South Dakota Oil and Gas Association

South Dakota Oil and Gas Association
SDOGA

Saturday, September 13, 2014

Frac Sand Mine Tour with South Dakota Proppants Executives


Pictured left to right: COO Chris Galvin, SDOGA Executive Director Adam Martin, CFO Craig Meis, and CEO Pat Galvin

I took a wonderful tour this past Friday, September 12 near Hill City S.D. with executives from one of our Association members, South Dakota Proppants (SDP).  

South Dakota Proppants has plans to build the state's first silica mine under 1750 acres in the Black Hills National Forest near Hill City, S.D.

CEO Pat Galvin and the SDP team gave their insight on how they discovered the silica sand, and why this particular sand can be used for the hydraulic fracturing process and technology.  To put it simply, s
ilica sand is extremely strong and round, the best material known for fracking. 

To the naked eye, you would not know you were looking at something used in so many products.  Under the magnifying glass, this is where it all changes.

Silica sand is a key ingredient in anything from solar panels, smartphones, toilets, eyewear, glass bottles, and more.  It is literally eye opening to see this material exists right here in South Dakota, and it just happens to be the right stuff for fracking.  This particular silica sand is clear, one of the qualities that makes it so valuable as its more pure.  

Just how much silica sand exists?  CEO Pat Galvin estimates they will have enough material for the next 50 years to service the industry, with extracting only up to 30% of available resources in this particular area of the mine. One well can use up to 10,000 tons of frac sand in its lifespan.  SDP states the proposed $65 million facility will generate one million tons of sand a year. 

We discussed how the facility will impact the local economy, creating new jobs, and the value the strategic location in the Black Hills means to the company and the oil and gas industry in our region.

We also discussed the process of getting the facility through the permitting process to becoming fully operational.  SDP is working to get this done and be shipping product by the 4th Quarter of 2016.  "We're hopeful, and everyone in the process so far has been great to work with," states COO Chris Galvin.

The economic impact to the local communities will be significant once it's up and running, something the SDP team cares a great deal about.  Hill City, Rapid City, Custer, Hot Springs and Newcastle, Wyoming all stand to benefit. CEO Pat Galvin estimates the facility will create nearly 300 local staff and truck driver jobs once fully operational.  

The routes the delivery trucks will be taking to avoid populous areas and highways that frequent both local and tourist traffic will result in minimal impact to the area. Pat Galvin explained they would like to attempt to avoid it all together, other than occasional maintenance needing done in Hill City or Rapid City.

During the tour and conversation, the value was even considered of shutting the plant down during the week of the Sturgis Motorcycle Rally to avoid any potential issues with truck and motorcycle traffic conflicting on highway routes in the region.  I was very impressed with how SDP is carefully considering all of the aspects of doing business in South Dakota.  

The goal is to have the facility and truck traffic be out of sight, out of mind as much as possible for local traffic, and so the people who spend time hiking, hunting, and exploring in the area can continue to still enjoy all the Black Hills National Forest Service has to offer.  

I am an avid outdoorsman and hunter.  Ensuring the least amount of impact to the views people enjoy in the area was also brought up.  The SDP team explained this is being kept at the front of the business plan.  Pat Galvin explained, "We want to do this right." 

In fact, when we arrived at one location in the area of the mine, we ran into some locals on UTV's ready to take in the weekend, relax, and enjoy the outdoors.  I watched as each member of the SDP team stopped what they were doing to visit with the locals to ensure they were educated about their plans, answer questions about the mine, and encouraged them to continue to frequent the area and enjoy all it has to offer.  

The location of this facility couldn't be any better to serve South Dakota, the Bakken, Niobrara, and Powder River.  Due to South Dakota's proximity of routes to these major plays alone, the company has a strong competitive advantage.

South Dakota Proppants is a member of the South Dakota Oil and Gas Association, helping move our great State forward as a partner in the oil and gas industry. www.southdakotaproppants.com.  
 

Pat Galvin is a featured speaker at the 2014 Black Hills Bakken and Investor Conference.  He will also be participating in a Manufacturing Opportunities Panel Discussion with other leading companies serving the Bakken to share his business and manufacturing experience with attendees. 

The Black Hills Bakken and Investor Conference is October 1 and 2, at the Spearfish Holiday Inn Convention Center, Spearfish, S.D.  Seating is limited, and is expected to be sold out soon. Sponsor and Exhibitor spots are still available and going fast.   

I strongly encourage you to attend and learn more about South Dakota Proppants, other companies, speakers, and engage in the panel discussions to help your business or investments continue to grow in the Bakken.  


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