Brady Sand Mines Close as Frac Sand Suppliers Move West
BRADY, TX — Pioneer Natural Resources Company will save $400,000 per well by closing the frac sand mine in Brady and shifting supply to its mines in west Texas, closer to its oil and gas extraction operations.
The company announced the closure and move late last week.
Pioneer expects to wind down operations during the first quarter of 2019 and transition to 100 percent west Texas sand by May 2019.
The Brady mine closure will not be inexpensive in the near term. The publicly traded corporation will take a noncash after-tax charge of $350 million to $400 million in the fourth quarter of 2018 related to the closure.
“The new west Texas sand mines with their low cost of mining and proximity to our Permian acreage position have provided us a more cost-effective, long-term source of sand supply,” said Timothy L. Dove, Pioneer President and CEO.
Frac sand, or proppant, is used for hydraulic fracturing, commonly referred to as fracking within the oil and gas industry.
The news of Pioneer shuttering its Brady sand mine comes after Ohio-based Covia Corp. said it was also closing its two mining facilities southeast of Brady in the town of Voca.
Like Pioneer, the company is moving its sand mining operations closer to the pil fields. Covia just opened two new mines in the Permian Basin near Kermit and Crane, according to the Houston Chronicle. The trend towards sourcing sand in west Texas may impact Texas Pacifico Railroad. The Mexico-owned rail line has created a niche business of transporting frac sand from northern U.S. states like Wisconsin to west Texas.
The last long train I saw moving through San Angelo didn't have frac sand cars. It had cars and cars of pipe for building much-needed pipelines that will deliver oil to coastal refineries and for export via the Port of Corpus Christi and the Houston Ship Channel.
“The sand business is on its head as we've all known it over the past several years,” said Stan Meador, Marketing Director for Texas Pacifico. He added that the railroad is transporting oil out of the Permian as well. Long term, once the pipelines are on line, Meador said the international bridge currently under contruction in Presdio will open new and different opportunities for exports into Mexico.