Even in a market with a volatile history, a local sand producer is optimistic about its business in 2023.
Since it was established in the spring of last year, Blue Diamond Proppants has seen its production steadily increase.
Ryan Leverson, plant manager at the company’s drying and transloading facility near Poskin, said the company is optimistic production will be even higher in 2023.
“The market continues to be on the rise,” he said in a recent phone interview.
The price for frac sand is closely tied to the price of oil—the industry uses the sand to prop open gas and oil wells in a process called hydraulic fracturing. The price for a barrel of oil has held steadily in the $80 range in recent months, and it is widely anticipated demand will pick up in 2023.
For example, a Dec. 30 article by Forbes quoted a recent report from energy sector research firm Enverus Intelligence Research that indicated a likely return to $100 prices for a barrel of oil in 2023. Frac sand supply was specifically mentioned as a factor in rising oil prices.
The article quoted Mark Chapman, Senior VP of Intelligence at Enverus, who stated, “U.S. supply growth is limited by the availability of oilfield services and supply of consumables like sand and pipe, a tightness which we expect to continue throughout 2023.”
Most of Blue Diamond’s sand—about 98 percent, Leverson said—actually goes to northwestern Canada on the Canadian National Railway line. The number varies a lot, but about 150 cars of sand leave the plant each week in train cars owned by oil and gas producers.
Blue Diamond emerged from the collapse of Superior Silica Sands, which went through bankruptcy in 2019 and 2020 and closed its operations in Wisconsin.
Unlike most frac sand companies, which tend to be part of large corporations, Blue Diamond is smaller and local.
The business was formed by five local partners who have backgrounds in the business of excavating, mining and trucking. They include Paul Mumm, Terry Pecha, Jeff Anzczak, Shane Savin and Bob Pottete.
They purchased the Poskin plant and one Superior Silica mine, known as Thompson Hills, along 21 ¼ Street in the Town of Sioux Creek.
Leverson said that while it would have been “ideal” to have one of Superior Silica’s three closer mines in the Town of Arland, the equipment had already been sold when Blue Diamond formed.
“Superior forced our hand I guess,” said Leverson.
He added that Thompson Hills had the benefit of having the largest reserves of sand, enough to last two or three decades.
The 2022 mining season wrapped up in mid-November—it’s cost prohibitive to try to keep sand washing operations going when temperatures drop below freezing.
But the Poskin plant has reserves to keep it going through the winter.
Blue Diamond doesn’t only produce frac sand. The sand is also used to make gritty soap, for sand bedding, sand blasting and other industrial uses.
Leverson said the company is continuing to try to diversify and not put all its eggs in the oil and gas basket.
When both facilities are operating, Blue Diamond has 46 employees and subcontractors working, plus about another 50 or so truck drivers, said Leverson. He said some employees are absorbed into the drying plant operations in winter.
He said wages start at $22-25 per hour, depending on experience, and go up from there.
“There’s not a lot of turnover,” said Leverson. “We’re bringing good local jobs to the community.”
He said that come spring the company expects to be hiring.
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