May 29, 2015

Wisconsin's frac sand industry booms, with a value of about $4 billion NewsWatchWisconsin was the leading producer of frac sand in 2014, accounting for nearly half of the nation's production of the white sand coveted by the hydraulic fracturing industry, new statistics released this week show.

The United States Geological Survey's preliminary estimates for 2014 show Wisconsin's production at 24 million metric tons, compared with 8 million for Illinois, 8 million for Texas and 5 million for Minnesota.

Wisconsin, which has been dubbed the Saudi Arabia of sand, has seen a significant expansion of sand mines and sand processors in recent years as the oil and gas industry has expanded production of oil and gas through horizontal drilling techniques such as "fracking."

In a report, the USGS estimated that frac sand sales totaled 31 metric tons in 2012.

The agency cautioned that the report came from data voluntarily supplied by sand companies. Figures for 2013 weren't available.

A big question for the industry: Whether a dramatic drop in the price of crude oil — which has slowed well drilling activity — will lead to a long-term drop in production or a scaling back in sand mining companies' aggressive expansion plans?

In Wisconsin, some expansion has slowed. Emerge Energy Services last month canceled a project in Independence, in Trempealeau County, saying it was "no longer economically viable."

But competitor Hi-Crush Partners is moving ahead with permitting for another mine in Wisconsin.

In response to dropping oil prices, Emerge said this month that demand for sand is down at least 30% from late last year, with sand prices off 20% to 25%.

Industry analysts say that unless oil prices remain low over the long term, demand for frac sand remains strong, even with the decline, in part because of drilling techniques adopted in the last few years that require much more sand to be used per well than was the case even five years ago.

The USGS report says a typical fracking well used 900 tons of sand seven years ago but that had grown to 4,100 to 5,000 tons last year.

That means an average of 40 to 50 train carloads of sand were needed for each well, the USGS report said.

U.S. production of 54 metric tons is expected by 2017 to reach 70 million metric tons, with a value of about $4 billion by 2017, according to the report.

The Great Lakes region and Texas "will likely continue to represent the largest production shares through the end of the decade as expansions at existing mines occur and new mines are developed," the agency says.

The rapid growth of the industry has caused complaints, with concerns including truck traffic, air pollution and the effects on waterways.

Environmental groups have sought more aggressive regulation of the sand mines, and this year the state Department of Natural Resources board voted unanimously to have the agency conduct a strategic analysisof industrial sand mining and whether changes should be made to how sand mining is regulated. Please continue reading from: Wisconsin's frac sand industry booms