U.S. Silica Holdings Inc. and BNSF Railway Co. are partnering to meet the needs of Eagle Ford Shale producers for sand to be used as proppant in their hydraulic fracturing (fracking) operations.
The companies plan to build a silica sand storage facility capable of storing 15,000 tons of sand in San Antonio, TX. It is expected to be operational early next year.
U.S. Silica said it expects to make three to four shipments per month of 10,000 tons of frack sand on 100-car unit BNSF trains from its Ottawa, IL, sand mine to meet the industry's need for proppant. Shipments are to include three different grades of dry sand, as well as resin-coated proppants from U.S. Silica's new facility in Rochelle, IL, which is expected to be fully operational in the first quarter of 2013.
Frederick, MD-based U.S. Silica is the second largest domestic producer of commercial silica, a specialized mineral used as a proppant in fracking. BNSF Railway operates on 32,000 route miles of track in 28 states and two Canadian provinces.
"Working with U.S. Silica to extend BNSF's service into the Eagle Ford Shale will create new opportunities for growth for the nation's energy supply, for jobs and the economy," said BNSF Executive Vice President John Lanigan.
Like just about everything else related to the drilling and completion of shale gas and oil wells, the handling of sand to be used for fracking is a more critical and technically challenging endeavor than one might first think, according to Brian Olmen, founder of consulting firm Kelrik LLC, which specializes in industrial minerals.
"Frack sand comes in all types of different qualities," Olmen told NGI's Shale Daily. "You can have your premium quality frack sand that exhibits exceptional strength, gradation control, that maximizes conductivity downhole, to products that are what I would refer to as a tier two or lower quality sand..." But just as important as sand quality is how it is transported and stored, he said.
"When you talk frack sand quality, it's kind of two-fold. There's the aspect of the product itself, and secondly it's how the product is handled -- or I should say delivered -- and handled at its destination...When you produce a high-quality frack sand or fracturing proppant...there's a tremendous amount of effort and technology that goes into that process."
To some it might just be sand, but Olmen said it shouldn't just be lying on the ground. "What I find astounding sometimes is that after all that effort is put in to make a high-quality proppant...people will place that material in essentially a warehouse, which is nothing more than a concrete slab with a roof, and that subjects that material to segregation and possible commingling or contamination with other products...In some locations, not all, they'll actually put that material, basically in a pile on the ground."
Sand for fracking has become a valuable commodity in and around the nation's shale plays. Some producers have moved to lock up their own supplies to ensure continued availability.
Earlier this year Dallas-based Pioneer Natural Resources Co. struck a deal to acquire Carmeuse Industrial Sands for $297 million (see Shale Daily, March 6). "...[W]e viewed this as a strategic opportunity to secure high-quality, low-cost and logistically advantaged brown sand supply to support our growing fracture stimulation requirements in three of our four core Texas growth assets: the Spraberry vertical, horizontal Wolfcamp Shale and Barnett Shale Combo plays," said Pioneer CEO Scott Sheffield at the time.
Next month EOG Resources Inc.'s efforts acquire an air permit for a proposed sand processing plant will go before the Texas State Office of Administrative Hearings. EOG's plans to build the sand processing plant come only months after it started up a sand processing facility in Chippewa Falls, WI. That sand is being shipped primarily to the Eagle Ford (see Shale Daily, June 13).
EOG is the largest leaseholder in the Eagle Ford with 647,000 net acres, according to company reports, and Pioneer has an estimated 116,700 acres in the play. Other significant Eagle Ford leaseholders include Chesapeake Energy (475,000 acres), BP/Lewis Energy Group (450,000 acres), BHP Billiton (332,000 acres) and Marathon Oil (305,000 acres).