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Frac sand firms investing heavily near Rice Lake
This will be a summer of industrial construction in Northwestern Wisconsin, where frac sand companies are investing about a quarter-billion dollars into mines and processing plants just south of Rice Lake in Barron and Chippewa counties.
Mining companies literally are lining up to invest tens of millions into plants that wash, dry and sort the Wisconsin sand, which has a unique size. It’s been found to be ideal for injection into oil and gas wells to “fracture” underground fissures and release valuable petroleum products. The plants are creating hundreds of new jobs that pay $17 to $35 per hour.
“The economic benefits are substantial, to say the least,” said Richard Shearer, president and CEO of Superior Silica Sands. Last September, his Dallas, Texas-based firm opened a $70 million processing plant in New Auburn. Located midway between Rice Lake and Eau Claire, it employs 72 persons. Now, Superior Silica Sands is preparing to build a second plant. To be constructed in Clinton Township, south of Cameron, it likely will create 130 positions, counting employees and contracted truckers.
“We’ll have an operating budget of $35 million to $40 million. Mining and manufacturing tends to have a six- to seven-times multiple, so the impact to the local economy is $210 to $225 million per year. That’s a lot of jobs and a lot of benefits for western Wisconsin,” Shearer said.
“The construction cost is at least $50 million for a single wet-dry processing plant,” said Jeff French, Barron County administrator, and at least three will be constructed this year.
Shearer said the area has a qualified and willing workforce. Raised on farms, many local residents already have experience operating heavy equipment, which is a key element of the mining and processing work. The recession has forced some to leave the area to find jobs, and many are anxious to return, he said.
The area’s sand layer tends to be covered by 20 to 100 feet of overburden. It is removed by heavy equipment, with the topsoil set aside for future land reclamation. Usable sand is found in a layer that ranges from 30 to 50 feet, Shearer said. After it’s transported to a wet plant, clay and other contaminants are washed away. Then the sand is moved to a dry plant, where moisture is removed and it’s sorted by grain size for shipment to oil and gas fields in North Dakota, Texas, Louisiana and Pennsylvania.
In addition to Superior Silica Sands, two other firms plan to construct processing plants this summer, according to Bob Missling, executive director of the Barron County Economic Development Corp.
“Together, they’ll add about 100 jobs,” he said of facilities to be constructed by Great Northern Sand, a division of CRS Proppants of Houston, Texas, and Chieftain Sand, based in Garland City, Ark. Both companies intend to build processing plants in the Town of Dovre, about 25 miles south of Rice Lake near U.S. Highway 53.
Those facilities, along with the New Auburn plant, have been built along a transportation corridor operated by Progressive Rail. It links with Union Pacific in Alma, Wis. Superior Silica’s proposed Clinton Township plant, however, is sited on dormant Canadian National right of way that runs from Ladysmith to Almena. Restoring service to that corridor is critical to keeping expenses reasonable, Shearer said.
“It’s very expensive to haul this product around the country,” he explained, and having access to rail lines is a critical in moving processed sand from northwestern Wisconsin to oil and gas extraction sites.
“We’ve had several meetings with CN Railroad to encourage them to reconstruct that 40 miles of track. They’re talking with another company as well. They’re open to that as long as they have enough business to justify investing the money that’s required,” he said. “Before they’ll make that investment, they’re going to want signed contracts assuring them a certain amount of tonnage will indeed be transported on that track.”
A variety of permits must be obtained before the plants can operate, French said, including ones issued by the Wisconsin Department of Natural Resources addressing air emissions and the drilling of high-capacity water wells. The facilities use significant amounts of water. In Chippewa Falls, for instance, Canadian Sand and Proppants is constructing a plant that’s expected to annually consume 125 million gallons. Much of it is lost through evaporation during the washing process, while some is used to suppress dust from the sand. That’s an important precaution because long-term exposure to crystalline silica can cause silicosis, a sometimes-fatal disease. When it leaves the region by rail, the sand is loaded into enclosed hopper cars.
Sand companies also must obtain county permits for land reclamation and trucking. In some cases, they must negotiate township road use agreements with to address noise and dust concerns.
After the sand is removed, mining companies face strict reclamation requirements, Shearer said, and must restore the overburden and topsoil.
“We don’t leave a big open pit. We level off knolls and the land becomes usable again,” he said.
Acceptance of the new industry isn’t universal, however. According to regional newspapers, numerous area cities and counties have enacted temporary moratoriums on the frac sand mining. They include Houston, Goodhue and Wabasha counties and the cities of Winona, Cannon Falls and Red Wing in Minnesota and Buffalo and Eau Claire counties in Wisconsin.
In response, the Wisconsin legislature in 2011 enacted a new law that strictly defines when governmental bodies can impose restrictions. Among other things, it requires them to provide a statement describing the problem giving rise to the need for the moratorium, a statement of the specific action that the municipality intends to take to alleviate the need for the moratorium, the length of time during which the moratorium is to be in effect, a statement describing how and why the governing body decided on the length of time for the moratorium and a description of the area in which the ordinance applies.
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