Wall Street Journal article: "Demand for Sand Takes Off Thanks to Fracking--Companies Race to Build New Mines as Prices Rise"

"Demand for Sand Takes Off Thanks to Fracking--Companies Race to Build New Mines as Prices Rise"

Frackers are expected to use nearly 95 billion pounds of sand this year. A sand mine in Garnavillo, Iowa. Stephen Mally for The Wall Street Journal

Sand prices are rising and companies are racing to build new mines in South Dakota and other locations as demand intensifies for the silica crystals that energy companies use to frack oil and gas wells.

Sand is a key ingredient in items from solar panels to smartphones, but in recent years billions of pounds of it have been poured down wells to help coax more fuel out of the ground. In hydraulic fracturing, sand is mixed in a slurry of water and chemicals, then pumped down a hole to crack open dense rocks so oil and gas can escape to the surface.

Frackers are expected to use nearly 95 billion pounds of sand this year, up nearly 30% from 2013 and up 50% from forecasts made by energy-consulting firm PacWest Consulting Partners a year ago.

It can take four million pounds of sand to frack a single well, but several companies are experimenting with using more. Companies like Pioneer Natural Resources Inc., PXD -5.32% which recently received a ruling from the U.S. Commerce Department allowing it to export unrefined ultralight oil produced from shale formations, are finding that the output of wells is up to 30% higher when they're blasted with more sand. About a fifth of onshore wells are now being fracked with extra sand, but the technique could expand to 80% of all shale wells, according to energy analysts at RBC Capital Markets.



That's great news for sand miners, but it's heating up competition between energy buyers and other big industrial users.

U.S. Silica Holdings Inc., SLCA -1.17% one of the largest industrial-sand companies, has already raised prices for some frack sand, and it said recently that it would also start charging 10% to 20% more for the finer grades of sand typically used to make glass and various industrial products as it diverts some of this supply to oil producers. The best sand is dubbed Northern White because the round crystal, which can withstand serious heat and pressure underground, is found in states like Wisconsin and Minnesota. The company expects demand for sand will be at least 25% higher than supply for the rest of this year.

"Northern White is in short supply, so people are using basically whatever they can get their hands on to complete their wells," said Michael Lawson, a spokesman for U.S. Silica.

Oil companies' insatiable appetite has even generated renewed interest in second-tier deposits of lower-quality brown sand in places like Texas and Arkansas.

Preferred Sands, which announced last month it has received backing from private-equity firm KKR KKR -0.81% & Co., plans to increase sand production by next summer with new and expanded mines in places like Wisconsin and Minnesota, said Chief Executive Michael O'Neill, though he added that it's becoming tough to find available railcars to move the sand from mines to oil fields.

Jamie Weinstein, co-head of KKR's special solutions team, said the trend toward using more sand per well will mean sand producers will keep growing. The firm is extending $680 million in debt and equity to Preferred Sands to restructure the company's balance sheet.

"We believe the incremental demand for sand over time is only going to increase," Mr. Weinstein said.

Frack-sand producers are hot stocks. Emerge Energy Services EMES +0.48% LP was last year's most successful public offering, according to Dealogic, with a share price that has shot up 558% since its debut. Investors want more. They may get it from private-equity-backed Fairmount Minerals, a major U.S. sand miner, which has enlisted bankers to explore an IPO, according to people familiar with the matter.

Laura Fulton, chief financial officer of Hi-Crush Partners L.P., is predicting another 5%-to-10% increase in sand prices before year's end. Hi-Crush recently signed seven new long-term contracts at higher prices—and for greater volumes—with oil-field service firms including Halliburton Co. HAL -3.22% , which help exploration outfits pump more oil and gas.

"There's really no limit on the demand side," she said.

But there are growing restraints on sand supplies. By the end of this year, new and expanded mines capable of producing 10 million pounds of sand annually will be up and running, but future projects could face delays, Cowen & Co. analyst Marc Bianchi said.

Dozens of new sand-mine permits were issued over the last three to four years in places like Wisconsin, Minnesota and Illinois, triggering a massive public backlash about the truck traffic, dust and breathing problems these operations can create. Now many state and county-level health officials are trying to slow the sector's expansion.

A few companies are skirting those efforts by teaming up with towns hungry for jobs and tax dollars, as well as more regulatory control. In Wisconsin, the cities of Independence and White Hall last year annexed land in Trempealeau County so that Hi-Crush could move ahead with its new mine. Those cities' zoning rules governing sand operations supersede the county's regulations, including its temporary ban on permits, so Hi- Crush's site can go into service later this year. Local officials in Minnesota and Illinois are taking similar steps.

As the good sand becomes increasingly difficult to find, one company is turning next door to South Dakota. Pat Galvin is chief executive of South Dakota Proppants LLC, which aims to resurrect a 1950s-era mine on federal lands about 40 miles from Mount Rushmore. Located in the Black Hills National Forest, the abandoned mine is filled with the same type of high-quality sand frackers have come to count on, and it could generate up to one million tons annually, he said.

The company is getting ready to pull together an environmental-impact statement to present to the federal government, which controls the site. But oil companies are already asking about supply contracts, Mr. Galvin said. The proximity to fracking operations in North Dakota's Bakken formation and Colorado's Niobrara Shale could trim delivery costs by as much as $50 a ton, he said.

The South Dakota site has another key advantage: no neighbors. And shipments can be routed to avoid tourists bustling around Mount Rushmore.

"We're in the middle of nowhere compared to Wisconsin, where you've got farming and everything else going on," Mr. Galvin said.

—Ryan Dezember contributed to this article.

Write to Alison Sider at alison.sider@wsj.com

New York Fracking Opponents call for a moratorium of 3-5 years!

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New York Fracking Opponents call for a moratorium of 3-5 years!

http://www.dailyfreeman.com/general-news/20140529/ny-fracking-opponents-call-for-moratorium-of-3-to-5-years#disqus_thread

Have your property values decreased? See the attached for assistance in working through assessment values with local/county/state officials!

Total SA suspends $11B Joslyn oil sands mine in Alberta, lays off up to 150 staff

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Good news concerning the Joslyn Mine in Alberta, Canada…

“Joslyn is facing the same challenge that most of the industry worldwide is in the sense that the costs are continuing to inflate when the oil price and specifically the netbacks from the oil sands are remaining stable at best,” he said. That is squeezing margins and “cannot be sustainable in the long-term.”

Total SA suspends $11B Joslyn oil sands mine in Alberta, lays off up to 150 staff                     http://www.windsorstar.com/business/fp/Total+suspends+Joslyn+sands+mine+Alberta+lays+staff/9889319/story.html

WORKER DEATHS

On Workers Memorial Day, a new post on The Pump Handle about the second worker fatality of 2014 for Canada's oil sands company, Suncor:
http://scienceblogs.com/thepumphandle/2014/04/28/second-2014-worker-fatality-at-suncor-alberta-oil-sands-facility-highlights-alarming-industry-death-rate/

The industry, according to records available through Alberta Occupational Health and Safety, suggest the provinces oil and gas extraction industry – which Alberta's energy agency says provides 1 in 16 of the province's jobs – has an alarmingly high rate of occupational fatalities -- on average over the past five years, about a third of those incidents on record with Alberta OHS.  Alberta is where most of Canada's oil reserves are located and where oil sands extraction was pioneered.
Please feel free to share and repost, and thanks as always for reading ~  Lizzie

Elizabeth Grossman

office & cell: 503-704-5637

lizziegrossman@mac.com

Twitter: lizzieg1

skype: lizzie.grossman

http://www.elizabethgrossman.com/Elizabeth_Grossman/Home.html

We don’t always hear about worker deaths; and certainly we have no way of knowing of citizen health issues of those living and working around mines, processing plants, and trans-load facilities, but it is atrocious to know that particulates are frequently being reported by citizens at their residences both in the City and the rural areas at distances from the facilities. We ask for transparency in reporting all deaths related to the mining industry!

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OIL TRAINS AFFECTING MANY STATES

OIL TRAINS AFFECTING MANY STATES

THE ARTICLES BELOW PROVIDE IMPORTANT INFORMATION

You will find the information below pretty shocking. It shows the linkages between the tar sands, Bakken Crude Oil, and oil from the East to West Coast via rails, terminals, etc.   It is not complete but we have discovered more terminals along the way for both CP and BNSF.   Many of you are connected to hydraulic fracturing, frac sand mining, processing facilities, terminals, rails etc. Overlay this activity with the pipeline activity and you will realize there would be few people not impacted by the dirty oil industry in some way.  (Guy Wolf)

FOR IMMEDIATE RELEASE           

28 May 2014

Contact:

Lorne Stockman, lorne@priceofoil.org, 540-679-1097

David Turnbull, david@priceofoil.org, 202-316-3499

New Report Outlines the Rise of Crude-by-Rail in North America

First Major Analysis of Booming Bomb Train Industry

Today Oil Change International released the first major exposé of the burgeoning crude-by-rail industry in North America, detailing where crude trains are being loaded and unloaded, how many oil trains are crossing the North American continent, and what companies are involved.

Runaway Train: The Reckless Expansion of Crude By Rail in North America is the first in a series, exposing North America’s booming crude-by-rail industry. It is published in conjunction with the launch of a unique interactive online map of crude-by-rail terminals and potential routes in North America. 

The report and map can be found at www.priceofoil.org/rail

“This analysis shows just how out of control the oil industry is in North America today. Regulators are unable to keep up with the industry’s expansion-at-any-cost mentality, and public safety is playing second fiddle to industry profits,” said Lorne Stockman, Research Director of Oil Change International and author of the report.

“This is what the All of the Above Energy Strategy looks like – a runaway train headed straight for North American communities,” Stockman said.

The report shows that there are currently over 230 crude-by-rail terminals in Canada and the United States either in operation, expanding, under construction or planned.

Today, one million barrels of crude oil per day is loaded and unloaded on the North American rail network, meaning roughly 135 trains of 100 cars each are moving dangerous crude oil each day through the continent. But if used at full capacity, existing loading and unloading terminals could handle 3.5 times more crude-by-rail traffic and by 2016 that capacity could grow to over 5 times current levels.

“Communities are already waking up to the dangers of oil trains barreling through their backyards, with spills, explosions and derailments happening all too often. This report and online tool will help provide the critical information that’s been sorely missing in order to shine a light on what’s really going on, and to help stop the runaway train of crude-by-rail in its tracks before more damage is done,” Stockman said.

The  oil industry is simultaneously pushing both new pipelines and increased crude-by-rail on the North American public and recent pipeline spills and train accidents show that the neither is safe. Spills from both transport methods are on the rise.

This report comes ahead of a nation-wide week of action planned for July 6 – 13 in opposition to oil by rail organized by Oil Change International, ForestEthics, 350.org, the Sierra Club, residents of Lac-Mégantic, and a number of other organizations. See more at www.stopoiltrains.org

Future reports in this series by Oil Change International will look at the economics of crude-by-rail, safety, and climate change issues. Please see www.priceofoil.org/rail for the map and links to reports and data.

###

Lorne Stockman
Research Director
Oil Change International
714 G Street SE, Suite 202
Washington, DC 20003P: 1 540 679 1097
W: priceofoil.org -- refineryreport.org/
FB: /priceofoil
T: @priceofoil -- @LorneStockman

Results for Proposed Initiative #75

You can read a summary of the proposition at the Colorado Sec of State 

webistehttp://www.sos.state.co.us/.../2013-2014/75Results.html

- Community Rights Alliance of Winneshiek County 

That’s code words for “take your time, we’re in no hurry to see anything accomplished.

The Minesota Pollution Control Agency (MPCA) is in charge of organizing the three rulemakings mandated by last year’s silica sand bill, and it’s really not that complicated — narrow specific issues.  From the Session Law, here’s what they’re supposed to do.


Do notice that each directive for rulemaking says that “The rulemaking is exempt from Minnesota Statutes, section 14.125.“  That’s code words for “take your time, we’re in no hurry to see anything accomplished.  Dawdle, go around in circles, fall down, and get lost along the way…”  Folks, that’s just what we’re experiencing in this rulemaking process, molasses on a cold day in hell.