The Secondary Effect

By Staff Report | April 22, 2013

David Ganje is a third-generation South Dakotan, natural resources attorney and, after his silica sand mining operation opens in 18 months, a prime example of someone linked to the Bakken’s secondary effect. As Ganje explains it, S.D. can be classified into that secondary effect because although the state is not participating in direct oil or gas production, its economy is clearly affected. 

In early 2012, Ganje cofounded Cambrian Enterprises LLC, a frack sand mining company that he hopes will play a large role in several states. Cambrian has already issued requests for proposals from potential mining firms, and expects to be through permitting and in operation in roughly 18 months. Cambrian has the rights to roughly 600-acres of land in the S.D. counties of Custer, Lawrence and Pennington. Silica sand from each location has already been tested by two third-party testing labs and, according to Ganje, the quality of the sand meets the American Petroleum Institute’s hydraulic fracturing sand requirements. Sand from the locations would be shipped via truck to warehouses in North Dakota or Montana for use in the oil retrieval efforts. “The Cambrian claims when developed into a mining operation,” Ganje says, “would be the western-most known silica sand mining operation in the U.S.” 

The Cambrian mines wouldn’t however, be new to the region. The Black Hills region has established mining operations, and gold mining in the Black Hills has been ongoing since the 1870s. The largest producing gold mine in North America, the Homestake Mine, is right next door near Lead, S.D., and Deadwood, S.D.

Oil and gas production may not be a primary driver of development within South Dakota, but Ganje says he is seeing signs that it will. Natural resource attorneys are busy, and land acquisition specialists have started to travel the state to lease mineral acres. “You are seeing much more activity in S.D.,” he says, “than you have seen since the 1950s. Science and technology indicates there is some potential in S.D., and you see leasing at a number you didn’t see before.” 

The secondary effect and frack sand supply isn’t just about South Dakota either. Wisconsin currently provides more than two-thirds of the frack sand used in the Bakken, and recently, Northern Frac Proppants LLC, a Wisconsin-based company, signed a sand supply agreement with CARBO Ceramics, a global proppant supplier with a large presence in the Bakken.