Double Crown Resources Inc. (fka DDCC)

[ProfitScout]

Frac sand industry still growing
12/23/2014 2:14:00 PM

News Link: http://www.ricelakeonline.com/main.asp?SectionID=32&SubSectionID=113&ArticleID=28651

Ryan Urban
Chronotype staff

Low oil prices and winter weather have slowed down but not stopped the rapid expansion of the frac sand operations that came into Barron County 3-4 years ago.

In the Town of Arland, Superior Silica Sands has opened up its third sand drying plant in Barron County.

In the Town of Dovre, Chieftain Sand & Proppants and Great Northern Sand are expanding capacity at their dry plants.

Chieftain, as well as Source Energy in the Town of Sumner, are in the process of permitting hundreds of acres to expand their mining operations.

Oil impact

A 6-month slide in oil prices has caused demand for frac sand to level off, according to local industry sources. "Orders aren't huge right now. But we're quite a bit more stable than smaller competitors," said Sharon Masek, manager of mine planning and industrial relations, crediting loyal customers in the oil industry.

Joe Jackson, vice president of business development at Source Energy Services, said the company plans to keep production level at its Town of Sumner mine and finish the expansion of its facilities next year.

He said the downturn in oil prices have created challenges in gaining in capital for new oil industry projects.
"We're taking a managed approach," said Jackson. "From what we're seeing from both the industry and our customers, austerity is the name of the game next year."

But the recent decline in the oil and gas market hasn't stopped the expansions of local frac sand producers, which supply hard, round grains needed to prop open pockets of gas and oil.
"We are doubling the capacity of our dry plant and adding a new wet plant at the mine site. This is in response to customer demand," said Robbie Sage, CEO of Great Northern Sand, in an email.
Others are doing the same.
This month, mild weather has allowed mining and construction to continue.

Superior Silica expands

Even when harsher weather comes, Superior Silica Sands may still be mining and processing sand.
"The LP mine site might run all winter," said Masek, referring to a mine along 7th Street in the Town of Arland.

She said scaffolding has been erected around the wet plant at the site and heat is blown in to prevent freezing. At the company's Thompson Hills mine in the Town of Sioux Creek workers chip ice off the wet plant hourly to keep operations going, said Masek.
Superior Silica Sands opened a new dry plant near the intersection of Hwy. P this month capable of processing 2.5 million tons annually. The plant is supplied with wet sand by three mines within 2 miles.

The plant is unique in that it does not have rail access. Instead, large semi trailers are used to haul dried sand to other dry plants near Poskin and New Auburn for rail shipment.
Masek said some semi loads are sent directly to gas and oil wells sites when a customer has an immediate need for frac sand. Semis also transport frac sand to Illinois so the sand can be coated in a resin to make the grains even stronger.

Masek said the Poskin plant has potential to fill 80-100 rail cars per day, and the New Auburn plant has nearly the same capacity.
Superior Silica Sands is modifying part of the plant on Hwy. 8 near Poskin to accommodate more sand from the semi trucks.
"That helps us speed up getting the sand from the trucks into the silos and onto the train," said Masek.

The system is not what Superior Silica Sands had in mind originally when building the dry plant in the Town of Arland. Sand dried in the plant was intended to be transported by semi on Hwy. 8 to a transload site on the BNSF railroad in North Branch, Minn. But the drew strong opposition from residents of Taylors Falls, Minn., who voiced concerns about increased truck traffic, and Superior Silica pulled the project.

Masek said Superior Silica Sands still hopes to gain direct access to the BNSF railroad, allowing it to ship directly to more customers.

"It's on the backburner," said Masek, adding that the Minnesota Department of Transportation is considering a bypass of Taylors Falls.

The BNSF serves more of the Bakken Shale, a hot spot for hydraulic fracturing in North Dakota, Montana and Canada, than any other railroad.

Looking to 2015

Two sand companies have recently shown they are planning to expand mining areas by hundreds of acres.

Chieftain Sand & Proppants plans to add 9 new mining properties generally west of its existing operation near the intersection of Hwy. AA and 25 1/2 Street.

Source Energy Services has lined up nearly 1,500 acres, mainly east of its existing mine along Hwy. 8 in the Town of Sumner.
Source Energy has revised its reclamation plan filed with Barron County to include the addition of approximately 400 acres beyond the existing 200-acre mine site.

Twenty phases of mining are mapped out. Most early phases are 12-20 acres while later phases are around 40 acres. Early phases are in field areas and later ones are in areas currently forested.
Source Energy is somewhere around the fifth or sixth phase, said Barron County conservation technician Brad Robole.
The acreage has an estimated 77 million cubic yards of frac sand-or roughly 100 million tons.

A Source Energy affiliate owns some of the mining property. Other parcels are owned by Gregory and Judy Nelson, David and Donna Johnson, Ort Lumber, Loren and Kathryn Wiesner, Allan and Norma Frank, John and Sally Johnson and the Vincent Family Trust.
The land will be reclaimed to crop land with 4:1 slopes at the property boundaries.

Chieftain is in the process of developing nine more mining areas in the towns of Sioux and Dovre near its existing mine and wet plant, according to a Wisconsin Department of Natural Resources draft air permit.

The company has already secured several hundred acres in the Town of Dovre to supply its dry plant at the intersection of Hwys. SS and AA.

Chieftain also plans to continue expanding the dry plant with a second dryer capable of processing 200 tons per hour, a second dryer building, new rail load out area and three new storage silos, among other modifications.

As companies like Chieftain and Great Northern continue to expand, two more companies plan to develop mines and processing plants in the towns of Dovre and Sioux Creek in 2015.

Northern Rail & Transload started construction on a transload site north of the Chieftain and Great Northern sites along Hwy. SS. Affiliate company Northern Industrial Sand has secured more than 900 acres for mining in the Town of Sioux Creek along 19 1/4 Ave.
Global Proppant Supply also plans to build a dry plant along Hwy. SS on the north side of Hwy. AA, making it the fourth sand plant in a 3-4 mile stretch. Operating as Sioux Creek Silica, the company has more than 1,000 acres secured for sand mining in the Town of Sioux Creek along 23rd Street and 1 1/2 Avenue.