COLFAX — After a disappointing 2015 and 2016, the frac sand industry in Wisconsin is moving forward at a record rate. That was the message delivered by Rick Shearer, president and CEO of Superior Sands, to members of the West Central Wisconsin Regional Planning Commission on Thursday, Nov. 9, at Little Slice of Italy restaurant in Colfax.
When Superior Sands started operations in 2010 in western Wisconsin, it was “all good,” Shearer said. Production went up and up from 2011 to 2014, he said. But February 2015 saw the beginning of about a 50 percent drop in demand.
OPEC, the Organization of Petroleum Exporting Countries, was the reason for the slide.
“We began to be a thorn in their side,” Shearer said, about the fracking industry as a whole. OPEC decided to drive the oil price down to drive out companies doing fracking, thus cutting the demand for sand. The consequences were sudden and dramatic. Superior Sands lost 53 percent of its workforce. The company’s revenues dropped $50 million in 2016.
The resulting crisis drove a lot of changes in the industry.
“We spent the dark days of the downturn reinventing ourselves,” Shearer said. “Engineers found better ways to drill.”
Drillers started using more sand per well, doubling the amount used and requiring higher quality sand — like the kind found in western Wisconsin — to produce much more hydrocarbon.
Superior Sands itself worked to reduce costs, broaden its customer base, develop new technology, including a plant in Barron to coat the sand to reduce dust at the well site and improve logistics with 17 storage terminals. The company purchased a mine in south Texas, where the sand “isn’t as good,” Shearer said. But the location meant the cost to deliver sand to the well site was not as great.
After the downturn and industry improvements, the economics of drilling and mining changed. Before 2015, companies needed to see oil at $50 a barrel to make fracking profitable. Now it is $30 a barrel, Shearer said.
OPEC has responded by giving up on the effort to eliminate fracking and started moving oil prices back up.
“Northern white sand is not dead,” Shearer said, about the kind of sand produced in western Wisconsin. “We are not throttling back.”
Superior Sands is actually shipping Wisconsin sand to countries around the world, as fracking picks up globally.
“We are here for the quality of the sand, the crush factor and the coarseness,” Shearer said. “This is very unique geology here. Maybe the best frac sand on the planet is right here in West Central Wisconsin.”
The market for sand has rebounded, Shearer said. Company profit this year should be $40 million and next year is projected at $150 million.
“This is a cyclical business,” Shearer said. “There is no denying it. But when it’s good, it’s very good.”
Quote “This is very unique geology here. Maybe the best frac sand on the planet is right here in West Central Wisconsin.”