MADISON, Wis. (AP) — Some energy producers are still willing to pay more for Wisconsin’s high-quality fracking sand despite increasing competition from Texas producers.
Mining industry publications estimate there could be more than 20 new frack sand mines in western Texas this year, Wisconsin Public Radio reported. The growth is happening in the Permian Basin, a major oil production area.
Frack sand is used in the hydraulic fracturing process to extract oil and natural gas from rock.
Texas sand is located in dunes, making it easier to mine than Wisconsin sand locked in sandstone deposits, said Samir Nangia, an oilfield services expert for analytics firm IHS.
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“You wash it, you dry it, you put it on a truck and you send it where it needs to go,” said Nangia. “You don’t need a rail load out terminal, you don’t need to do any blasting, you don’t need to do any heavy moving, and then on top of that you only need to truck it like 50 miles to 75 miles.”
The accessibility drives down the price, which is attractive to oil drilling companies, Nangia said.
“The costs are really low of producing this sand and of course they’re putting up too many mines, which basically means that they could sell that sand for as little as $30 a ton,” said Nangia.
In comparison, it can cost up to $60 to transport sand by rail form Wisconsin to Texas, he said.
While the new mines will take away some of the market share from Midwest facilities, they likely won’t take away more than half, Nangia said.
Many energy companies still value Wisconsin sand because of its strength, Nangia said. Companies can drill deeper and keep oil wells producing longer. Some companies are mixing Wisconsin sand with cheaper Texas sand when using hydraulic fracturing to drill in oil-rich shale deposits, he said.
Information from: Wisconsin Public Radio, http://www.wpr.org