EAU CLAIRE, WI – After more than a decade of alternating boom and bust cycles, the regional frac sands industry appears to be stabilizing – at least for the time being.
That’s the assessment of UW-Eau Claire Claire professor of geology Kent Severson, who also serves as a consultant for the frac sand industry.
“It’s now adjusted to a different base level,” Severson said. “Now I would say it’s kind of a balancing act.”
While the industry is not expected to return to what it was in 2011 to 2014 when new mines and plants such as dandelions appeared across western central Wisconsin to take advantage of the region’s silica sand reserves, Severson said. The surviving facilities seem to have found reliable markets for their sand, including some that have turned to production for other industries such as glassmaking.
Wisconsin mines needed to find alternative destinations to ship their sand to to replace the giant market that had mostly evaporated when energy companies built a number of sand mines near Texas oil fields, O’Clear Leader Telegram reports.
Expansion of production lowered prices and enabled oil drillers to source local sand for less than it would cost to ship it from Wisconsin, forcing many fracking sand companies to stop or stop Wisconsin operations in recent years. Syverson estimated that less than half of the frac sand facilities built in the area – primarily the lowest-cost producers – are still viable.
However, the free fall has stopped, and the northern Wisconsin-produced white sand market is boosting again, said Brandon Savsky, senior research analyst at IHS Markit.
The annual production capacity of northern white sand has increased from about 12 million tons in early 2020 to 21 million tons today, an increase of nearly 75%, Savesky said, noting that Wisconsin remains the country’s second sand shipping company after Texas.
“Demand for sand is definitely up across America, and northern white sand has probably been more stable than native sand for the past year,” Savsky said.
While some Wisconsin sand is shipped by rail to Texas again in response to truck driver shortages that are part of the nationwide supply chain issues related to the COVID-19 pandemic, much of it is being delivered to oil fields in Western Canada, North Dakota and Appalachians that haven’t developed sand supplies. local, he said.
“The landscape has shifted from chaotic anxiety as we exit 2020 to becoming more cautiously optimistic as mines come online and recover,” Savsky said. “Now almost all sand mines are operating near capacity.”
SES spokeswoman Megan Summers said Source Energy Services, which owns and operates the Wisconsin sand-mining facilities at Weyerhauser, Blair and Preston, has been the primary supplier of fracking sand to the Western Canada sedimentary basin for nearly a decade.
She added that while the Calgary-based company in Canada supplies other basins in the United States, the Canadian market will continue to focus on it.
Somers agreed that the switch to local sand, along with lower commodity prices, made it particularly difficult for those involved in the sand industry in Wisconsin.
The vast majority of the mines that produce northern white sand are located in Wisconsin, with the greater part located within 80 miles of Eau Claire.
Sand is used in hydraulic fracturing – a drilling technique known as hydraulic fracturing which involves injecting a mixture of sand, water and chemicals deep into underground wells to force oil and natural gas to the surface. Sand is used to fix open cracks in the rock.
Northern white sand, prized by fracking companies because of the roughness, durability, and spherical shape of its grain, is still considered to be of higher quality than the sand produced in Texas, but producers have developed ways to make the lower quality sand work well enough for their needs.
Most importantly for producers, Texas sand is cheaper because it doesn’t have to be shipped more than 1,000 rail miles from Wisconsin to oil and gas deposits in the Permian Basin in West Texas and southeast New Mexico.
The prospect of more trucking disruptions in Texas that drive up demand for the northern white sands of the Permian Basin is a wild card that Severson said he’s watching, as it could spark another temporary boom in demand for Wisconsin sands.