Sand mining grows in texas along with faith in energy rebound as ‘real deal’ business news-journal.com gas unlimited sugar land tx

It is producing more than ever to meet the demand of an oil and gas sector that is using up to 20 times more sand per well than it did during peak of the last energy boom. Across the state, already home to nearly 10 frac sand mines, operators are moving to expand quickly, setting the stage for Texas to become a bigger player — and competitor — in an industry long dominated by purer Wisconsin and Minnesota sands.

At the same time, the growth of sand mining is opening a new front in the battle between the energy industry and environmentalists, who argue the mines despoil pristine land and create health hazards by kicking up silica dust, which has been linked to lung cancer, tuberculosis and other lung diseases when inhaled.

In Atascosa County, south of San Antonio, residents are fighting a 300-acre sand mine proposed by Preferred Sands of Radnor, Pennsylvania, citing health risks, potential well water contamination, truck traffic and potential damage to the site of the 1813 Battle of Medina, a bloody fight in the early years of Mexico’s long war for independence.

Sand companies contend they follow regulations to limit silica air pollution and that they have almost no carbon emissions. They are pressing ahead to take advantage of demand and prices that have doubled in a little over a year. Several new sand mines or expansions, covering thousands of acres are proposed in Texas. Recovery ‘real deal’

Here, at the 300-acre Superior Silica Sands mine in Kosse owned by Emerge Energy Services, employment over the past year has rebounded to 30 from its oil-bust low of four, and the company is looking to acquire another Texas sand mine any day now and expand it.

Sand is mixed into fracking fluids that crack shale rock to prop open the fissures to allow oil and gas to escape, hence the industry name "proppant" to describe the fine grains. The largest wells now consume up to 25,000 tons — 50 million pounds — of sand each, up from 1,500 tons, or about 3 million pounds, per well during the boom years through 2014.

Drillers are creating much longer wells that extend a mile or two horizontally and sometimes pumping more than 5,000 pounds of sand per foot, according to energy analysts and executives, including Rick Shearer, the chief executive of sand manufacturer Emerge Energy Services. ‘Switch is flipped’

Nevertheless, the silica industry did suffer during the two-year oil bust. Some sand mines were mothballed and the sector remained in the doldrums last fall as energy companies exhausted their existing sand supplies. That finally changed near the end of 2016, Shearer said.

The downside is the surging demand is creating price spikes for sand, slowing the profit recovery for oil and gas producers, and creating more logistical bottlenecks with rail and truck shortages required to move the sand across the country. Industry average sand pricing rose from 2016 lows of less than $15 per ton to nearly $40 a ton now, executives and analysts said.

Sand usage slowly rose during the shale oil rush from 2011 to 2014 with the thought that it would peak and reach a point of diminishing returns, said George O’Leary, director of oil services research at Houston energy investment firm Tudor, Pickering, Holt & Co.

Oklahoma City’s Chesapeake Energy attracted attention late last year when it coined the term "propageddon" to describe using more than 50 million pounds of sand in a single gas well in northwest Louisiana with the stated goal of "unleashing hell" on every gas molecule.

Houston-based sand miner Hi-Crush Partners sources its sand from its Wisconsin facilities, but opted in February to spend $325 million to acquire and build out sand mining operations in Winkler County — near the heart of the Permian Basin. Hi-Crush is hiring 55 people to man the mine.

The plant should open in October and churn out 3 million tons a year, said Hi-Crush co-founder and CEO Bob Rasmus. The Texas sand is less expensive so producers can use more of it, he said. "The more sand used, the better the well results." Hydro cannon

The mining operations last year switched from standard excavation practices to using a "hydro cannon" for hydraulic mining. Operators aim the hydro cannon at the clay-like sand and blast it into a watery slurry, which is drained and piped to the mine’s "wet plant." There, the impurities are removed from the sand and it’s separated out into different grades of sand. The sand then goes to the "dry plant" to remove the moisture and create the finished product. The sand is then dumped from silos into trucks ready to haul it to oil and gas fields.

Young followed suit, moving himself and the company headquarters to The Woodlands. The goal was to take the company public, but then oil prices went bust. "That made us shelve our IPO. We bootstrapped it, cut costs and rode it out," he said.

The industry trend toward finer grains of sand has matched Smart Sand’s production supply. Previously, it was believed coarser grains were needed to prop open wider the fissures in the shale rock to help the oil flow, said Lee Beckelman, Smart Sand’s chief financial officer.