Rock Products

NOV 2014

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ROCK products • NOVEMBER 2014 17 As Williston Basin operators accelerate the use of sand for hy‐ draulic fracturing – as much as 6 million lb. per well in some cases – there is an even bigger ramp up in new sand mines in Wiscon‐ sin and unloading terminals in North Dakota, according to Big Sky Business. EDG Resources, for example, uses 1,000 lb. of sand per lateral foot – about 2.5 to five times higher than proppant used on the average Bakken well. Some estimates put the prop‐ pant market in North America to exceed one billion pound worth $10 billion by 2017. One projection from PacWest, estimates the Bakken, Eagle Ford, Permian and Appalachia plays will account for 83 billion lb. by 2015 – accounting for 75 percent of the total U.S. proppant consumption. Even with the expansion, operators still cannot get enough sand. "They are bringing in sand by trucks from Wisconsin," said Gabe Claypool, president and CEO of Dakota Plains Holdings, Inc. "because they cannot get enough sand cars. The railroads cannot keep up with the demand." Carbo Ceramics recently reported that average selling prices per lb. for proppants sold during the second quarter of 2014 were as follows: Ceramic $0.33; Resin Coated Sand $0.21; and Northern White Sand $0.03. Primarily due to the change in product mix, the average selling price per lb. of all proppant was $0.21 during the second quarter of 2014 compared to $0.30 for the same pe‐ riod in 2013. In addition to product mix, average selling prices can be impacted by sales prices, geographic areas of sale, cus‐ tomer requirements and delivery methods. Hi‐Crush Partners LP announced the appointment of Jeffery A. Johnson as director of environmental compliance, with the re‐ sponsibility for maintaining and administering the regulatory compliance programs for all Hi‐Crush facilities. Johnson brings more than 15 years of experience to the company, with the ma‐ jority working within the environmental regulatory programs at the Wisconsin Department of Natural Resources. Johnson will have a senior leadership role in the continued development and implementation of Hi‐Crush's environmental programs. "Hi‐ Crush continues to be fully committed to operating in an envi‐ ronmentally responsible manner and strives not only to meet, but to exceed, environmental regulatory requirements in the communities where we operate," said Robert E. Rasmus, co‐chief executive officer of Hi‐Crush. "We are excited that Jeff has joined the Hi‐Crush team and believe that Jeff's extensive experience and leadership in regulatory and environmental matters is a great fit for Hi‐Crush as we continue to expand our operations." Canadian National Railway's net income surged 21 percent to $853 million in the third quarter as revenues reached a record $3.12 billion. Revenues grew 16 percent from $2.7 billion as car loadings increased 11 percent to 1.47 million and revenue‐ton miles were up 13 percent. "Clearly we are growing much faster than the economy, which is our game plan," said CEO Claude Mon‐ geau. The railway saw its volume reach a record high in the quar‐ ter on robust grain shipments and strong growth in energy markets. Analysts foresee strong growth prospects for CN in crude oil and frac sand. (PLS) project, and about 30 km south of the southernmost mapped margin of the basin. It also lies adjacent to the east of the Athabasca Minerals silica sand project. "The economics of a project like Firebag can be vibrant," stated Miller. "With a growing demand for API standard sil‐ ica sand and a large potential resource, a strategic joint ven‐ ture at this stage makes economic sense for us." LaRonge Scores Huge Reserve La Ronge Gold Corp. has entered into a binding letter of agreement for an option to acquire a 100 percent undivided right, title and interest in an approximately 520‐acre prospective frac sand property located in northeast Arkansas. The property is a greenfield frac sand exploration prospect underlain by the Ordovician St. Peter sandstone formation. There are several surface outcrop exposures of the St. Peter sandstone unit on the property. The St. Peter formation is host to a number of producing frac sand mines/quarries, namely, Guion (Unimin), Crystal City, Pacific (U.S. Silica), Agusta (Hi‐Crush), Festus, Pevely, Alton, Ottawa (U.S. Silica), Kasota and Ottawa Township, all of which supply "Tier 1" quality frac sand (also known as Northern White or Ottawa White Sand) to oil and gas oper‐ ations in the U.S. Tier 1 frac sand specifications are set out in ISO 13503‐ 2:2006/API RP 19C Recommended Practice for Measure‐ ment of Properties of Proppants Used in Hydraulic Fracturing and Gravel‐packing Operations. These properties include sand sphericity and roundness, crush (K Value), acid solubility, turbidity and SiO2 content. Tier 1 frac sand demand is on the rise in the U.S. and glob‐ ally. Morgan Stanley's "Industry View" published Aug. 27, 2014, states "...we expect (frac) sand demand to nearly double (+96 percent) in 2016 vs. 2013, driven by 59 percent sand/well growth, vs. capacity growth of only 76 percent." Raymond James' "Global Research" published Aug. 19, 2014, states "...we foresee robust growth in North American sand demand over the next three to five years, with aggregate consumption expected to reach approx. 78 million tons by 2016, representing a approx. 22 percent CAGR between 2013 and 2016." La Ronge President and CEO Rasool Mohammad com‐ mented, "In view of recent advances in fracking technology, and the resultant increase in Tier 1 frac sand demand, we believe this opportunity will give La Ronge a potential to sell into the large Southern U.S. oil and gas plays." News Briefs

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