West Texas frac sand business saves big bucks on transportation cost
A Houston-based supplier of sand for West Texas oil drillers has hit financial pay dirt by mining and processing the sand virtually next door to its customers.The facility can produce 3 million tons of frac sand a year and replaces sand that was shipped by rail from Wisconsin. It is yet another way the shale drillers have become more efficient and more competitive with traditional drillers in OPEC. The cost of production in the Permian Basin is now lower than that of some OPEC countries.
Hi-Crush Partners, a master limited partnership, had been shipping sand from Wisconsin to oil drillers in the Permian Basin of West Texas, but now operates a facility in the basin, thus enabling it to slash transportation costs and sell the commodity for far less than some rivals.
A Hi-Crush facility in Kermit, Texas – after just one year of operating – has been able to significantly cut expenses and create a viable billion-dollar sand mining operation.