Canadian Pacific gets a grip with frac sand deal
Written by Railway Age Staff
Canadian Pacific has signed on to operate frac sand unit trains to one of North America’s major oil and gas drilling centers.
The deal comes as Smart Sand, Inc. announced that it acquired the rights to operate a unit train-capable transloading terminal in Van Hook, N.D., to service the Bakken Formation energy basin, for $15 million.
As part of this transaction, Smart Sand and Canadian Pacific have entered into a long-term agreement to service Van Hook directly along with the other key oil and gas exploration and production basins of North America.
Smart Sand, based in The Woodlands, Texas, expects to begin operations at Van Hook in April.
“CP is committed to working with its strategic partners to drive sustainable growth in the frac sand market,” said Coby Bullard, CP’s Vice President Sales and Marketing, Merchandise and Energy, Chemicals and Plastics. “Working with Smart Sand to repurpose this existing rail facility into a high-efficiency sand terminal is well-aligned with our commercial strategy to maximize capacity and asset utilization. It capitalizes on our high-capacity corridor between the nation’s premier proppant-producing region and North Dakota’s Williston Basin.”
The agreement is noteworthy because while early fracking efforts valued Wisconsin white sand for its quality and uniformity, evolving technology now utilizes as much as double the amount of sand as a few years ago, greatly increasing demand and leading oil and gas drillers in regions further from Wisconsin to have lesser-quality sand sourced nearer their wells delivered by truck.
“We are excited to partner with transportation leader CP to offer our customers competitive, efficient rail service for our Northern White frac sand to operating basins throughout North America,” said Smart Sand Chief Executive Charles Young. “In particular, our new unit train-capable terminal in Van Hook allows us to continue growing our presence in the Williston Basin. With our previously announced annual processing capacity expansion from 3.3 million to 5.5 million tons, our Oakdale, Wisc., mining operation continues to deliver frac sand in the quantities and with the efficient logistics needed to support today’s higher-intensity finer mesh frac designs. This agreement with CP is another step forward toward Smart Sand’s goal of being an integrated mine-to- wellhead supplier of frac sand.”
