CP begins to transport frac sand to Victory Nickel's Alberta plant; UP to build frac sand unit-train facility in Texas with U.S. Silica

Victory Nickel Inc. yesterday announced the first nine rail shipments of frac sand from Winona, Minn., have arrived at its Seven Persons facility near Medicine Hat, Alberta.

Two additional rail shipments are in transit to Alberta and the company expects to soon reach a continuous-supply mode. Late last year, Victory Nickel contracted Canadian Pacific to move sand from Wisconsin to the Seven Persons plant for finishing. The company also secured an agreement to provide private rail cars access to CP's line.

Delivered tonnages of sand will increase as full production is achieved at the Seven Persons facility, which can handle 500,000 tons per year, Victory Nickel officials said in a press release.

"The company is building inventories of both wet concentrated sand and finished product at the Seven Persons plant to ensure availability of premium-quality Wisconsin frac sand to meet customer needs," said Ken Murdock, chief executive officer of Victory Nickel subsidiary Victory Silica.

Victory Silica is pursuing a three-phased plan to serve the frac sand market. Under the first phase, the company this year plans to begin selling Midwestern White frac sand from the Seven Persons plant, which is within trucking distance of major crude-oil plays, Victory Silica officials said.

The second phase calls for building a concentrator in Wisconsin to reduce costs and ensure supplies from a Wisconsin mine, and the third phase involves the construction of a larger frac sand plant in Winnipeg, Manitoba, to process and distribute both imported and domestic sands.

Meanwhile, U.S. Silica Holdings Inc. today announced it entered into an agreement with Union Pacific Railroad to build a unit train-capable frac sand storage facility in Odessa, Texas.

U.S. Silica and Union Pacific Distribution Services plan to develop a 20,000-ton frac sand storage facility that would be operational by 2014's end. U.S. Silica will provide about $12 million for the facility, which will bolster the company's transload network and supply sand closer to the wellhead in the Permian Basin, one of the nation's fastest growing shales, said U.S. Silica President and Chief Executive Officer Bryan Shinn in a press release.

Potential opportunities likely will arise for UP from the Odessa transload facility, said Brad Thrasher, UP's vice president and general manager of industrial products.

"This will serve as a great outlet for continued growth in the Permian Basin," he said.

U.S. Silica also announced it completed modifications to its resin-coated sand facility in Rochelle, Ill., that will enable the plant to ship raw sand to multiple destinations across the country. The first unit train departed from the Rochelle facility last month.

"Rochelle gives us a tremendous amount of flexibility to move material cost effectively to all of the major shale basins in the country," said Mike Winkler, U.S. Silica's VP and chief operating officer.