Monday, May 14, 2012

Sand, Sand, Sand

A story in today’s WSJ detailed a surprising off-shoot of the oil and gas boom in the United States. Sand Miners Race to Keep Up With Demand From Fracking (sub req):

The surging demand is making sand the Midwest slice of a national energy boom. Oil and gas producers in recent years have greatly boosted the use of horizontal drilling and hydraulic fracturing to tap reserves once out of reach. Sand, injected deep underground to prop open fractures in shale formations and allow oil and gas to flow out, is important in "fracking."

Wisconsin and Minnesota have abundant supplies of the type of sand that oil and gas producers need. Geological conditions were right hundreds of millions of years ago to form sand hard enough to withstand the pressure thousands of feet underground, while also having round grains that leave space so the oil and gas can escape. Fracking sand can fetch around $50 a ton, depending on quality.

Paul van Eijl, land-acquisition manager for Superior Sand Systems Inc., a Calgary mining company, recently set up a tiny office on Third Street in this Mississippi River port city, a color-coded map of sandstone formations behind his desk. Mr. van Eijl spends his days looking to strike deals with landowners for sand just below the surface, using county land records and Google Earth elevations to target properties.

Sand mines are popping up across the region. Wisconsin officials estimate that the number of mines in the state has doubled to more than 60 since just last fall. Those doing the mining range from Houston-based oil-and-gas producer EOG Resources Inc., which opened a mine in Wisconsin to supply its own production, to tiny operators that don't even process the sand.

As with any natural resource story these days, there is some wailing and gnashing of teeth from NIMBYs and environmental reactionaries about the potential detrimental impacts of a surge in sand mining. But most people in the region seem okay with the idea of getting a small sliver of the oil & gas pie. Let North Dakota crow about their oil. Anybody can exploit black gold. We’ve figured out a way to sell sand.