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.
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.
The facility has a production capacity of 3 million tons of frac sand per year, according to the plant manager Greg Edwards, and costs $50 per ton.
“It saves [companies] and our customers quite a bit of money if we process it in the [Permian] Basin,” he told FOX Business’ Connell McShane on Wednesday.
Oil and natural gas drillers use processed sand to "fracture" underground petroleum reservoirs, which sharply increases the total output from an oil or gas well.