Sept. 18–One of the largest West Texas oil and gas drillers has bought into a local sand mine in order to cut its costs.
The Irving company Pioneer Natural Resources, which primarily focused on West Texas’ Permian Basin oil field, said last week that it signed an agreement with U.S. Silica Holdings, Inc. to buy a 15-year interest in U.S. Silica’sLamesa sand mine.
Pioneer Natural Resource’s President and CEO Timothy Dove said the agreement will provide sand at around half the cost of the imported sand the oil driller currently uses.
The mine is located approximately 60 miles north of Midland and is expected to produce 6 million tons a year of sand for use in hydraulic fracturing, or fracking, the process by which oil and gas drillers combine water, sand, and chemicals to fracture shale rock in order to extract oil and gas reserves.
Pioneer Natural Resources holds 750,000 acres in the Permian Basin and is seeking to become a pure play Permian oil and gas driller by divesting the last of its non-West Texas assets, which are primarily held in South Texas’ Eagle Ford Shale region.
The Lamesa frac sand mine was announced in Sept. 2017 at a cost of $150 million to build a facility with production of 2.6 million tons a year. It is unclear how much the much larger facility may cost in the end, though a news release says Pioneer Natural Resources expects to receive its first sand volumes in the first quarter of 2019. Eventual sand volumes to Pioneer Natural Resources are at least 2 million tons a year by 2020.
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