. The tight supply of Technical Grade Hydrochloric Acid, and the steady demand from the oil and gas industry is beginning to impact supply of High Purity Hydrochloric Acid.
 

Several suppliers have reported that they are being allocated Hydrochloric Acid, and in turn are allocating Hydrochloric Acid to their customers.  There have also been reports of recent specification failures of Hydrochloric Acid at incoming inspection.  

Firms who use Hydrochloric Acid should consider taking the following actions: 

1. Contact your supplier of Hydrochloric Acid and assure their ability to supply

 

2. Assess and understand the Hydrochloric Acid supply chain for vulnerabilities that could cause supply interruptions and product authentication concerns

 

3. Secure a supply of Hydrochloric Acid from a trusted supplier

 

4. Conduct full analytical testing upon receipt of Hydrochloric Acid

Rx-360 is continuing to monitor the situation and will publish updates as necessary.  

  

Update Minimize

Fracking and its Impact on Specialty Chemicals

Lately, the Specialty Chemicals Market has been experiencing tightness in supply on a few key raw materials. Some of this tightness is due to the slump in the auto and construction industries, but recently, we have seen shortages caused by increased demand from the Oil & Gas market, specifically those materials that are used in hydraulic fracturing (fracking).
 

Overview of Fracking

Fracking is a process that forces liquids through the ground at high pressures to create small fractures in a rock formation, ultimately releasing oil and/or gas for collection. Fracking is not a new process, and its recent resurgence is expected to generate considerable growth in natural gas production. But with this growth comes increased demand for more raw materials.
 

Materials Used in Fracking

Approximately 99.5% of the materials used in fracking are water (90%) and sand (9.5%). When you consider that fracked wells use about 1,000,000 gallons of water per well - times 500,000 or so active wells - that remaining 0.5% of “other materials” can have a sizeable impact on our market.

As part of our MOR™ (Management of Risk) program, we have researched the materials used in fracking and the specialty chemicals market to determine which products could be at risk (see the table below). Keep in mind that many fracking materials are proprietary making exact information difficult to obtain; however, we will continue to research this market and further refine the product list and associated risk.

 

Overlapping Products Used in Fracking & Specialty Chemical Industries
Acetic Acid Ethylene Glycol Potassium Chloride2
Ammonium Persulfate Formic Acid Potassium Hydroxide2
Borate Salts Glutaraldehyde Quaternary Ammonium Chloride5
Boric Acid1 Guar Gum4, 3 Sodium Carbonate
2-Butoxyethanol Hydrochloric Acid4 Sodium Chloride
Calcium Chloride Isopropanol Sodium Erythorbate
Choline Chloride Methanol Sodium Hydroxide
Citric Acid2, 3 Polysaccharide Blend3 Tetrakis Hydroxymethyl-Phosphonium Sulfate5
Ethanol2 Potassium Carbonate2 Tetramethyl Ammonium Chloride

1Materials used in nuclear cleanup: tight market due to Japan disaster.

2Materials also influenced by fertilizer demand.

3Market tightness due to weak sugar crop in Brazil.

4Current market tightness due to fracking demand.

5Materials used in various cleaning chemistries as a biocide.


Risk Mitigation

In November, D&I released a MOR™ notification to MOR™ participating customers concerning tightness in the hydrochloric acid market caused by reduced supply in the market and increased demand by Oil & Gas. In the last few weeks, guar gum has also been impacted. Because of these impacts, we are now monitoring the overlapping materials used in the Oil & Gas and Specialty Chemicals market.


Next Steps

MOR™ Participants: Should conditions deteriorate on any of these materials, D&I will notify you with suggested risk mitigation steps prior to any public communication.

Non-MOR™ Participants: Consider subscribing to our blog where we will post updates on developing market conditions.


For More Information

For more information on Doe & Ingalls' MOR™ program, sign-up for our free webinar where we will explain how the program works. To learn how you can register as a participant of the MOR™ program, contact your sales rep, or email us.


References

http://www.energyfromshale.org/hydraulic-fracturing-fluid

http://fracfocus.org/water-protection/drilling-usage

http://www.eia.gov/forecasts/aeo/MT_liquidfuels.cfm#biofuels

  

 

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