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Wednesday, February 05, 2020

Delay for (FRAC) sand mine project in Manitoba has some celebrating

National News | February 5, 2020 by Brittany Hobson 


Members of a peace camp opposing the development of a silica sand mine project in Manitoba are celebrating a “small victory” after the company in charge of the project announced it has been delayed due to financial reasons.

“It was a relief. I figured at least we’re going to have some more time to educate more people,” Marcel Hardisty, one of the camp organizers, told APTN News by phone Wednesday.

Hardisty is part of a group from Hollow Water First Nation, located approximately 200 km northeast of Winnipeg, who set up Camp Morningstar last winter after exploration began on the project.

The group had concerns about the environmental impacts on the community including the destruction of a community trap line.

Canadian Premium Sand Inc. (CPS) is in charge of the project called Wanipigow Sand, which was approved last year to develop an industrial plant to extract silica sand from Hollow Water and the neighbouring communities of Seymourville and Manigotagan.

The project was slated to begin production last year but CPS now expects to begin production in early 2022.

The company had to start from scratch after the original design for the plant was deemed too costly.

“This set us back. We lost a year,” said Glenn Leroux, president and chief executive officer for CPS.

The company expected the project to cost $120 million but the old design came with a price tag of $220 million.

Leroux says the group is lining up investors and financing this year with the hopes of beginning construction next year.

“We spent the last several months going back into the project basically with a white sheet of paper so we had all the approvals and everything in place, and still have those in place, but if you can’t get the money, you can’t get the project,” he said.

“It’s hard to raise money if you’re connected to the oil and gas business because the oil and gas business is in a downturn and it’s under fire from every single environmentalist on the planet.”

Leroux believes the delay will not affect the final outcome of the project.

The Manitoba government approved the environmental licence necessary for the project in May 2019.

The company may have to apply for an extension as well as make changes to their environmental licence based off the new plant design.

This could result in new consultations processes because of the change.

However, part of the reason Camp Morningstar was created was because the group didn’t believe a proper consultation took place.

“It was show and tell by the company to gain support,” said Hardisty.

Hollow Water chief and council along with CPS hosted meetings with men, women, youth and elder groups.

Community leadership is in favour of the project.

Chief Larry Barker told APTN last year the industry would bring much needed jobs to his community.

Hardisty says in the meantime Camp Morningstar will remain up and running for educational purposes.

“We’re not shutting it down,” he said.

“We may have an international Sundance, for sure a land-based learning centre for young people to learn about the environment to learn about what’s in this forest, what’s beneath the silica sand.”

Camp Morningstar will be hosting a celebration for it’s one-year anniversary on Feb 15.

Brittany Hobson

Opinion Analysis

Frac-sand project faces major hurdles, competition

By: Don Sullivan Posted: 12/11/2019 

Artist’s rendering of the planned Canadian Premium Sand facility at Hollow Water.

The problem facing Canadian Premium Sand (CPS) is that it needs to overcome some big internal hurdles, and if successful, then face stiff competition from existing frac-sand operations should it succeeds in getting its mine fully operational near Hollow Water First Nation.

Northern White Sand (NWS), the gold standard in frac sand, is mined mostly in Wisconsin, and like many frac-sand operators is an end-to-end user-integrated operation.

The term "end-to-end user-integrated operations" means these operations in Wisconsin have long established large-volume contracts for their frac sand with various oil and gas fracking operations in all of the major oil and gas fields throughout North America, including Canada.

These Wisconsin frac-sand companies, in addition to owning the frac-sand mines and processing facilities, also tend to own or have a financial stake in all of the necessary on- and off-loading transportation infrastructure to move their frac sand as close as possible to their markets, such as the rail transload facilities needed to load and unload their frac sand.

In addition, these Wisconsin companies have long-term contracts with major rail companies, such as CN and CP, to pick up and deliver their frac sand to their rail transload facilities located near their markets, they then contract out last-mile truck services to deliver their frac sand to the wellhead.

These highly integrated operations are designed to deliver frac sand to their markets at the lowest price possible. Many of these frac-sand companies in Wisconsin have been doing this for a decade or more, and are able to undercut freight on board (FOB) prices for their frac sand when a new startup operation, such as Canadian Premium Sand, wants to enter the market.

In short, these Wisconsin frac-sand operations have captured nearly 70 per cent of the North American market by offering a superior product and by being fully integrated end-to-end user frac-sand operations.

However, given the downturn in oil and gas prices, and the need for oil and gas fracking operations to reduce their costs, all these operations are now looking to acquire frac sand that is situated much closer to where they operate in the major North American oil and gas fields. This is what is precisely occurring now, both in Canada and the U.S., and this drive to find "in-basin frac sand deposits" has created an oversupply of frac sand, which in turn has further reduced the market and price for NWS.

For CPS, the closest markets, should they become operational, would be Bakken oil and gas fields located in Saskatchewan, North Dakota, Montana and a small part of southwestern Manitoba.

Given the distance between CPS’s proposed frac-sand mine and a major rail transportation hub — almost 200 km away in Winnipeg — and with no frac-sand transload facilities currently located in Winnipeg (and with the possibility of no processing facility to be constructed at its frac-sand mine site location as part of their as-yet-incomplete cost-optimization measures), these will be some major hurdles that CPS will need to overcome, first and foremost, to even get in the game.

CPS will also need to secure frac-sand contracts beforehand from fracking operations in North America’s oil and gas fields, then secure offload rail transload facilities located near their potential markets. CPS will have to do all this at a very competitive price against frac-sand operations in Wisconsin that are currently operating in these areas and which have a huge cost-savings advantage over CPS, precisely because they are fully integrated operations.

No doubt, CPS is trying to figure out how to overcome these many hurdles as it prepares its cost-optimization report, but it is fairly evident that CPS will need to radically alter its original plans, for which it has already received government of Manitoba approval.

Don Sullivan is a landscape photographer, former director of the Boreal Forest Network and served as special adviser to the government of Manitoba on the Pimachiowin Aki UNESCO World Heritage site portfolio. He is a research affiliate with the Canadian Centre for Policy Alternatives Manitoba and a Queen Golden Jubilee medal recipient.

Fast Facts: Canadian Premium Sand Frac Sand Mining Project About to Hit a Financial Wall

AUTHOR(S):
Don Sullivan
SEPTEMBER 17, 2019

There are important new developments regarding the proposed frac sand operation adjacent to Hollow Water First Nation on the east side of Lake Winnipeg that will have a large impact on the entire project.

Canadian Premium Sand (CPS), a publicly traded and Canadian-owned mining company, received an Environmental License from the Government of Manitoba in early 2019, which allowed CPS to proceed with the construction phase of a frac sand processing facility and the mining of 1 million tons per year of frac sand on a designated community trap line adjacent to Hollow Water First Nation.


The processed frac sand would then be transported by trucks, from the mine location to Winnipeg, where it would be transferred to rail to be used in fracking operations for the oil and gas industry throughout North America.

CPS estimates that the capital cost of getting this project up and running would be around $300 - $335 million, and the project would require approximately an additional $29 million per year in operating costs thereafter.

In addition, CPS has yet to estimate the unforeseen costs as a result of having to meet the 98 conditions in the Environmental License they received from the government of Manitoba. These costs are substantial but unknown.

In a 2018 Investors Presentation, CPS based the economic viability and profit margins of its entire frac sand project on selling the frac sand they produced at between $150 a ton (low end) and $250 a ton (high end). The problem for CPS is that, based on the most recent market analysis done by a number of market research firms, frac sand is now selling for less than $30 a ton in North America.

Moody’s, one of the largest bond rating agencies, has stated that the market price for frac sand will not change in the foreseeable future as there is a large over supply of frac sand in the North American market which is driving down prices. At this price CPS cannot even cover of its annual operating costs of $30 million, let alone begin paying down the start-up cost of $300 - $335 million associated with getting the whole project up and running.

Obviously CPS has seen the writing on the wall as they have not made a Final Investment Decision to proceed with construction phase of the project and recently announced they were undertaking a Cost Optimization Study to reduce their total expenditures related to the project. This study is to be completed by September of 2019.

Some insight as to where CPS is headed with this Cost Optimization Study was obtained recently from local community members in Hollow Water First Nation, where there was an information meeting held with a select few people in the first week of September. At this information meeting it was learned that CPS is now toying with the idea of barging wet unprocessed sand to Gimli, on the west side of Lake Winnipeg, where an operating rail line exists.

If this new plan proves to be accurate, then this would be an entirely new project, and one that is radically different from what CPS proposed to the government of Manitoba back in early 2019, and for which CPS received an Environmental License for.
It would also mean that the 127 jobs that CPS stated would be created in the region would disappear, as they would not be constructing a processing facility at the proposed mine location, nor would they be transporting processed frac sand via truck from the mine site to market.
In short, it would be my understanding that CPS would need to submit a whole new Environmental Act Proposal, and obtain a new Environmental License from the government of Manitoba, as this new plan is far more than just an alteration to the company’s existing Environmental License.

Further, there would be far more federal government oversight required should CPS choose to barge unprocessed frac sand via Lake Winnipeg to Gimli, as this body of water is federally designated navigable waters. The Department of Transportation would also need to approve the barges needed to ship this unprocessed frac sand to Gimli. The Coast Guard I am sure would have some regulatory interest, as well as the federal Department of Fisheries and Oceans.

Finally, there are a whole host of new potential adverse impacts that would need to be identified and addressed before CPS could move forward with this new plan. At the end of the day, CPS is unlikely to be able to reduce their costs to the level needed to make a profit, given the current low market price for frac sand, even if this new plan were to be in place and approved.

Clearly, CPS has some very tough decisions to make in the months ahead.

Sources of Information
Canadian Premium Sand Environmental Act Proposal Canadian Premium Sand NI 43-101 Technical Report – May, 2019
Environment Act Licence No. 3285 – May 6, 2019 Claim Post Resources Inc. Investor Presentation – March 2018
Forbes - Shale Bonanza Subsiding For U.S. Frac Sand Miners As Low Prices Bite - 
Gaurav Sharma – May 29, 2019
Canadian Premium Sand News Release – July 18, 2019

ATTACHED DOCUMENTS:
Canadian_Frac_Sand_About_to_Hit_financial_Wall.pdf
385.92 KB

by Don Sullivan
November 22, 2018 Manitoba Offic

by Michael Bradfield
October 27, 2014 Nova Scotia Office


INTEREST IN THE MANIGOTAGAN DEPOSIT

Silica Frac Sand

Gossan holds a significant royalty on a high-quality frac sand deposit, owned and operated by Canadian Premium Sand Inc. (TSX.V:CPS), known as the Seymourville Frac Sand Project. Canadian Premium Sand is currently in the process of developing this permitted project into production in the near-term.

Under the terms of the royalty agreement, semi-annual advance royalty payments of $50,000 each are payable as of June 18th and December 18th of each year. All frac sand produced, sold and paid from the nine Manigotagan leases (formerly held by Gossan) is subject to a $1.00 per tonne production royalty payable quarterly and all other products are subject to a $0.50 per tonne production royalty. Although the royalty is solely payable on production from the Manigotagan leases, the agreement also provides for a minimum production royalty from both the Manigotagan and the adjacent Seymourville properties held by Canadian Premium Sand, based on their relative mining reserves of frac sand at the time of permitting. Canadian Premium Sand can acquire one-half of Gossan’s production royalty interest for $1.5 million during the three years after commencing commercial production and $2 million for a further two years.

On June 12, 2019, Canadian Premium Sand announced the results of a new Preliminary Feasibility Study (PFS); a new Mineral Resource; and that it had obtained all necessary approvals from the Hollow Water First Nation, the local community of Seymourville and the Province of Manitoba. Additionally the Canadian Minister of Environment and Climate Change confirmed that the project would not require environmental assessment under federal law CEAA 2012.

As part of the PFS, and based on an additional 93-hole sonic drill program, a NI 43-101 Mineral Resource was defined at 49.6 million tonnes of Measured & Indicated and 97.3 million tonnes of Inferred. Additionally, a 30.6 million tonne Proven & Probable Mineral Reserve was defined.

The PFS estimated a 25-year mine life; initial capex of $220 million and sustaining capital of $110-$115 million; an after-tax net present value of $220 million (discounted at 8%); and an after-tax internal rate of return of 20.2%. The mining method is expected to be a conventional open pit quarry employing typical truck and excavator operations. The project is expected to produce an average of 1.2 million tonnes of product per year. Subsequently, On July 18, 2019, Canadian Premium Sand announced that it was conducting a comprehensive capital optimization review to identify cost reductions to capex outlined in the PFS and a scaled market-entry strategy. Refer to SEDAR or www.canadianpremiumsand.com/ .

The Manigotagan Property is located 170 km northeast of Winnipeg where Gossan held a silica sand deposit at Seymourville, on the east shore of Lake Winnipeg, directly across from Black Island where silica sand was extensively quarried prior to the island becoming a Provincial Park.

On June 25, 2013, Gossan entered into a purchase and sale agreement to vend its Manigotagan Silica Frac Sand Project, comprised of 9 quarry leases located near Seymourville Manitoba, to Claim Post Resources Inc., now Canadian Premium Sand Inc. Gossan had been seeking a joint-venture partner or a purchaser for the Project since completing a marketing study in late 2010. In 2012, Claim Post acquired the adjacent Seymourville Property to the south and announced plans to develop a frac sand operation. A consolidation of the two properties should improve the viability of the project.

To June 18, 2019, Canadian Premium Sand, formerly Claim Post Resources, has made total property payments of $1.28 million cash; 4 million shares of Claim Post (subsequently sold); and advance royalty payments of $400,000. The next advance royalty payment of $50,000 is due December 18, 2019.

In 2006, Gossan conducted a 23-hole core and auger drill program at the 306-hectare Manigotagan Silica Property and in 2008 followed up with a 26-hole sonic drill program. These drill programs were successful in outlining two material zones of high-purity silica sand with limited overburden.

In 2009, Gossan commenced testing the silica sand for use as frac sand proppant, resulting in consistent ISO 9K Proppant ratings for various mesh fractions. Pressure conductivity tests were also conducted with positive results.

In 2010, Gossan retained a marketing consultant for the project. The marketing study established that the highest and best use of Manigotagan silica sand is as frac sand proppant used in the oil and gas sector. The study provided an analysis of 17 companies producing frac sand proppant in North America and an assessment of candidates suitable for a strategic partnership in Gossan’s Project.

Grains of sand: How fracking has caused a surge in demand for one of the world's oldest commodities
Of the million-odd horizontal wells in North America, most use frac sand that comes from a rich seam of 'white silica' sand that cuts beneath the Great Lakes region in Wisconsin


A fracking operation in Alberta.

CALGARY — Even the smallest grain of sand is of consequence to Brad Thomson, the CEO of Calgary-based Source Energy Services Canada LP.

The company is one of Canada’s largest suppliers of frac sand, a material that is injected into wells during hydraulic fracturing operations to prop open rock fractures and allow oil and gas to flow to the surface.

Of the million-odd horizontal wells scattered around North America, most use frac sand that comes from a rich seam of so-called “white silica” sand that cuts beneath the Great Lakes region in Wisconsin. It is prized for the superior quality of its grains, which are said to more effectively lodge themselves into shale rock fractures, allowing producers to boost well performance.

“You need sand that’s very round, very hard and very pure,” says Thomson, whose company owns a mine and processing facility in Wisconsin. “There’s sand everywhere in North America but generally it lacks one of those three characteristics.”

Thomson estimates Wisconsin white silica, sometimes called “Ottawa White,” supplies roughly 90 per cent of the Canadian frac sand market. And all of that sand is meets tight specifications: Samples are sent to far-off laboratories to be tested for crush resistance, consistency, shape and the concentration levels of quartz minerals, all according to specific American Petroleum Institute (API) standards.

Demand for frac sand is expected to double in the coming years as oil producers focus on wringing as much oil and gas as possible from every well. That has kicked off a race among sand suppliers to take advantage, either by developing new mines in Canada or by shipping product from the U.S. Midwest.

Todd Korol for National Post

While chronically low commodity prices have reduced drilling activity in recent years, producers continue to squeeze tremendous volumes of oil and gas from hard rock formations. That has placed more attention on the market for frac sand, which is expected to total between US$850 and US$950 million in Canada in 2017, according to IHS Markit.





In the Montney Formation of northern B.C. and Alberta, producers in 2013 used an average of around 500 pounds of sand per foot of a horizontal well; today that number is closer to 1,000 pounds, according to research by RS Energy Group. And wells are getting longer: horizontal wells now stretch around 9,000 feet, compared to 5,000 feet just four years ago.

It’s had a massive impact. Today, a producer in the Montney might blast 100 rail cars of sand down a single well.

Analysts expect that figure to increase, particularly in the Montney, as companies begin to pump higher volumes of sand, led by producers like Encana Corp. and Seven Generations Energy Ltd.

“So far the more aggressive operators they’re well above that 1,000 pound-per-foot average, and I think eventually everyone will end up settling where they are,” says Trevor Goertzen, an analyst with RS Energy Group in Calgary.

As a result of the increased demand, U.S. and Canadian suppliers are vying for market share by expanding their rail and terminal infrastructure into highly sophisticated networks.

“Without exception everybody is going through a phase of growth,” Source Energy Services’ Thomson says.

The company plans to spend $25 million this year to build three rail terminals in Edson and Fox Creek, Alta., and Taylor, B.C., to receive rail shipments from Wisconsin. The company plans to nearly double its capacity in coming years to 3.8 million tonnes per year.

Major U.S. suppliers are also expanding. U.S. Silica Holdings Inc. expects to expand its sand flows into several prolific shale basins by 68 per cent in 2017, while Emerge Energy Services LP, a Texas- based company, continues to expand its sand division by building out its rail infrastructure and loading facilities.

“The entire objective is to get volumes into the basin in a location that minimizes your trucking distances,” he says.
Without exception everybody is going through a phase of growth

Analysts are now wondering whether Canada’s rail infrastructure can absorb the addition demand as capacity is running near its peak. “This doesn’t yet appear to be a critical issue, but with every 1-2 wells effectively drawing a unit train of sand, it seems reasonable to question whether there is the logistical network to properly facilitate all of this,” Raymond James analysts wrote in a recent research note.

More worryingly, low commodity prices have gutted the stock valuations of some companies in recent months. Source Energy completed an initial public offering in April at $10.50 per share, well below the $17 to $20 range it had floated earlier in the year.

“Financial markets have been soft,” Thomson says. In early June its stock was trading around the $8.50 range.

U.S. sand suppliers have also seen their market valuations shrink. U.S. Silica’s stock price is down roughly 36 per cent from its February levels, while Emerge Energy Services LP’s stock price has been halved over the same period.

Meanwhile, several would-be Canadian suppliers have proposed building sand mines in Western Canada as a way to undercut Wisconsin-based shippers. 
Julia Schmalz/Bloomberg

Edmonton-based Athabasca Minerals Inc. and Saskatoon-based Hanson Lake Sands Corp. both aim to secure a hold in the frac sand market from their gravel and nickel mines, respectively. Vancouver-based Stikine Energy Corp. had proposed two sand mines in B.C., but the company wasn’t able to raise the necessary capital and currently appears to be nearing insolvency. Calgary’s LaPrairie Group operates a sand mine near Grande Prairie, Alta.

Often times, domestic mines are not well connected to rail infrastructure, and depend on high-cost trucking services to deliver their product. Others have grains that are angular rather than spherical, which can cause the sand to bond with water molecules and plug a well.

“Everybody thinks they’ve got frac sand,” says Ray Newton, a co-founder of Canadian Sandtech Inc., a private company with a sizeable stake in an upstart sand mine near Saskatoon.

Proving the quality of sand is crucial. Canadian Sandtech recently sent several five-gallon pails of sand to a laboratory in Langley, B.C. to test the mettle of its sand particles. It also completed in-house tests, Newton says.

Newton, like other domestic suppliers, disputes whether silica sand is necessary to boost well returns. His local mix of “Bradley Brown” is equal in quality, he argues.

For now, however, producers seem willing to pay a premium for Ottawa White, even as they face pressure to continuously reduce well costs.

Producers in the northern reaches of B.C., for example, might pay $150 per tonne for frac sand, while companies in the southern Montney might pay $75. Domestic supplies cost a fraction of that price.

For now, Thomson is confident firms in Western Canada will continue to transport their sand over thousands of kilometres rather than risk using inferior grains of sand.

“There’s certainly a bit of a quality trade-off.”

MORE

How a ‘meteoric rise in demand’ has triggered a frack sand race


The Permian Basin: An existential threat to Canadian oil as war on cost heats up


Public fracking: Source Energy said to seek C$250 million in Toronto IPO

Thursday, February 06, 2020

ALBERTA BASED FRAC SAND COMPANY WORKING IN SHALE OIL PLAYS IN THE DUVANERY AND MONETY BASINS 

News Releases

Athabasca Minerals Inc. – Amended Annual Information Form

January 10, 2020
January 10th, 2020 - EDMONTON, ALBERTA. Athabasca Minerals Inc. (“AMI” or the “Corporation”) – TSX Venture symbol: ‘AMI’ – announces that it has filed an amended and restated Annual Information Form (AIF) on SEDAR on January 10th, 2020.
The AIF changes from the original (filed October 3rd, 2019) incorporate updates from the Technical Report for the White Rabbit Property, associated with AMI’s Duvernay Premium Domestic Sand Project (filed on SEDAR November 6th, 2019), as well as mineral reserves and mineral resource estimates for AMI’s Richardson and Firebag Projects (filed on SEDAR December 11th, 2019).
About Athabasca Minerals Inc. (AMI)
Athabasca Minerals Inc. (www.athabascaminerals.com) is an integrated group of companies focused on the aggregates and industrial minerals sectors, including resource development, aggregates marketing and midstream supply-logistics solutions. Business activities include aggregate production, sales and royalties from corporate-owned pits, management services of third-party pits, acquisitions of sand and gravel operations, and new venture development. Athabasca Minerals Inc. is the parent company of Aggregates Marketing Inc. (www.aggregatesmarketing.com) – a midstream technology-based business using its proprietary RockchainTM digital platform, associated algorithm and QA/QC services to provide cost-effective integrated supply /delivery solutions of industrial minerals to industry, and the construction sector. It is also the parent company of AMI Silica Inc. (www.amisilica.com) – a subsidiary positioning to become a leading supplier of premium domestic in-basin sand with regional deposits in Alberta and NE British Columbia. It is the joint venture owner of the Montney In-Basin and Duvernay Basin Frac Sand Projects. Additionally, the Corporation has industrial mineral leases, such as those supporting AMI’s Richardson Quarry Project, that are strategically positioned for future development in industrial regions with historically and consistently high demand for aggregates.

Demand For Frac Sand Expands Into Canada





The frac sand boom continues to gain traction in the Southern United States, where drillers are pumping more sand than ever down wells in an effort to boost crude oil and natural gas production. Drilling is ramping up North of the border as well, as Canada looks to maximize production of the commodities.

In addition to increased demand for the proppant sand, the industry is seeing a shift in the type of sand used in the hydraulic fracturing process, with premium sand becoming less favorable.

DEMAND FOR FRAC SAND

On the back of recovering oil prices, drillers are again ramping up production, particularly in Texas. The lone star state’s Permian Basin is experiencing a flurry of activity as drillers look to obtain as much oil and gas as possible from hydraulic fracturing operations. This has again brought rise to a frac sand boom reminiscent of the one experienced in previous years. The proppant sand is pumped down wells to hold open fractures so oil and/or natural gas can freely flow out for collection.

Similarly, a race for oil and gas in Canada, particularly in Alberta’s Duvernay shale formation, which many are comparing to the prized Eagle Ford, is also causing a push for more sand.

A recent article states that Source Energy Services, a supplier bringing sand to Canada’s Western Sedimentary Basin, saw sales increase by 255% in 2017’s third quarter compared to 2016.

According to Global News, the Alberta Energy Regulator states that in 2016, 82 wells were fracked in the first two months of the year; that number jumped to 140 wells for the same time period in 2017.

In addition to increasing demand for oil and natural gas prompting a requirement for more sand, demand for sand is further being pushed as a result of the amount of sand employed per well. Longer wells are requiring more sand, and drillers have discovered that increasing the amount of sand per well increases hydrocarbon recovery. In a report by Carbo Ceramics, the company cites a staggering statistic from ProppantIQ: since 2011, the amount of sand used per well in the US has increased by 210%.

While the industry looks to accrue frac sand in an effort to meet demand, the difference between this frac sand boom and the last, is that producers are looking to reduce costs by opting for lesser quality, more local sand sources.


THE SHIFT AWAY FROM PREMIUM SAND

In the initial frac sand boom, producers used premium quality sand, steering away from the cheaper “brown” sands, despite their closer proximity and lower cost. The Midwest, and in particular, Wisconsin, is home to North America’s most high quality frac sand, known as “Northern White,” or “Ottawa White.” The sand is embedded in sandstone deposits in the western portion of the state, as well as in northern Minnesota.

The Upper Midwest’s sand is prized for its purity, high crush strength, spherical shape, grain size, and uniformity – all key characteristics in utilizing sand as a proppant in the hydraulic fracturing process.

A recent industry downturn forced producers to cut costs wherever possible and this prompted them to experiment with lower quality sands in their operations. The industry found the sand, despite being of a lesser quality, was sufficient for their fracking needs in most cases. Now that the industry has recovered, the low quality sand trend continues to progress as producers use the brown, or “Brady” sands in place of premium sand in an effort to maximize economic returns.

While Texas previously relied primarily on the Midwest to satiate its demand for sand, frac sand mines have been cropping up closer to home, mitigating the high shipping costs that come along with Midwestern sand. Shipping costs are a key consideration in the procurement of frac sand – before Texas began mining its own sand, shipping costs from the Midwest could account for up to 65% of the sand’s cost, according to IHS Markit.

And while this has slowed some of the demand from the South, activity north of the border is helping to provide an outlet for the region’s high quality sand, but some suspect that the demand may not last for long.

A similar trend as was seen in Texas is emerging in Canada; Canada’s shale formations currently rely on high quality sand from the Midwest, but like Texas, more local sand mines are beginning to crop up in the region, supplying a lower quality, but sufficient product at a reduced cost.

According to Global News, Mike Burvill, VP of Fracturing at STEP Energy Services, a Canada-based provider, says that prior to the industry downturn, only about 10% of frac sand was coming from their domestic operations, but in recent times, domestically supplied frac sand has grown closer to ⅓ of what they supply.


NORTHERN WHITE FRAC SAND STILL HOLDS VALUE

Despite the growing trend toward employing lower cost sands, Northern White sand still accounts for around ⅔ of the market share. This premium sand boasts a higher crush strength than sands mined in Texas, allowing it to be used in deeper wells. Furthermore, some producers still prefer the higher quality sand over the lesser cost types.

Some people in the industry are skeptical that brown sand will overtake Northern White, due to its lesser quality. Additionally, some worry that insufficient infrastructure exists near the Permian to meet the demanding logistical requirements of the booming industry, which could result in some producers hauling in sand from the Midwest. Other industry experts anticipate that demand will be so high, Texas will still require sand from the Midwest on top of what it can supply itself. Kent Syverson, industry consultant and chairman of UW-Eau Claire’s Geology department told Wisconsin State Journal: “If the projections hold true and they’re going to need so terribly much sand, then they will need the Texas sand and all of the other sand as well, or they won’t be able to meet demand.”

And while Northern White is primarily mined in Wisconsin and Minnesota, the premium sand can also be found (albeit in much smaller formations), in Missouri and Arkansas. These deposits are geographically closer to the drilling activity, and could provide a source of Northern White with a reduced price tag on shipping to the region. 


FRAC SAND MINING & PROCESSING

Mining frac sand is similar to many mining operations, where overburden is removed to expose the sandstone formation, after which the sand may be extracted, sometimes with the assistance of blasting to break up the sandstone.

Upon extraction, frac sand goes through a series of steps to optimize its properties for use in the hydraulic fracturing process. The sand is first crushed to reduce the particle size of the sand into grains. The sand is then washed in order to remove impurities such as clay and silt that would ultimately clog wells in a hydraulic fracturing setting, defeating the purpose of the proppant sand.

After washing, sand is typically stockpiled for storage. During stockpiling, the sand will naturally reduce in water content. However, a further drying step is required in order to bring sand down to the desired moisture level. This also helps to reduce shipping costs, as less water is being transported. Drying is most commonly carried out using a rotary drum dryer – an industrial drying system known for its robust build, reliability, and tolerance of variations in feedstock.

In addition to the shift away from Northern White sand, the industry has also been switching low-cost dryers out with higher quality systems. Dryer systems designed with the unique challenges frac sand can present have proven to offer a better processing solution, boasting reduced carryover and dust, improved product integrity, engineered customizations, and increased reliability.


CONCLUSION

Despite a shift from premium Northern White sand to “brown” sands, the frac sand industry is showing signs of growth and optimism in the wake of recovering oil prices, and as drillers increase the amount of sand they use per well.

And while local sources of sand provide a greater economic return, premium Northern White sand still holds a valuable place in the market, allowing deeper wells to be fracked than what brown sands can tolerate.

FEECO is a preferred provider of rotary dryers to the frac sand industry. Our rotary dryers are designed around the unique challenges that frac sand can present in order to provide the most efficient and long lasting solution possible. We can also supply an array of material handling equipment to support the process. For more information on our frac sand capabilities, visit our frac sand page, or contact us today!

Huge increase in Canadian frac sand deliveries boosts Source results

By Deborah Jaremko Nov. 13, 2017

Image: Joey Podlubny/JWN

Increased drilling activity in the Montney, Duvernay and Deep Basin plays in Western Canada is driving significantly improved financial performance for Source Energy Services.

The company, which delivers Source White frac sand to the Western Canada Sedimentary Basin from Wisconsin, reported a 255 percent increase in sand sales in the third quarter of 2017 compared to the previous year.
The company sold 510,446 metric tonnes of sand in the third quarter of 2017, compared to 157,210 metric tons in the third quarter of 2016.

This generated $62.2 million in sand revenue in the third quarter of 2017, up from $19.1 million in the third quarter of 2016, contributing to Source’s 2017 third quarter net income of $3.0 million, compared to a a net loss of $12.3 million in the previous year period.

“Average Canadian well completion sand intensities continue to lag the average US well completion sand intensities; however, the Canadian average is rising as US style completions are being gradually adopted by Canadian exploration and production companies,” Source said in its earnings statement.

“Provided that commodity prices remain at similar levels to what they are today, and that exploration and production companies continue with their previously announced capital plans, significant improvement in sand sales compared to 2016 is expected to continue through the remainder of 2017. Source also expects that activity levels and sand intensity levels will continue to rise in 2018.”

The company has also “taken critical steps behind the scenes to meet growing proppant requirements,” noted CEO Brad Thomson. This includes the recent purchase of the company’s third Northern White Wisconsin mine and processing facility.

“As an organization, it's important that we continue to expand our ability to produce and distribute more northern white proppant,” Thomson said.

“Standing still is not an option."

Wednesday, February 05, 2020

How Fracking’s Appetite for Sand Is Devouring Rural Communities






PHOTO ESSAY / FIELD NOTES

How Fracking’s Appetite for Sand Is Devouring Rural Communities

Small towns in western Wisconsin are being divided by a little-known mining boom. An anthropologist who lives in the region set out to understand why.



THOMAS W. PEARSON / 4 MAY 2018

View Slideshow1 of 8 Photos

Thomas W. Pearson is a professor of cultural anthropology 
 at the University of Wisconsin, Stout.

“Do you want to see the mine?” asks Harlan*.

“Of course,” I reply.

He fetches his boots. We head outside with his wife Edith and follow a row of fledgling soybeans as we stroll across a few acres of farmland.

It’s June 2014, and I’m in Dovre, a rural community in western Wisconsin where farm fields hug tree-covered hills and cattle graze lazily in the afternoon sun. A wooden 19th-century Lutheran church sits at the center of town, along with a one-room town hall.

Harlan and Edith spent most of their lives as dairy farmers in this once tight-knit community, just the two of them and around 40 cows. As we walk, they reminisce proudly about a life rooted in hard work and strong communal ties. Their view of community includes neighbors, but also something more, a commitment to reciprocity that entails a give-and-take between people, animals, and the land.

“We took care of the cows,” says Harlan, “and the cows took care of us.”

They speak fondly about the lifetime of labor they invested in their farm, putting up the barn, the silos, the shed, the milk house. They talk about maintaining the soil and managing the woods. Each hill, each of the surrounding farms, has its own story.

But now sand mines are erasing those stories—“putting the land blank,” as Harlan says.

Nearing retirement in the early 2000s, Harlan and Edith sold much of their property to another farmer and then built a house on a hill nearby, where they could look out at the land they passed on to its next steward. For people like Harlan and Edith, you don’t actually own land. You just care for it until you move on, a cycle they assumed would continue. Several years into their retirement, however, the other farmer sold the land to an out-of-state mining company and then left town.

We reach the end of the field and push through some brush, emerging at the edge of the mine—a 20-foot drop into a flat moonscape that covers about 120 acres, half of it curving around a hill and out of view. Harlan looks grief-stricken as he stares intently into the massive pit containing a unique treasure: pure silica sand. An excavator scoops loads of it into a dump truck.

The land erased. A community frayed.

Much of Harlan and Edith’s former farm in Dovre, Wisconsin, has been ripped open by sand mining. Another mine cuts into a distant hillside. Thomas W. Pearson

“Well, let’s put it this way,” explains Harlan. “Everybody that I know around here that sold to the companies moved out, so that should tell you something. And right now, we’re surrounded, and it just makes you feel like they’re squeezing you too.”

The mining company has visited Harlan and Edith several times, but they prefer to hold out. “They keep coming over,” says Edith, “and we’d both like to see it farmland. But how long can we hang on?”

Phrases such as “being squeezed” and “hanging on” allow Harlan and Edith to express a type of loss, even trauma, that is both individual and collective. They watch mining transform the landscape and feel alienated from a place that had once anchored their sense of belonging. They are not alone.

Over the past decade, the push to expand fossil fuel production in the United States through techniques such as hydraulic fracturing (commonly known as “fracking”) has reverberated far beyond oil rigs, pipeline routes, and petrochemical complexes, pulsating unexpectedly through communities like Dovre.

Fracking involves drilling deep into underground rock formations to release natural gas or oil. And it uses sand. Lots of it. Sand props open tiny fissures in the bedrock that are created during the fracking process, but not just any sand will do the trick. Highly pure silica sand is especially strong and resists being crushed thousands of feet below the surface. Round sand grains of consistent size allow hydrocarbons to flow more efficiently through the well.

During fracking, just one well can require several thousand tons of sand. To put that into perspective, industry forecasters predict that more than 100,000 new wells will be drilled over the next several years in Texas’ Permian Basin alone. But fracking is not limited to Texas. The last decade has also seen drilling booms in Pennsylvania, North Dakota, Wyoming, and Alberta, Canada, among other places. Last year nearly 70 million tons of sand was mined in the United States for fracking.


Landsat images from a USGS/NASA time-lapse video show landscape changes over the past 32 years in Barron County, Wisconsin. Several frac sand operations are clustered in Dovre (on the right), with two in neighboring Sioux Creek to the west (left). Landsat/Google Earth Engine

It just so happens that Wisconsin is uniquely positioned to supply fracking rigs in North America with some of the best sand available. Deposits of silica sand that formed some 500 million years ago are concentrated in western Wisconsin. While sand mining also occurs in Texas, Arizona, and Oklahoma, among other states, Wisconsin’s sand is especially prized for its strength and purity. It’s also close to the surface, so digging it up is relatively easy. And profitable.

Since the mid-2000s, the growth of fracking has powered a booming frac sand mining industry in western Wisconsin, with hundreds of operations cropping up across the countryside. Some people clearly benefit. Lucky landowners may see a windfall in selling or leasing to a mining company, and others may find work at mining operations or by driving trucks. Down the line, consumers enjoy cheap fuel. But at what cost?

Frac sand mining disturbs once-quiet rural towns with blasting, truck traffic, and industrial activity. It generates new environmental health risks, and some residents worry they are being exposed to microscopic particles of airborne silica dust that cause silicosis, an often fatal lung disease. Mining also flattens hills and alters scenic bluffs, disrupting not only a picturesque rural landscape but places that are deeply meaningful to people. Perhaps most significantly, the mining boom in communities like Dovre has fomented division and distrust as residents grapple with a resource boom that brings both wealth and ruin.

As the geographer Gavin Bridge writes, “One person’s discovery is another’s dispossession.”

Dispossessing people of resources or land is one thing, but the disruption caused by mining is commonly expressed as a form of assault—a kind of violence not only against the land but also people’s relationship to it. Residents often struggle to convey their emotions, drawing on images of invasion, illness, and violence, describing the hills as “cut open,” “disfigured,” or “scarred” by mining.

“No one invited the pillaging hordes of Genghis Khan either,” stated one resident in a letter to a local newspaper as she compared out-of-state mining companies to an occupying army. “Let’s prevent the cancer,” wrote another man, relating mining development to the metastatic spread of a life-threatening disease. “When they mine this, they rape this land,” a man told me, his gaze as empty as the pit being dug across the street from his home. “I don’t know any other word to use but ‘rape.’”

It’s not just retired farmers like Harlan and Edith who grapple with this kind of dispossession. Joe and Nancy moved to rural Wisconsin after living their entire lives in a large Midwestern city. The countryside represented a sanctuary from the grind of city life. Several years after they resettled, however, a neighbor sold a parcel of his land to a mining company. When the mining started, says Joe, it was like getting “smacked in the head with a two-by-four.” In addition to noise and dust, the pain was psychological, he remembers.

“The first year they were here,” Joe explains, “I’d go out and walk the dog in the morning … then I’d go sit in the basement. I felt like I was in solitary confinement, in jail. I mean, I gained weight anyhow [after retirement], but I gained a hell of a lot more weight then. I didn’t want to go outside. I was sick. Your life is just turned upside down.”

Lisa’s life has similarly been upended. Several years ago, two frac sand mines opened within a mile of her home and the barn where she boards several horses. Trucks drive by all day long. A processing plant runs nonstop, loading railcars by the thousands. She constantly deals with noise, vibration, and interrupted sleep, and she worries about possible exposure to silica dust. 


Frac sand mining generates silica dust, which is hazardous when inhaled. One of the mines in Dovre has installed air monitors in an effort to measure the impacts of mining on air quality. Thomas W. Pearson

“I’m told I’m exaggerating when I talk about the sheer dust that’s in this house. In the middle of summer, I can start [dusting] on this end,” she says, pointing to one side of her kitchen, “and by the time I get to this end, there’s a layer of dust on that countertop.”

She has complained to local officials, but as she sees it, they support the mining industry and have downplayed her concerns. “I’m told that I’m lying, that I’m ridiculous, I’m exaggerating, I’m crazy.”

Uncertainty about the nature of the dust is a source of continual anxiety. She feels unsafe in her own home and abandoned by elected officials who she thought were supposed to watch out for her well-being.

To truly grasp her experience, it is important to recognize that people in the United States associate certain meanings with the idea of home: order, security, investment in the future. Mining may disrupt these expectations, leaving people feeling extremely vulnerable, if not hopeless.

It makes sense that some residents would prefer to live elsewhere. But leaving one’s home also brings with it complex feelings of loss.

Heidi says she felt “empty” when she sold her 19th-century farmhouse after multiple mining operations were permitted to operate nearby. The mining company bought her out so that they wouldn’t have to deal with a frustrated, outspoken resident living next door. She accepted the buyout, her one chance to “escape,” as she puts it. Others were “not so lucky,” she says, and she struggles with the guilt of leaving friends and neighbors behind.

While she elected to sell her home to a mining company, it was a choice constrained by circumstance. Her only other option, she says, would have been “to grow old and be some pissy old woman sitting in the middle of the driveway yelling at all the trucks going by. I would’ve lost everything.”

“It was very traumatizing,” explains Heidi, “to feel pushed out of our home.”

The sense of loss expressed by some people in Dovre extends beyond feelings of vulnerability or the trauma of relocation. Like Harlan and Edith, some lose connections to places that were once immensely meaningful—that were part of them.

Marleen has lived in Dovre for over 80 years. Historical photos of her farm, which her grandfather purchased in the 1890s, hang prominently in her living room. When hosting visitors, she likes to thumb through photo albums and tell stories about family and friends. Her husband was laid to rest in the cemetery next to the Lutheran church.

For Marleen, memories are etched into the rural landscape, a genealogy of kin ties linking past to present. These ties transcend her own property. Her grandfather, for instance, worked on a different farm up the road when he first arrived from Norway—one that is now being mined for sand. In fact, it is the same land that Harlan and Edith once owned.

“And I [had] always felt good about that,” Marleen says mournfully, “that I could go up there, and I was actually stepping on soil where my grandfather lived.”

Now the hills are gone, replaced by “pyramids of sand,” she scoffs. These are the stockpiles at a nearby processing plant being readied for shipment to the drilling rigs.

The land has been put blank.

“It’s sickening, just sickening,” says Marleen. “I wish it was like a dream, and you wake up and it was a dream and it didn’t happen.”

*Pseudonyms have been used to protect the identities of people interviewed in Dovre over the course of the author’s research.

**Editors’ note: People and places described in this essay are further discussed in the author’s book, When the Hills Are Gone: Frac Sand Mining and the Struggle for Community, and his article in the journal Human Organization.  


In west-central Wisconsin, frac sand mines struggle amid industry changes
Eric Lindquist Eau Claire Leader-Telegram
Jun 25, 2019

In this Thursday, Dec. 15, 2011 photo, frac sand destined for the oil and

 gas fields piles up at the EOG Resources Inc. processing plant in Chippewa Falls.
STEVE KARNOWSKI, Associated Press
A relatively new industry to west-central Wisconsin continues to give area residents a modern-day lesson in old-fashioned economics.

The regional frac sand industry, which burst onto the scene about a decade ago, already has gone through at least two boom-and-bust cycles and is in the midst of a bust that has idled several mines.

The source of the strife comes down to the basic economic principle of supply and demand.

While demand for frac sand remains strong, the supply has expanded dramatically in the last two years as energy companies have built a number of mines closer to oilfields in Texas and Oklahoma, said UW-Eau Claire geology professor Kent Syverson, who also serves as a consultant for the frac sand industry. The production expansion has pushed down prices and enabled oil drillers to get local sand for less than the cost of shipping it from Wisconsin.

“I think the boom years are over,” Syverson said, referring to the period from 2011 to 2014 when sand mines, processing plants and rail loading facilities were popping up like dandelions across west-central Wisconsin to take advantage of the region’s silica sand reserves.

“The capital has already been invested in Wisconsin,” he said, “so the real questions are how much of this sand will still be needed and how many of these higher-cost operations that are taken off line will never come back.”

Ryan Carbrey, senior vice president of shale research for Rystad Energy in Houston, said Upper Midwest mines with annual capacity of 18 million tons of frac sand already have been idled this year, and his company projects that total will rise to 30 million tons by the end of 2019.

The vast majority of the mines producing what is known in the industry as northern white sand are in Wisconsin, with the bulk of them located within 80 miles of Eau Claire.

The sand is used in hydraulic fracturing — the drilling technique commonly known as fracking that involves injecting a mixture of sand, water and chemicals deep into underground wells to force oil and natural gas to the surface. The sand is used to hold open fissures in the rock.

Northern white sand, prized by fracking companies for its coarseness, durability and the spherical shape of its grains, is still considered to be of higher quality than the sand produced in Texas, but producers have developed methods to make the lower-quality sand work well enough to satisfy their needs, Carbrey said.

Most importantly to producers, the Texas sand is cheaper because it doesn’t have to be shipped more than 1,000 miles by rail from Wisconsin to the oil and gas deposits in the Permian Basin in west Texas and southeast New Mexico.

“Wisconsin sand is still the Cadillac of all sands, but these companies in the Permian Basin are saying they can make more money driving a Chevy than a Cadillac,” Syverson said. “It’s all a cost-benefit analysis.”

As a result, demand has dramatically increased for the finer grain sand, which is much more plentiful than northern white sand, he said.

“The demand structure has flipped, and it appears right now that the industry has moved toward the finer sand and it’s hard to imagine that going back,” Syverson said. “It was just kind of mind-blowing to have this seismic shift from coarser to finer grain sand in just a couple years.”

All of this is important, Carbrey said, because the Permian Basin accounts for about half of the nation’s shale energy production. He added that the relatively new west Texas mines already have the capacity to produce more than 70 million tons of frac sand per year.

Region hit hard

The impact of the demand shift is evident across west-central Wisconsin, with once-booming sand mining and processing facilities sitting dormant.

Superior Silica Sands has idled three of its five frac sand mines in Chippewa and Barron counties, said Sharon Macek, the company’s manager of mine planning and industrial relations in Wisconsin. Superior Silica is still producing sand at a mine near Chetek and one in the Barron County town of Arland, and its dry plant near Barron is fully operational.

Emerge Energy Services, which owns Superior Silica, entered into a debt restructuring deal with its lenders in April, so company officials can’t comment further on operations at this time, Macek said.

Covia, created by a merger of Fairmount Santrol and Unimin, announced in a filing with the Securities and Exchange Commission that it was idling operations in Maiden Rock as well as several mines across the country.

A company spokesman also confirmed Covia has reduced production at its mine in Menomonie.

Hi-Crush idled its Whitehall frac sand production facility in September but then announced early this year it was resuming operations at the Whitehall mine and halting production at its facility in Augusta. The Houston-based company said its Augusta workforce would be moving to the Whitehall plant, which is about 30 miles away.

The decisions were based on increased demand from oil and gas industry customers, predominantly in the Northeast, that are more efficiently served by Hi-Crush’s Blair and Whitehall facilities located on the Canadian National Railway, CEO Robert Rasmus said in a news release. Hi-Crush was the first sand company to establish a mine in the Permian Basin.
A company spokesman said Hi-Crush mines in Blair, Whitehall and Wyeville are fully operational and that the firm’s Wisconsin employment is down about 9 percent this year, with about about half of the decline resulting from attrition.

The Augusta facility remains dormant, Mayor Delton Thorson said Thursday.

“They’ve got a lot of investment here, so it’s hard to imagine this shutdown will be permanent, but if they have sand sources closer to the oil fields, you can understand why they would go there to get it,” Thorson said. “My guess is that sooner or later the wheel will spin back to here.”

Outlook unclear

Samir Nangia, director of energy consulting at analytics firm IHS Markit, told Wisconsin Public Radio last month that as much as 75 percent of Wisconsin sand mines might need to be closed temporarily or even permanently. Nangia couldn’t be reached last week for further comment.

Carbrey offered a glimmer of hope for Wisconsin frac sand producers by pointing out that other major shale energy deposits in North Dakota and Pennsylvania continue to rely on northern white sand.

“In those regions, there’s not really much good local sand,” he said.

Despite the major shift to using sand found closer to oil fields, the long-term outlook is unclear because the finer sand leads to wells in which production declines faster than those using northern white sand.

“It is cheaper, but it doesn’t produce as high quality of a well,” Carbrey said. “No one really know yet if in-basin sands provide positive economic value. We really don’t know how it will all shake out.”

Frac Sand Mining
SIERRA CLUB WISCONSIN

Hydraulic fracturing, or “fracking,” is the controversial practice of extracting fossil fuels from hard-to-reach shale deposits. In this process, fossil fuel corporations force these underground shale rock formations to crack and split open by blasting them with a mixture of highly pressurized water, high quality sands, and toxic substances, unleashing massive quantities of natural gas and oil. The sand helps to prop these fissures open so the fossil fuels can be released and captured. As a result, waste material often seeps into groundwater, or is collected and then injected back into the ground using waste disposal wells. While not a new development, the amount of fracking has dramatically accelerated in recent years.

This process pollutes our air and water and can even lead to induced earthquakes and flammable tap water (check out this video of a woman taking a match to her kitchen faucet). It also unleashes methane, a greenhouse gas that is 30 times as potent as carbon dioxide, into the atmosphere — contributing to climate change and reinforcing our dependence on fossil fuels, delaying the urgently necessary transition to renewable energy sources. Luckily, Wisconsin doesn’t have any known natural gas deposits, so we have been spared from the immediate harms of fracking. But our state does have an indirect — yet important — connection to this destructive industry…

What is frac sand mining?

Western Wisconsin has beautiful rolling hills and scenic bluffs that stretch from the banks of the Mississippi River into the central part of our state. Beyond their aesthetic appeal and intrinsic value, they facilitate hiking and other recreational activities as well as provide habitats for many species of native flora and fauna. But for the fracking industry, these bluffs are important for just one thing — high quality sand.

Fracking requires a steady supply of special silica sand with grains of ideal size, shape, strength, and purity — called frac sand. And fracking necessitates enormous quantities of it; in fact, each natural gas or oil well uses millions of pounds of this sand in its lifetime. Because so much sand is needed, frac sand mining — the process of extracting the sand from the earth — has developed to satisfy the surging demand.

In a lot of places, this sand is rare. Unfortunately for us, the majestic bluffs that have enhanced the beauty of our state’s western landscape for millennia contain the ideal type of sand needed for fracking. And the fossil fuel industry and mining corporations have figured it out.

The Sand Rush


The boom in natural gas and fracking has triggered a subsequent “sand rush” in western Wisconsin, causing mining corporations to scramble to supply natural gas wells with a necessary ingredient. Wisconsin now has 128 industrial sand facilities, including mines, processing plants, and rail load-outs.

To extract this sand, mining companies use open pit and hilltop removal mining, which destroys landscapes, poisons our environment, and harms quality of life. Enormous tracts of land are cleared of all greenery, and then the “overburden” — which is what miners call all of the soil and life that exists above whatever mineral they are extracting — is excavated using heavy machinery and explosives. And as the name suggests, hilltop removal mining involves literally destroying entire hills and bluffs.

Because the sand is actually in rock form, it must be pulverized and then washed, to remove any impurities. The waste materials are then collected in vast pools of sludge, while the purified frac sand is stored in large piles awaiting transportation to natural gas and oil wells.
Why is frac sand mining bad for Wisconsin?

1) It’s environmentally destructive. Frac sand mining requires clearing land of forests, grasslands, meadows, and wetlands, eliminating valuable ecosystems and habitats. But it also generates alarming levels of air and water pollution. The mining process, especially the excavation and pulverization steps, release silica dust — a known carcinogen that causes lung cancer — into the air. Long term low level exposure can also cause silicosis, which is debilitating, incurable, and often fatal, as well as other respiratory diseases, meaning miners and people living near the mines are at risk. In one study, 79 percent of air samples at frac sand sites revealed levels of silica dust over the exposure limit, and a third were so high that most respirators wouldn’t be capable of removing it
from the air. But it’s not just the air — water is affected too. These mines contaminate local waterways with toxic substances like heavy metals and polyacrylamide, and there have been several cases of waste liquid spills, including one that released 10 million gallons of waste into tributaries of the Trempealeau River — leading to dangerous levels of heavy metals in the water. Additionally, frac sand mining requires immense quantities of water, contributing to water overuse and waste. In fact, just one mine can demand up to 2 million gallons of water a day. Finally, these mines increase noise and light pollution; some residents in Trempealeau County said they can’t even open their windows due to “constant noise and light.”

2) It enables fracking. As previously discussed, fracking for natural gas and oil is incredibly detrimental to the environment and generates a litany of social ills — from poisoning our air and water with harmful pollutants and carcinogens to exacerbating climate change to even inducing earthquakes. Basically, there is no safe amount of fracking, and the practice needs to come to an immediate halt if we want to protect both local communities and the planet as a whole. Because frac sand mining provides the necessary ingredients that fuel this destructive process, these frac sands mines act as accomplices to the fossil fuel industry and help perpetuate this unjust and degrading system.

3) It leads to volatile boom-and-bust cycles that spell disaster for local economies. At first, frac sand mines might appear to be beneficial to the economy, as they hire workers and generate economic activity. But this activity is unsustainable and often disconnected with the rest of the local economy, meaning much of the money generated through the mining process does little to benefit Wisconsin’s communities and makes the economy less diversified and more vulnerable to the wild fluctuations of the sand market. And the uncertain and unstable jobs that are actually provided make up just a small fraction of the total employment in the region and can actually displace more sustainable and socially beneficial jobs. Plus, technological improvements mean less and
less workers are hired as the years go on, and more profits are hoarded by the executives and corporations that own the mines. And the boom years are often short-lived; already, Wisconsin frac sand mines are going idle or bankrupt and laying off workers as the market becomes oversaturated with too much sand. More profitable mines selling cheaper sand closer to oil and gas wells are also opening up in Texas and New Mexico, outcompeting these Wisconsin mines and causing their market share to plummet. Regardless of the competition, frac sands mining, because it relies on depleting the earth’s finite resources, is inevitably unsustainable and inescapably a short-term endeavor. And this isn’t the first downturn for the nascent industry — 2016 also saw mine closures and layoffs. What this means is that frac sand jobs are notoriously insecure and precarious: once the mine folds, the jobs disappear and all that remains is the environmental devastation, the harmful health consequences, the higher carbon emissions, and the deep scars on Wisconsin’s landscape.
What can we do to stop frac sand mining?

Local activists are turning people out to public hearings, questioning the mining companies and educating people in the area about the dangers that exist, and they’ve had some success in preventing some of the harms that these mines inflict on the state. Unfortunately, however, once one mine is stopped, the companies just pop up with a new mine in the next town over, evading laws and exploiting new localities inexperienced at dealing with these manipulative mining corporations.

The one action that has had some success in blocking new frac sand mines are moratoriums. Towns, cities, and counties have established short-term moratoriums in order to better study the impacts of mining proposals. As expected, though, sand mine companies have actively fought against these moratoriums. For example, High Country Sand sued Eau Claire County after the county established a moratorium on the company’s proposed mine. Worse, in the last days of the legislative session, the legislature passed 2011 Wisconsin Act 144. The law makes it far more difficult for cities, towns, and villages to establish development moratorium ordinances, effectively blocking local communities from creating moratoriums.

Therefore, we need to enact a statewide moratorium on new frac sand mines in Wisconsin, at least until the state conducts a comprehensive study of the impacts, and we need stronger regulations to protect public health, local communities, and sensitive habitats from the degradation that results from the rapid proliferation of these inherently unsustainable mines.

The mining companies claim they are bringing jobs into the area, and we do need jobs. But these are insecure and short-term jobs that only employ a small fraction of the population. There are better ways to create real, sustainable jobs.

If you’d like to help us in our fight against these frac sand mining companies and protect Wisconsin, please volunteer with us!



The Permian Rush Is Creating A Frac Sand Shortage 


By Julianne Geiger - Jul 18, 2018 OILPRICE

The ‘mega-frac’ is turning the typically annoying sand of West Texas into the new gold, and the oil and gas land rush on the Permian Basin has now extended into the dry, gritty sand that only a year ago few would have given a second thought.

While most are busy watching all land grabs by oil and gas producers in the Permian, much less attention has been paid to the secondary land rush for the sandy wasteland that could ease some of the bottlenecks for producers who need frac sand to make anything happen.

Now as some herald a new phase of deal-making and consolidation following the Permian oil and gas land rush, the same may end up happening for all those frac sand producers who have followed them there.

As many as 23 new frac sand mines are being developed in West Texas this year, according to reports cited by Bloomberg.

Why Texas, And How Much Frac Sand Do We Really Need?


The process of hydraulic fracturing involves injecting highly pressurized water into a well and then pouring sand into it in order to keep the tiny fractures created by the water blast open. After that, the holes are widened to allow the crude to ooze out of the shale rock. The more fractures created in a rock, the more oil and gas producers will get out of it. That notion of well completion intensity is driving increasing sand usage per well.

It’s all put the frack sand subsector very much on investor radar as a backdoor into the lucrative shale business. So much so, in fact, that some have even started referring to the frac sand situation as “proppant-geddon”.

So the answer to ‘why Texas’ is a simple one: Frac sand producers follow the oil producers, and they’re descending on the Permian. And until the run on Texas sand, producers were largely dependent on expensive ‘white sand’ mined in Wisconsin and Minnesota. The brown sand of Texas is cheaper. And when it’s right in your backyard, producers save a bundle.

It’s cheaper because it’s easier to mine. Wisconsin’s sand is locked up in sandstone, while Texas’ is just hanging out in big dunes. That’s where the lower price comes into play.Related: The Best And Worst Oil Price Predictions

Of course, it’s bad news for Wisconsin, which won’t like the competition that ends up driving frac sand prices down. The run on Texas is a big one:

“The costs are really low of producing this sand and of course they’re putting up too many mines, which basically means that they could sell that sand for as little as $30 a ton,” Wisconsin Public Radio quoted IHS oilfield services expert Samir Nangia as saying.

Producers love it because, according to Nangia, it costs up to $60 a ton just to ship Wisconsin frac sand to Texas by rail.

"These Permian mines are going to take market share away from the Midwest mines but what is also true is that they cannot take away 100 percent of the market share," said Nangia. "If I had to cap it, I would cap it at 50 percent."

It doesn’t necessarily mean that Wisconsin is out of this game, because all sands aren’t equal. The cheese state’s white sand is stronger and lets producers drill deeper and wells produce longer. But according to Nangia, some producers have already been cutting it with the cheaper Texas sand to make it go further.

This Is Frac Sand Boom 2.0

All in all, the ‘mega frac’ is a brilliant price driver for specialty frac sand, which cost about $25 per ton last year, but has been known to hit $70 per ton when supplies are short. And while this is a mouthwatering price for investors, it’s not traded like a commodity, so getting in on it means buying equity in producers themselves.

There aren’t that many public frac sand companies to choose from, either, and this is a pretty consolidated market, led for the most part by U.S. Silica, Fairmount Santrol, and Hi-Crush Partners LP, which together corner over 45 percent of market share.

And according to a new Market Study Report, the global frac sand market is expected to grow at a CAGR of around 14.7 percent over the next five years, reaching $6.7 billion in 2023, up from around $2.9 billion last year.Related: Record Oil Production Doesn’t Free U.S. From Global Market

For anyone betting on oil, frac sand shouldn’t be far behind—but it hasn’t always followed the same pattern. It went bust in a bad way in 2014 when oil did, and saw a revival in 2016—before oil prices responded upwards. That’s because producers started increasing the size of wells (bigger fracs), even if the number of wells wasn’t going anywhere. So, in 2016, the new frac sand boom preceded an oil rebound.

And look to Texas, because the frac sand mining set-up is about to get even easier. Kinder Morgan is planning a new gas pipeline to West Texas that will ease a major bottleneck for oil and gas producers. That heralds yet another uptick in frac sand demand once it’s up and running as slated in 2019. The $1.75-billion line will connect the Permian to eastern Texas and is scheduled to begin operations in October next year.

Right now, prices for natural gas that pipeline bottlenecks have trapped in the Permian are lower than pretty much any other major American hub. Output may be booming, but prices are down 30 percent from a year ago because it’s all trapped.

Once the bottlenecks are sorted out, we’ll see Frac Sand Boom 3.0, and it’s going to be all about Texas.

By Julianne Geiger for Oilprice.com






SEE https://plawiuk.blogspot.com/search?q=FRAC

SEE https://plawiuk.blogspot.com/search?q=FRACKING

SEE https://plawiuk.blogspot.com/search?q=SAND

SEE https://plawiuk.blogspot.com/search?q=FRAC+SAND