Growing hunger for sand
Companies are opening mines closer to oil fields to fill the growing demand
A miner is planning a new plant in West Texas to feed the demand of hydraulic fracturing crews.
A Texas sand miner is planning to open a plant near the small West Texas town of Van Horn to feed the demand of hydraulic fracturing crews unleashing gas and oil production in the booming Permian Basin.
Alpine Silica, which operates at least one sand mine in Kermit, plans to break ground on the 3 million-tona-year sand plant in Van Horn in the coming months. The mine will take about seven months to complete.
Alpine already produces about 3 million tons of sand a year from its Kermit mine, 40 miles west of Odessa. Alpine also is developing a frac sand plant in Oklahoma near Fay, 70 miles northwest of Oklahoma City. That plant, too, will produce 3 million tons of sand annually to serve the Sooner Trend, Anadarko, Canadian and Kingfisher, or STACK, and the South Central Oklahoma Oil Province, or SCOOP, oil regions.
In hydraulic fracturing, sand is mixed into a concoction of water and chemicals, which is blasted into wells under higher pressure to crack shale rock and release oil and gas. The sand, known in the industry as proppant, holds open the fissures to allow the petroleum to flow into the well.
Alpine Silica’s plants are the latest addition to the boom of frac sand mines cross the state. In May, Black Mountain Sand of Fort Worth said it would acquire 2,300 acres in Atascosa County, south of San Antonio, for a sand plant to serve the Eagle Ford Shale.
When completed, the mine is expected to produce 2.2 million tons of sand annually. The plants capacity has already been sold out in long-term contracts.
Research firm IHS Markit said in an August report that 60 million tons of new sand supply in Texas was set to come online between 2017 and 2018. Texas accounts for about 60 percent of U.S. frac sand demand.
Brandon Savisky, a senior research analyst at IHS Markit, said the amount of sand used in Texas oil and gas basins rose significantly between 2016 and 2017. In the Delaware Basin, the western lobe of the Permian, frackers increased their use of sand from 8.5 million pounds per well in 2016 to 12.8 million pounds in 2017.
He said sand consumption has likely edged past 13 million pounds per well.
The Texas oil and gas industry has traditionally relied on sand produced in Wisconsin and Minnesota, but the industry downturn that began in 2014 spurred a drive for efficiency and lower production costs, leading the industry to find cheaper sand sources. Buying locally can cut costs by a much as half, dramatically reducing transportation and related expenses, Savisky said.
Sand from Wisconsin and Minnesota, known as northern white, has stronger grains that are better able to stand up to the pressure and hold open the cracks in the shale. Northern white accounts for about 60 percent of the market, Savisky said, but he expects local sand, dubbed Texas brown, to continue to gain share, climbing to as much as 55 percent. Oil and gas operators, Savisky said, are still comparing the performance of the two sands.
Meanwhile, the development of mines remains controversial. A mine being developed in Atascosa County by a Pennsylvania company, for example, had to be moved last year after it faced community opposition. Residents were worried about heavy truck traffic and possible health effects from mine operations.
Texas accounts for about 60 percent of U.S. frac sand demand.