Dogged by low oil prices, Wisconsin’s once-booming frac sand mining industry is down but not out.
An industry trade magazine will host a two-day conference next week in La Crosse where the goal is to provide practical knowledge — along with hope that oil prices will eventually rebound and North Dakota drillers will again buy their fine-grained sand.
Even as layoff notices have become a nearly monthly occurrence at Wisconsin sand mines, the frac sand industry is poised for a rebound.
“We’re still here,” said Marty Lehman, president of the Wisconsin Industrial Sand Association. “We’ve been through this before. It’s a cyclic industry.”
The conference, scheduled for Tuesday and Wednesday, is expected to draw 300 to 400 people to the La Crosse Center, where topics will range from mining techniques and management to the market outlook and even how to open a frac sand mine.
Promoters say the Frac Sand Insider conference “will help producers prepare for that future while weathering immediate market uncertainties.”
It will be the first time the conference — now in its third year — has been held in Wisconsin.
“We’re looking to provide hope,” said Mark Kuhar, executive editor of Rock Products magazine, the parent publication of Frac Sand Insider. “One of the best places you can find hope is when you get together with your peers.”
Kuhar said sand producers are also looking for ways to improve their processes.
“They’re looking for ways to do it better,” he said. “Every efficiency you can come up with in tough times is an extra dollar.”
For years, companies have mined the fine-grained silica sand prevalent in western Wisconsin for industrial use. But advances in a gas and oil mining technique known as hydraulic fracturing created enormous demand for the sand, which is used to open cracks in underground rocks.
According to Wisconsin Department of Natural Resources records, there are now 129 mines and processing facilities in the state. But falling oil prices have led North Dakota drillers to idle wells, and the demand for sand has plummeted, idling many of those mines.
Frac sand producers have announced plans to lay off nearly 190 Wisconsin workers so far this year, accounting for nearly 10 percent of the state’s mass layoffs reported by the Department of Workforce Development. About 120 workers were laid off last year at three sites in Monroe, Eau Claire and Chippewa counties.
“For the people who supply sand… the question becomes how do we maintain a viable business,” Kuhar said. “If you’re a big company … it’s easier to ride the wave. If you’re a smaller company it’s a little harder to maintain.”
Despite the industry optimism, the outlook is not sunny.
According to the market analysis firm PacWest, demand for proppant sand peaked in the final three months of 2014 at 30 billion pounds. It is expected to bottom out near the end of 2016 at something less than half that amount, said Thomas Jacob, lead analyst for the industry publication ProppantIQ.
While demand is expected to rebound in 2017, Jacob does not expect a return to 2015 levels in the next two years.
“It will be a very, very slow recovery,” he said.
Anti-frac groups on alert
Despite the outlook, environmentalists and anti-mining groups are not dropping their guard.
“I think people can expect this industry to be around for a long time,” said Kellan McLemore, a staff attorney for Midwest Environmental Advocates. “There are a ton of proposed operations just waiting to go on line…. We get notices from citizens almost weekly about mining companies buying land or securing mineral rights.”
The Wisconsin DNR has not been effective in regulating the industry, McLemore said, which raises concerns about the health impacts of fine dust on neighboring residents and the release of waste water and sediment into public waters.
MEA has objected to the DNR’s proposed new storm and waste-water permit for mines, saying it does not comply with the federal Clean Water Act.
Others are focused on banning frac sand mining at the local level. A coalition of more than 10 regional organizations is planning a rally outside the La Crosse Center on Tuesday.
“This is really a wildcat industry. It can’t be regulated well with the resources we have,” said Doug Nopar of the Land Stewardship Project, which is pushing for a mining ban in Winona County, Minn. “It’s time to just say no.”