Smart Sand Inc. plans to build a $10 million rail-loading terminal near Tomah, Wis., that would allow one of the state’s largest frac sand mines to ship its product to new markets, according to the La Crosse Tribune.
Smart Sand Inc. has applied to state and federal officials for permission to fill about 2.5 acres of wetlands for a proposed project that would include nearly seven miles of looped track that could accommodate four trains longer than 1.5 miles. The terminal would handle sand from Smart Sand’s nearby 1,118-acre Oakdale mine.
The Oakdale mine is along Canadian Pacific tracks, which provide a direct connection to oil wells in North Dakota. Smart Sand says a connection to the Union Pacific line will give the company access to customers in Texas, Oklahoma and Colorado.
“Having the option to ship direct to customers, on multiple rail lines, from one facility would provide a significant cost savings,” the company said in its permit application. That fits with industry expert predictions that sand companies who survive the recent slump in oil prices must be located on major rail lines and have facilities to load unit trains – the cheapest and most efficient mode of transport.
With lagging demand and depressed prices, there is no longer enough profit margin to support both mines and shippers, Joel Schneyer, managing director for the investment banking firm Headwaters MB, said at the recent Frac Sand Insider conference.
According to documents filed as part of a 2014 initial public offering, the Oakdale mine contains up to 281 million tons of sand, which is expected to last more than 100 years operating at its 2.2 million-tpy capacity.