South Dakota Proppants LLC (SDP) plans to build the state’s first silica mine at a 960-acre site in the state's Black Hills forest, according to media reports.
The proposed facility – a mine, processing and transport hub – is located within 300 miles of North Dakota’s Bakken, Colorado's Niobrara and Wyoming's Powder River Basin. If built, the facility will make South Dakota the latest state with marginal oil and gas reserves to profit from the nation's hydraulic fracturing drilling boom.
SDP says the proposed $65 million facility will generate 1 million tons of sand a year.
Sand typically arrives at drilling sites by rail from Wisconsin or Minnesota. By using trucks instead of rail, SDP can save more than $50 per ton of sand, according to Patric Galvin, the founder and owner of South Dakota Proppants.
South Dakota officials and companies have wanted to enter the frac sand industry for years but their sand's poor quality has held them back. State geologists have sampled dozens of potential sites for the right sand and consistently come up short.
The company's sand quality tests confirmed their resource meets the American Petroleum Institute's standards. “This particular mine site is very unique,” Galvin said. “We think that the same sand type [from Wisconsin] exists in this particular formation.”
The mine site is located in a national forest, around 14 miles from the nearest community. If approved, SDP's facility won't be operational until 2016. Before then, the company has to complete an environmental impact study for the site, as well as submit several permits, including one with the U.S. Forest Service.
The public also has a chance to weigh in. If the facility is approved, SDP will need another six to eight months to build it.