The recent growth in successful drilling of oil and natural gas wells through hydraulic fracturing and horizontal drilling in the United States has created a great demand for one of the key ingredients in the process — sand. Raw frac sand is used in the hydraulic fracturing process, commonly known as fracking, to help crack shale formations. The sand acts as a proppant, propping open the cracks, which allow drilling companies to extract more fossil fuels from wells.
Raw frac sand may be used as a proppant in all but the highest pressure and temperature drilling environments, and has been employed in nearly all major U.S. oil and natural gas producing basins. The sand that has proven the most useful in the process comes from sand mines in the St. Peter Sandstone formation of Wisconsin, Minnesota and Illinois, though Wisconsin has seen the largest mining boom of the three states. Hi-Crush Partners LP, a domestic producer and supplier of sand, gets all of its raw frac sand from its mines in western Wisconsin.
“Our reserves consist of Northern White sand, which is highly valued as a preferred proppant because it exceeds all API specifications,” said Hi-Crush CFO Laura Fulton. “Northern White is known for its high crush strength, turbidity, roundness and sphericity, and monocrystalline grain structure. Northern White has historically experienced the greatest market demand relative to supply, due both to its superior physical characteristics and the fact it is a limited resource that exists predominately in Wisconsin and other limited parts of the upper Midwest region of the United States.”
The past few years have seen unprecedented growth in the demand for sand. North American demand for proppant has increased rapidly, growing at an average annual rate of 33.5 percent from 2007 to 2012, with total annual sales of $4.7 billion in 2012, according to The Freedonia Group Inc.
At the beginning of 2014, U.S. Silica, a sand mining company, received 60 percent of its revenue and 70 percent of its profits from the sale of frac sand.
“We’ve actually doubled our revenue and tripled our profits in the past three years because of the boom in the oil and gas part of the business,” Michael Lawson, U.S. Silica’s director of investor relations and corporate communications, said. “We’ll double our (production) capacity in oil and gas by the end of this year from 2012 and we have plans on the drawing board for another new mine in Wisconsin.”
Wisconsin has seen industrial sand mining grow from just five mines and five processing plants in 2010 to more than 100 mines and processing facilities operating today. In 2012, several companies banded together to form the Wisconsin Industrial Sand Association (WISA) in order to pro-mote safe and responsible mining standards.
“Industrial sand mining has been part of Wisconsin — and a solid job-creator and contributor to the state economy — for more than a century,” said Rich Budinger, president of WISA. “It is part of a national policy to achieve energy independence.”
Railroads have also benefited from the sand boom as rail has emerged as the leading method of transporting frac sand to drilling sites like the Marcellus Shale of Pennsylvania, the Bakken formation in North Dakota and the Permian Basin in West Texas and New Mexico.
The BNSF Railroad recently partnered with U.S. Silica on a new storage facility near San Antonio to store and distribute sand to South Texas sites. The facility is located in the 280-acre BNSF Logistics Center San Antonio. It’s a 15,000-ton storage facility that contains a two-mile rail loop, which will allow BNSF to deliver 100-car unit trains carrying 10,000 tons of sand.
To learn more about news and developments on fracking and shale plays, visit BICMagazine.com. For more information on the WISA, visit www.wisconsinsand.org or call (715) 497-3749.
