Robert Lane, the Senior Vice President, CFO and Treasurer of Emerge Energy Services LP (EMES) said the company is “incredibly strong, and we’re in a position to be a leader” thanks to the worldwide demand for Northern White sand, a key component of fracking operations. He was speaking at the Ultimate Energy Conference in New York City.
The company will be doubling its sand capacity by mid-year, Lane said. “We have a very low-cost operating structure,” he added, and pointed out its logistical advantages, experienced management team and strong industry relationships. The company also has a strong fuel division, which consists of processing and selling transportation mixtures.
Emerge Energy Services is one of the top eight manufacturers of Northern White Silica sands, of which 99% is sold as a proppant for hydraulic fracturing. Lane said Emerge has 8.2 million tons of sand currently under contract, with those deals representing an average life span covering 4.2 years. The demand for sand will only increase as the transition from vertical to horizontal drilling continues and wells need to be re-fracked, Lane said.
Northern White sand is supply constrained. It is only available in North America, and the coarsest Northern White is only in Wisconsin and Minnesota. But permitting is difficult, Lane said. “Not everything announced gets permitted, not everything permitted gets built,” he said.
But U.S. companies are not slashing their hydrocarbon production, Lane said, and noted that those producers are stepping on the gas. “The laterals are getting longer, spacing is getting closer.” The result of that is that “there is more sand (used) per stage.” Total sand use in the main U.S. basins continues to grow, Lane said, as basin improvement is driven by individual well improvement.
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