EAU CLAIRE — Sand mining isn’t new to Wisconsin or Minnesota. And despite a significant, prolonged slowdown in the industry, it’s here to stay.
But the current bear market for sand could last a while.
Rich Budinger, president of Wisconsin Industrial Sand Association, says the slowdown began around Thanksgiving last year.
He is less certain of exactly when the market will pick up again.
In the meantime, demand for frac sand could dip even lower.
The industry usually experiences a dip in demand during the winter months when the oil fields often slow down production for maintenance.
“We still are expecting to see that,” said Budinger, who remains optimistic about frac sand’s future. “We’re hoping that after that break we come out stronger. We expect that 2016 is going to be a better year than 2015.”
The frac sand outlook was a prime topic of conversation at a conference put on by the Chippewa Falls-based Wisconsin Farmers Union and the Wisconsin Towns Association Monday at the Plaza Hotel in Eau Claire.
More than 160 people from around the state — and beyond — showed up to discuss all things sand.
WFU President Tom Quinn, who kicked off the event, cited data suggesting that a significant increase in demand for frac sand isn’t likely until 2017, if not later.
“It’s all, of course, tied to crude oil,” he said.
But Quinn also offered a similar prognosis as Budinger, saying, “The demand for sand is predicted to stabilize.”
While predictions are just that, Budinger points to the mining industry’s history as an indicator of what could happen in the future.
“These cycles are not new in the industry. (It has) ebbed and flowed over the past few decades,” he said.
Frac sand has been a contentious issue across western Wisconsin and southeast Minnesota, and the industry’s slowdown may please its critics, but it isn’t necessarily a reason for everyone to cheer. Like it or not, sand mines have become economically linked to communities in the Chippewa Valley.
The WFU keeps tabs on the industry due to its effects on rural communities. These mines offer good-paying jobs in rural areas where they can be hard to come by. The slowdown has resulted in the loss — even if only temporarily — of some of those jobs.
Quinn raised the question of the impacts the downturn will have on secondary businesses that have popped up to support sand mining.
“If the downturn lasts too long, how will those ancillary industries be affected?” he asked.
So far, there is more uncertainty than answers.
“The hardest thing in the world is predicting oil prices and we are now a part of that system,” Quinn said.
When the demand for oil picks up again, Budinger suggested that Wisconsin sand producers have something going for them: quality.
“It’s the highest-quality sand in North America,” he said.
When the price of oil is low, that may not be valued as much by oil companies, Budinger suggested. But when prices go back up, the companies will become quality-conscious again.
“That’s going to be all about Wisconsin,” Budinger said.