CN will start serving this month a new frac sand production facility of Source Energy Services (SES) on its Wisconsin rail network.
The SES production facility in Weyerhaeuser, Wis., is located on CN's rehabilitated Barron Subdivision. It will have an annual production capacity of 1.2 million tons of high-grade sands and is expected to reach 2 million tons by the third quarter of 2014. The production facility formerly belonged to Canadian Sand and Proppants.
CN spent US$35 million in 2012 to restore a 40-mile segment of the subdivision between Ladysmith and Poskin, Wis., to serve the frac sand market. CN has 11 frac sand facilities on its Wisconsin network. It is seeing substantial increases in frac sand production in this area because of reserves of high-quality and in-demand sands. These are used by the oil and gas industry in the hydraulic fracturing process to hold shale fractures open to let natural gas and oil flow out.
"SES is excited to partner with CN on this project, which will advance our goal of becoming a major player in the frac sand industry," said Brad Thomson, president and CEO of Calgary-based SES. "In conjunction with the opening of the production facility in Wisconsin, SES will also bring on-line the largest frac sand terminal in the Western Canadian Sedimentary Basin in Wembley, Alberta, on CN's network near Grande Prairie."
"With a loop track and on-site storage capacity of 40,000 metric tons of sand, this will be SES's ninth and largest terminal on a network that spans North America, from Ft. Nelson, B.C., to Three Rivers, Texas,” continued Thomson. "Working with CN will position us strongly in the frac sand marketplace with timely rail access to Western Canadian shales and other basins throughout the United States and Canada."
Claude Mongeau, CN president and chief executive officer, said: "CN's network is uniquely positioned to provide Wisconsin frac sand producers efficient access to key North American shale deposits. In addition to our investment on the Barron Sub in 2012, CN accelerated work this year on the US$33 million-rehabilitation of 74 miles of track between Wisconsin Rapids and Blair, Wis. This will increase carloading capacity and train velocity for the growing frac sand supply chains.”
"Over the past five years,” said Mongeau, “CN's frac sand market has grown by nearly 300 percent, rising to more than 50,000 carloads in 2013. Our end-to-end service focus has supported that growth, and we expect to achieve C$300 million in frac sand revenue by 2015."