U.S. Silica Holdings Inc. announced that it plans to build a second, state-of-the-art frac sand mine and plant in West Texas to serve the rapidly growing Permian Basin.
The new facility, located about 60 miles north of Midland, near Lamesa, Texas, is expected to produce approximately 2.6 million tons annually and is part of the company’s previously announced plan to add 8 to 10 million tons of new Brownfield and Greenfield capacity to meet surging frac sand demand.
The $150 million project will be funded with cash on hand and cash flow from operations. The company has secured customer commitments for the purchase of 1.2 million tpy of sand including cash pre-payments, and for up to four Sandbox crews to deliver the sand directly from the mine to customer well sites.
Construction of the mine and plant will begin immediately, and initial production is expected in March of 2018. The 3,500-acre site has over 30 years of reserves of fine grade 40/70 and 100 mesh. Besides having high-quality reserves, the site has ample water supply, good transportation infrastructure and is located outside of the area in West Texas that has been identified as providing potential habitat for the Dunes Sagebrush Lizard.
“Mine location and logistics capabilities are key competitive advantages to fully serve our customers in the Permian,” said Bryan Shinn, president and chief executive officer. “I believe that our new site in Lamesa, together with our Crane County facility, gives us the best West Texas mine footprint. We expect to be closer than competitors to almost half of the horizontal rigs operating today in the Permian and that should translate into better service and lower overall cost for customers.” Shinn added that, “Being able to deliver a total mine to blender sand solution by utilizing our Sandbox system further extends our industry leading position.”
With the addition of 2.6 million tons of capacity at Lamesa, the company’s total capital expansion program is now expected to deliver nearly 9.5 million tons of incremental annual supply, including 4 million tons at Crane County, and 2.8 million tons at its Tyler, Kosse and Pacific sites, collectively.