By LeAnn R. Ralph
COLFAX — With a boom starting in 2011, followed by a bust in 2013, a boom in 2014-2015 and another bust in 2016-2017, frac sand mining in West Central Wisconsin has had a temporary pickup but is now in a slump again.
The future of frac sand mining was the topic of discussion on the West Side on Wisconsin Public Radio, 88.3, June 3.
Guests on the show, hosted by Dean Kallenbach, were Dan Masterpole, director/county conservationist from Chippewa County Land Conservation and Forest Management; Samir Nangia, director of energy consulting at IHS Markit; and Rich Kremer, who covers the frac sand beat for the Wisconsin Public Radio office in Eau Claire and who recently received the Eric Sevareid Award for his reporting on frac sand mining.
Demand for frac sand mined in Wisconsin is drying up because sand from Texas is being used in the oil wells, Kallenbach said.
Some of the sand mines in West Central Wisconsin may close or go bankrupt, he said.
Silica sand is used for extracting oil and natural gas from wells in places like North Dakota, Texas, Oklahoma, Colorado, Wyoming, Pennsylvania and Virginia.
Silica sand mined in Wisconsin, called Northern White, is valued for the roundness of the grains and the high crush strength.
Silica sand, mixed with water and chemicals, is pumped down oil and natural gas wells to “prop” open the cracks in the rock to let the oil and natural gas flow out.
Chippewa County has 13 sand mines, Masterpole said.
According to the state Department of Natural Resources, there are 128 permitted sites in the state, and 92 sites are active, Kremer said, noting that he is not certain when the numbers were last updated.
Between 4,000 and 5,000 acres have a permit to mine frac sand in Chippewa County, but the number of acres actually being mined is between 500 and 1,000, Masterpole said.
Sand mines follow different business models. While some companies purchase the land outright, others lease the land, and the landowners receive royalties, he said.
Recently there has been an increase in the supply of frac sand from the Texas sand dunes, Nangia said.
While the quality of the Texas sand is not as good as Wisconsin sand for crush strength and roundness, the Texas sand is “good enough,” he said.
The operators of the Texas oil wells figured out they could get good production with cheaper sand from West Texas, Nangia said.
The cost to ship sand by rail from Wisconsin is higher than the cost to truck sand from West Texas. The Texas sand dunes have very little overburden, so it also is easier to get at the sand than it is in Wisconsin, he noted.
In Nangia’s opinion, the oil wells in North Dakota and out east in Pennsylvania and Virginia, and out west in Colorado and Wyoming, will continue to use Wisconsin Northern White sand.
The Permian Basin accounts for more than half of the drilling and fracking in the United States, Nangia said.
The Permian Basin is located in western Texas and southeastern New Mexico.
Concerns
One person who called into the radio show noted that sand mining is often a contentious issue in communities, causing animosity among neighbors and environmental concerns about air quality and water quality.
At public hearings for sand mines, people often express concerns about environmental issues and concerns about nuisance issues, Masterpole said.
Sand mines are required to have a reclamation plan, and the law requires mining companies to meet state rules for surface water and groundwater protection, he said.
The companies are required to post financial assurance that if mining ceases, reclamation would occur immediately. Reclamation is supposed to occur contemporaneously as part of the mining operations, Masterpole said.
Other impacts of mining can be more of a nuisance, such as hours of operation, dust, traffic and noise and are best addressed through county zoning or township mine license rules, he said.
Emerge Energy
One caller who did not want to go on the air wondered if Chippewa County has enough money to reclaim sand mines if Emerge Energy Services goes bankrupt.
Emerge Energy is the parent company of Superior Silica Sand operating in Barron County and Chippewa County.
Kremer said he read recently that Emerge Energy was working on a restructuring deal with the lenders, and if the company can reach an agreement in which the lenders can take over the company, Emerge will be able to avoid filing for bankruptcy.
In August of 2014, Emerge Energy was selling for $140 per share. The morning of the radio show, Emerge Energy was selling for 20 cents per share, Kremer said.
In regard to Chippewa County having the money to do reclamation if Emerge goes bankrupt, “yes, Emerge is current on bonding levels,” and the county has sufficient bonding in place for reclamation of the mine sites, Masterpole said.
Restructuring does not mean all of the sand mines will close down, Nangia said.
Emerge Energy and Hi-Crush contracted for silica sand for a couple of years. The prices dropped, and contracts must be renegotiated. Operations will be reduced, but they will not go down to zero, he said.
Fracking
Kallenbach asked about the environmental impact of fracking operations on groundwater.
Fracking occurs far below the water table, Nangia said.
Cement casing is used on the oil and natural gas wells that are being fracked, and a thicker casing is used where the well is going through the water table, he said.
In some places, such as the Permian Basin and the Delaware Basin, for every barrel of oil that is produced, two to four barrels of water come to the surface. The water is coming from 8,000 to 10,000 feet below the surface and must be disposed of properly, Nangia said.
Groundwater
Industrial sand mines must have monitoring wells to establish the current groundwater elevation around sand mines and to determine the water chemistry, Masterpole said.
Over the past seven years, Chippewa County has worked with the mining companies and the townships and has been able to document that the sand mines have not had a direct impact on the elevation of the groundwater in the area, he said.
The groundwater chemistry also has shown no significant changes so far, Masterpole said.
One woman who called in to the radio show said eight horses had died in Trempealeau county from drinking water contaminated with arsenic from the sand mines.
Kremer said he was aware of a lawsuit filed in Trempealeau County concerning Hi-Crush in Whitehall and Blair, but the lawsuit was related to property values.
Over his years of reporting on sand mines, Kremer said he has heard many complaints about well water changing in the vicinity of the sand mines.
Sand mining disturbs layers of rock containing aluminum, iron and arsenic, he said.
The DNR issued a news release in 2016 stating the agency was going to study water in the sand mine holding ponds. The companies reuse the water over and over to wash the sand, and the concern from the DNR was that metals would become more concentrated in the water, Kremer said.
A spill in Trempealeau County from the Hi-Crush operation released 10 million gallons of process water. The spill turned some tributaries and the Trempealeau River orange for a few days. High levels of metals were found in the sediment, although there were no fish kills associated with the spill, he said.
Mothballs
Is there a concern that if the sand mines are “mothballed,” reclamation will be postponed? Kallenbach asked.
Yes — there are concerns. Mining is moving past the peak phase and into a time where the mines will have an intermittent mining status, Masterpole said.
The counties where the mines are located, and the companies, are going to have to make sure the mines are stabilized if they are mothballed, he said.
The companies will have to decide if they are going to close the mine sites and then come into full reclamation, Masterpole said.
Badger Mining has an active reclamation program that shows what can be achieved, he said.
Alternative Energy
Kallenbach wondered if alternative energy sources, such as wind and solar, pose a threat to oil and to sand mining.
“Yes,” Nangia said, “over the long term.”
Over the short term, wind and solar energy are only available when the wind is blowing or the sun is shining, and natural gas is used to “bridge the gap,” he said.
Solar energy and wind energy can create more demand for natural gas, and natural gas is all coming from fracking operations, Nangia said.
When oil prices decreased, industry analysts said sand mining could not be profitable unless the companies were selling the sand for $70 per ton, and now the price is $50 to $60 per ton, Kremer said.
While West Central Wisconsin may see fewer sand mines in the future, sand mining for fracking and for industrial purposes will “be around for a long time,” he said.
