Canadian companies vying to scoop up bigger share of frack sand market

CALGARY – North American demand has surged in recent years for the smoothest, hardest sand available and Canadian companies are looking to carve out a bigger chunk of the market.

The appetite is coming from the fracking industry, which in North America went from using about seven million tonnes of sand in 2007 to an estimated 35.3 million tonnes this year, accord to PacWest, a consulting group that tracks the industry.

Part of the fracking process involves shooting tonnes of sand down a well as fracking fluid splits open rocks to release trapped oil and gas. The sand granules wedge into cracks and keep them open so the hydrocarbons can be sucked out.

The process puts thousands of pounds of pressure on the tiny grains of sand, which is why the industry has high specifications for their sand, said Joe Peskunowicz, external vice-president at fracking company Canyon Technical Services Ltd.

“It’s got to be round, because if it’s angular, it will crush because of point loading,” said Peskunowicz.

“Sphericity and roundness are important for strength, as is quartz content.”

The best sand in the business is known as “Northern White,” and many Canadian companies think it’s good enough to justify hauling it some 3,500 kilometres from Wisconsin to the big shale plays of northern British Columbia and Alberta.

“More than half of Canadian demand is satisfied by U.S. supply just because Wisconsin has the highest quality sand,” said Samir Nangia, managing director of PacWest.

But with energy industry operators looking at any ways to save costs these days, importing sand from far away — and paying for it in U.S. currency — has become harder to justify.

“It is expensive to transport it to Canada,” said Samir. “So as a result, local sands are making inroads into the Canadian market.”

Several Canadian producers have stepped in to try to fill the gap and provide some of the 3.5 million tonnes used annually in the country, but it’s been a rocky start for some.

The exacting demands of the industry have already claimed some Canadian upstarts, said Peskunowicz.

“There’s been a couple of mines that started and made less than a quality product, and they went away. It all depends upon the deposit.”

Others have succumbed to the tough markets, which saw North American sand sales drop from $2.8 billion last year to an estimated $1.7 billion this year, according to PacWest.

Victory Nickel Inc. had to suspend operations at its recently opened processing plant near Medicine Hat, Alta., and Stikine Energy Corp., which was developing a project in northeastern B.C., is near bankruptcy.

Canadian Silica Industries tried to open a frack sand mine near Fort Nelson, B.C., but the Fort Nelson First Nation launched a legal challenge to have the project undergo an environmental review, and won the case last week.

Despite the challenges, those pushing forward with sand mine projects are optimistic for the long-term potential of the industry.

With the possibility of Canada’s liquefied natural gas market taking off, there could be significant growth in fracking demands, said Dean Stuart, a spokesman for Athabasca Minerals, which is trying to develop a frack sand mine north of Fort McMurray, Alta.

Stuart also said drillers are finding that more sand increases the effectiveness of the frack, with some wells using as much as 10,000 tonnes per frack, compared to an average of 2,000 tonnes.

“Even though the drilling activity is going down, the amount of sand being used per well is going up,” he said.