Sept. 27–Houston-based Hi-Crush Partners said it is idling one of its Wisconsin sand mining plants because of weakening demand triggered by oil pipeline constraints in West Texas’ Permian Basin.
The sand mines service hydraulic fracturing, or fracking, operations in oil and gas wells and the demand for the sand is weakening in the booming Permian until new pipelines start coming online closer to mid-2019. Many companies continue to drill new wells while delaying the fracking operations and leaving the wells uncompleted for now.
The so-called “northern white” sand from mines in Wisconsin is most desired by oil companies, but companies like Hi-Crush also are building more mines in Texas to provide cheaper sand that’s much closer to the oil and gas wells.
“Despite temporary market dislocations, we continue to expect strong demand for Northern White frac sand,” said Hi-Crush Chief Executive Bob Rasmus.
While Hi-Crush is temporarily idling part of its Whitehall facility in Wisconsin, it is maintaining its three other Wisconsin mines. Hi-Crush also opened a West Texas mine in Kermit fairly recently, and Rasmus reiterated Hi-Crush still plans to build a second Kermit facility.
As drillers have pushed to become more efficient in producing oil, wells have become deeper and longer, and the amount of sand used to frac each well has surged. 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, just a few years ago.
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Most frac sand has historically come from the fine-grain “northern white” sand from Wisconsin and Minnesota, but the rapidly growing demand and longer travel distance have pushed companies to build more sand mines in Texas to serve the booming Permian. The Texas brown sand isn’t of quite as high a quality, but proponents argue it’s not far off. The Texas sand also is cheaper and much closer.
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