U.S. Silica building frack sand mine, plant to support Permian

By Patrick C. Miller | June 20, 2017

U.S. Silica Holdings Inc. plans to build a new state-of-the art frack sand mine and plant in West Texas to serve expanding oil and gas activity in the Permian Basin.

Approved earlier this month by the company’s board of directors, the new facility is expected to produce approximately 4 million tons annually and is part of U.S. Silica’s previously announced plan to add approximately 8 to 10 million tons of new brownfield and greenfield capacity to meet the high demand for frack sand.

"We believe we've selected one of the most advantaged sites in West Texas with good availability of water, easy access to Interstate 20 and a location that is equidistant to the hearts of both the Delaware and Midland Basins,'' said Bryan Shinn, U.S. Silica president and chief executive officer.

Construction will begin immediately and initial production is scheduled for late in the fourth quarter of 2017. The 3,200-acre site has more than 30 years of reserves of fine grade 40/70 and 100 mesh sand.

Shinn said customers have told the company that they want more sand supply in the Permian to support future well completions.

“Their willingness to negotiate long-term supply agreements for this new capacity and to potentially commit their own capital to the project demonstrates the confidence they have in U.S. Silica and the tightness of the frack sand market now and in the future," he explained.

The company expects to enter into similar agreements for other capacity expansion projects currently underway.

The $225 million project will be funded from cash on hand and cash flow from operations. It’s expected to be supported by long-term supply contracts with leading oilfield companies, which include cash pre-payments.

U.S. Silica produces commercial silica for the oil and gas industry and in a wide range of industrial applications. Headquartered in Frederick, Maryland, the 117-year-old company operates nine industrial sand production plants and eight oil and gas sand production plants. U.S. Silica also has offices in Chicago and Houston.