Rapid Escalation Anticipated for U.S. Frac Sand Mining and Processing Projects

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Researched by Industrial Info Resources (Sugar Land, Texas)--Forget the gold rush; it's all about sand these days.

Frac sand production is growing in North America. Many frac sand mines and processing plants have come online this year, and many others are planned to begin operations in the next few years.

Frac sand is a material commonly used in the hydraulic fracturing process. A hydraulic fracture is formed by pumping a fluid into a well bore quickly enough to make the pressure cause a crack in the rock formation located in oil and gas wells. In order to keep these cracks open after the injection stops, a sand-like material proppant is added to the fluid, providing a path connecting the larger area of the reservoir to the well. As a result, the area from which fluids can be produced is increased.

Using sand in the hydraulic fracturing process is not a new concept. Natural gas and oil companies have used sand for drilling since the technique was developed in the mid-20th century. The increased demand for oil and natural gas has driven energy companies to seek production increases by either stimulating older wells and/or drilling new ones, which in turn increases the need for more frac sand mines and process plants.

For additional details on hydraulic fracturing, see August 29, 2011, article - Safe Enough to Drink: Will New Hydraulic Fracturing Fluids Allay Public's Fears? and August 15, 2011, article - DoE Panel Recommends Changes to Improve Hydraulic Fracturing.

Industrial Info is monitoring 28 industrial sand mines and processing plants in its North American database. Of the 23 active projects in the Industrial Sand and Construction Sand & Gravel sectors, eight projects are frac sand projects in various stages of planning. This figure is rapidly growing as companies are considering almost 20 other sites in North America for frac sand mining and processing projects. IIR expects to see frac sand projects double by the end of this year.

IIR is tracking $100 million in active frac sand projects from EOG Resources Incorporated (NYSE:EOG) (Houston, Texas).

Smaller companies like Northern Frac (Wisconsin Rapids, Wisconsin) will throw its hat in the ring as well, with plans to build two to three frac sand mines in the next few years in Wisconsin and Minnesota. The first of these mines is scheduled to come online next year, pending permit approvals. The mine, which will be in Wood County, Wisconsin, will produce roughly 750,000 tons per year of frac sand.

Cadre Services Incorporated, now renamed Cadre Proppants (Houston, Texas), recently completed a $50 million frac sand mine and processing plant that opened this spring in Voca, Texas. The 1 million-ton-per-year mine and 175-ton-per-hour processing plant are rated to produce about 800,000 tons per year of quality frac sand proppants.

Currently, the sand mine hotspots seem to be in British Columbia, Canada, Texas and Wisconsin. Planned projects for these areas total $335 million, with the bulk being spent in Wisconsin: $210 million on six different projects. In British Columbia, Industrial Info is tracking frac sand projects with combined total investment values of $100 million, as well as a $25 million frac sand project in Texas.

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Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.