Transportation and the silica sand industry in Minnesota
About silica (frac) sand mining and processing in Minnesota
"Frac sand" is characterized by consistently round and extremely hard grains of pure silica sand.
It is used in hydraulic fracturing, or "fracking," which is a technology to pressurize, fracture, and prop open deep oil and gas shale fields to release petroleum.
Why it's important
Background and context
Silica sand exploration, new production and increased demand have occurred over the previous three years.
The sudden growth in demand has created a boom in new sand mining and processing in Wisconsin, which features large deposits of high grade sand. Minnesota interests have also become active, with several existing silica sand operations expanding activity, and significant deposits being made available for new mining.
Over two years, Wisconsin has gone from 15 mines and processing plants to a potential of almost 110 permitted mines and 35 processing plants. Most of these locations are on or near rail facilities capable of loading full (unit) trainloads, making it economic to ship long distances over land.
In the same time, Minnesota began with seven mines and currently has requested permits or active mines totaling 20 sites, with a half dozen processing plants.
Where frac sand is located
The draft map at right shows the approximate extent of potentially mineable silica sand formations at, or near, the surface — as well as the current, proposed, and prospect silica sand facilities in Minnesota.
NOTE: Information on the location and status of the displayed silica sand mines, processing plants and transload facilities was compiled from combined MnDOT, DNR and MPCA data.
Location data for silica sand deposits was provided by the Minnesota Geological Survey, with the disclaimer that it is an unreviewed product released now because of the urgent need to share information that can help cities, counties and the state better respond to issues surrounding silica sand mining.
Recently, new oil and gas production has saturated the gas market and significantly lowered petroleum prices on the oil market.
Because of market corrections, the number of active drilling rigs working these fields has dropped from a high of over 400 to about 200, with a proportionate drop in demand for sand.
Market analysts had posited a total U.S. sand demand of 40-60 million tons per year; the current best estimate of demand is for 34 million tons by 2015. The current markers of this trend are the following:
Wisconsin is producing 28 million tons per year (2012), against proposed capability of 70 million tons
New permitting has essentially stopped in Wisconsin; almost half of permits have not been exercised
Minnesota, with 20 percent of Wisconsin’s activity, has reports of at least four mine or processing proposals being suspended
Minnesota, currently producing 2-4 million tons per year, has only a potential capacity of 8 million through requested permits, not all of which may be implemented
Both states' current production roughly equals current U.S. demand; other states such as Missouri and Illinois have shut down mines with lower quality and/or higher costs
The market is approaching maturization and stabilization, with dropping sand prices and profits
Wisconsin sand originally destined for Minnesota loading sites is being gradually diverted to more economic rail-sited plants in Wisconsin.