Infillthinking.com provides in-depth coverage of the oil and gas industry. Read below (and subscribe!) to read more about the articles it wrote over the development of the frac sand project in Kanab, Utah.
Utah, Get Me One? – by Joseph Triepke
- There are no longer two local sand mine projects moving forward in Utah. One has reportedly been cancelled.
- In a four-part series last year, titled “Utah, Get Me Two” we documented two potential Utah local sand mines.
- One of those plants, Southern Red Sands in Kane County, faced serious local opposition primarily due to water concerns – something well documented in our research.
- It appears that opposition has finally caught up to the potential greenfield mine project, as local news sources reported on Thursday that the developer will not move forward with construction due to “feasibility assessments” (see this third-party article).
- Bottom Line: This removes a potential 0.7mmtpa to 3mmtpa from the frac sand supply stack (mine was initially going to be built to 0.7 and potentially grow to 3.0 per management plans). While any supply reduction helps in this already oversupplied market, this headline is a tough one for the industry in the long-run due to the clash between environmentalists and industry interests. This development marks one of the first capacity cancellation/curtailment actions taken in 2020, bringing the total mine capacity which we track that has experienced some sort of curtailment action this downcycle to 87mmtpa.
Utah Sand Project Update
We caught up with the management team of Southern Red Sands this week.
Recall that they were planning to build a frac sand mine in Utah but cancelled that project last week.
Management provided the following statement and also told us that they are progressing on other locations “closer to the basin.” This is key because it means we can’t permanently rule out the supply from their cancelled greenfield project. Furthermore, by moving their prospecting activity closer to demand, they may end up with a more competitive operation than if they had moved forward with their Kane County plant (which we believed suffered from a logistics disadvantage relative to demand).
Here is the statement management provided to Infill Thinking:
Joint Statement from Southern Red Sands and Best Friends Animal Society
For the last two years, Southern Red Sands has been engaged in due diligence activities in Kane County. Based on those activities and other feasibility assessments, Southern Red Sands has decided not to pursue its business ventures in Kane County.
Since the plan for the mine was made public, Best Friends Animal Society has sought a solution that would protect the Sanctuary from future mining projects of this type and its potential impacts. Now that SRS has determined not to move forward, Best Friends is working with SRS to preserve the land, water and wildlife habitat and to sustain Best Friends Animal Society’s Sanctuary.
Over the course of the next few months, Southern Red Sands and Best Friends will continue to work together as they sort through a variety of details including working with the community to ensure continued benefit as things move forward.