Double Crown Resources Inc. (fka DDCC)

[ProfitScout]

DNR reports no slowing in Wisconsin frac sand mining despite oil slump

January 11, 2015 • By Mike Ivey | The Capital Times

Despite concerns about falling demand for frac sand in light of the plunge in oil prices, state officials say they haven’t noticed any slowing of mining activity in Wisconsin.

Deb Dix of the Department of Natural Resources, the agency lead on industrial sand mining, says companies are continuing to press forward.

“I have not seen any reduction at this time and from recent conversations with industry there are still a number of new operations which are working toward being able to begin production as quickly as possible,” she said.

Recent reports have warned that frac sand companies are facing major headwinds after enjoying a boom over the past several years. The growing use of hydraulic fracturing or “fracking” had created huge demand for the kind of hard, large-grained sand found in western Wisconsin.

The state is now the nation’s leading supplier of frac sand, with train car loads daily shipping tons of material to drilling sites in North Dakota, Pennsylvania, Texas and beyond. The sand is mixed with water and chemicals and injected at high pressure into underground wells, driving oil and natural gas to the surface.

But while use of fracking has helped push the U.S. past Saudi Arabia as the world’s largest oil producer, it has also contributed to a global glut in oil supplies, sending prices into free fall.

As a result, a number of publicly traded frac sand companies doing business in Wisconsin have watched their share prices plummet as investors speculate that oil prices will also impact the industrial sand business.

Still, the head of the largest frac sand mining company working in Wisconsin isn’t convinced the bottom will fall out of the market.

Rick Shearer, CEO of Emerge Energy Services LP of Fort Worth, Texas, says the oil companies still drilling are using more frac sand per well, which has helped keep demand strong.

“We know there are ups and downs with this business but right now our customers are still buying all the sand we can ship,” he says.

A single fracked well can now use as much as 10,000 tons of sand.

In fact, Emerge Energy, which has does business in Wisconsin as Superior Silica Sands, just opened a new facility in the town of Arland in Barron County, its third major operation in the county. Shearer says that gives the company a total capacity of 2.5 million tons of sand.

Dix says the DNR is now working on an updated map that will show all the frac sand sites in the state. That map should be available in the coming weeks.

“This next year will be interesting to see where things go,” she said.

Read more: http://host.madison.com/news/local/writers/mike_ivey/dnr-reports-no-slowing-in-wisconsin-frac-sand-mining-despite/article_99ed073f-6d8d-599d-9771-57688e1e76c9.html#ixzz3OXpWPjbV