The extensive use of sand in the hydraulic fracturing process is leading to a rush on sand supplies, causing shortages as mining companies scramble to ramp up production.
Sand is used in the fracking process to fracture shale rock. A slurry of water, chemicals, and sand have long been used to frack a well, but operators have recently found that pumping in ever more quantities of sand can increase shale gas production. According to The Wall Street Journal, drillers can squeeze out 30 percent more natural gas by pouring in more sand. Sand can keep open well fissures, allowing more natural gas to escape.
That has companies rushing to procure more supplies of “frac sand.” Industry wide, frac sand use is expected to climb to 95 billion pounds in 2014, a 30 percent jump from the year before. Around four million pounds of sand are used in an average well fracture.
But the higher demand is putting a lot of strain on sand mining companies, which have seen their business boom over the last year. Some of the highest quality sand, known as “Northern White,” comes from Minnesota and Wisconsin. Companies there are scrambling to open up new mines and expand operations at existing ones. Emerge Energy Services, a sand mining company, saw its share price rise 558 percent since its IPO in 2013, according to the Wall Street Journal.
Although sand mining companies are making money hand over fist, the communities in which they operate are much less pleased. Mining sand can cause major public health concerns. The sand contains silica, which can be discharged into the air during the mining, transporting, and delivery process.
Silica can be extremely harmful to people who breathe it in. According to the Occupational Safety and Health Administration (OSHA), “breathing silica can cause silicosis. Silicosis is a lung disease where lung tissue around trapped silica particles reacts, causing inflammation and scarring and reducing the lungs' ability to take in oxygen.”
Breathing in silica can cause lung cancer and “has been linked to other diseases, such as tuberculosis, chronic obstructive pulmonary disease, and kidney and autoimmune disease,” according to an OSHA “Hazard Alert.”
To make matters worse, many sand mining companies flout environmental regulations. Around 20 percent of Wisconsin’s 70 frac sand mines violated environmental laws in 2012, according to the Wisconsin Center for Investigative Journalism. One official at the Wisconsin Department of Natural Resources said he had issued noncompliance notices to as many as 90 percent of the frac sand sites that he visited.
But the industry is big business in Wisconsin, and has an ally in the governor’s mansion. In May, Governor Scott Walker visited a frac sand facility in Trempealeau County and praised the mining company for “delivering a high-quality product” while “maintaining a positive relationship with the Wisconsin communities surrounding the facilities,” according to the Milwaukee Journal Sentinel.
Just two weeks later, that mine, owned by Hi-Crush Proppants, agreed to pay a $52,500 settlement to the state’s justice department for violating environmental laws. The Wisconsin League of Conservation Voters believes that the state attorney general downplayed the settlement – it did not issue a press release announcing the settlement – in order to avoid bringing attention to Walker’s promotion of the company.
Despite the infractions by Hi-Crush, the city of Whitehall went out of its way to assist the company in opening up its frac sand mine in 2013.
The issue is divisive. Some people see the mines as a providing economic opportunity, but others want to ban them. The tension between economic development and public health is playing out in Wisconsin towns like Whitehall, but with such high demand for frac sand, mines are beginning to open up elsewhere.
And with drillers discovering the production gains they can achieve by using more sand, demand is set to continue to rise. U.S. Silica Holdings, another sand mining company, projects that demand will outstrip supply by 25 percent at least through the rest of this year.
Hi-Crush CEO Laura Fulton told The Wall Street Journal that frac sand prices could jump by 5 to 10 percent as a result. “There's really no limit on the demand side,” Fulton said in an interview.
By Nick Cunningham of Oilprice.com