Hi-Crush Partners announced plans Monday to expand production by more than 45 percent at its frac sand mine in Monroe County.
The Texas sand company said in a news release that it has amended its contract with one of the world’s largest oil production companies to provide an additional 850,000 tons of sand each year from its Wyeville mine as well as 3 million tons from a new mine to be developed in Kermit, Texas.
Both mines will supply sand to the Permian basin, which produces more than a third of the domestic crude oil supply.
Hi-Crush did not provide an estimated cost for the Wyeville expansion or say whether it would result in additional jobs. A company spokesman did not respond to messages Monday and Tuesday.
The expansion, expected to be completed early next year, will not require any modification to Hi-Crush’s local permits, said Bryce Richardson of the Monroe County Land Conservation Office. It could require a modification of the air emissions permit, but Roberta Walls, industrial sand sector specialist for the Wisconsin Department of Natural Resources, said the agency doesn’t have enough information yet to know.
The 857-acre Wyeville mine and adjacent processing and loading facility has an estimated 82.1 million tons of reserves and currently is capable of producing 1.85 million tons a year. It is one of four Hi-Crush facilities in Wisconsin.
Earlier this year Hi-Crush released 10 million gallons of liquid into the Trempealeau River during the rescue of a worker whose bulldozer slid into a 3-acre holding pond.
Domestic production of silica sand last year was about 105 million tons, just shy of the all-time record, according to the U.S. Geological Survey. Hi-Crush expects demand to top 110 million tons this year and climb even higher in 2019. Wisconsin has historically produced about a third of the nation’s industrial sand.
Kent Syverson, chairman of the UW-Eau Claire geology department and an industry consultant, said it’s significant that Hi-Crush is investing in Wisconsin despite an industry trend to develop “in basin” mines near wells in Texas in order to avoid costly cross-country shipping, which generally costs more than the sand itself.
“That’s truly a vote of confidence,” he said. “That they think they’re still going to be able to move that material and they’re expanding.”
Hi-Crush also announced plans Monday to buy FB Industries, a manufacturer of silo sand storage systems, for about $60 million. The acquisition and expansion are expected to push capital expenditures to between $180 million and $210 million for 2018.
“With these Northern White and Permian expansions, we are uniquely positioned to best serve our customers and the growing demand for frac sand and logistics solutions expected in 2019 and beyond,” CEO Robert Rasmus said in a news release.
The company also said it sold just over 3 million tons of sand during the second quarter with expected revenue of $247 million to $249.5 million.
Hi-Crush’s stock value jumped more than 30 percent Monday with more than 12 million shares changing hands.