CN and Northern Frac Proppants II, LLC, celebrated the opening of Northern’s new state-of-the-art frac- sand production plant at Alma Center, Wis. CN now serves 13 frac-sand mines with more than 10 million tonnes of annual production capacity. Northern’s production facility, located on CN’s rehabilitated Whitehall Subdivision, will have an annual production capacity of one million tonnes of high-grade sands.
CN plans to complete a multi-year, US$36-million upgrade of the Whitehall Subdivision between Whitehall and Wisconsin Rapids, Wis., by December as part of its plan to better serve the frac-sand market. In 2012, CN spent US$35 million to restore a 40-mile segment of the Barron subdivision between Ladysmith and Almena, Wis., for frac-sand producers. CN is seeing a substantial increase in frac-sand production on its Wisconsin network because of the region’s reserves of high-quality and in-demand sands. These industrial sands are used by the oil and gas industry in the hydraulic fracturing process to hold shale fractures open to let natural gas and oil flow out.
Jeff Alston, President and Chief Executive Officer of Houston-based Northern Frac Proppants II, LLC, said: “We are excited to work with CN on expanding our frac-sand markets. CN’s network is a plus, giving us efficient access to the Bakken, Marcellus and Canadian oil and gas shale plays. Our new facility at Alma Center, which contains all activity to one site to eliminate over-the-road trucking, will be able to accommodate both manifest and unit train service options.”
Claude Mongeau, CN President and Chief Executive Officer, said: “CN is well positioned to help its frac-sand customers compete in their end markets, with rail access to the largest North American frac-sand consumption regions, including Western Canada, Texas and Marcellus shales. “We offer our frac-sand customers merchandise and unit train services to reach markets efficiently in both Canada and the U.S. As part of supply chain collaboration focus to expedite transit times, CN recently launched unit train frac-sand service between Wisconsin production facilities and distribution centres in the Western Canadian Sedimentary Basin in northwestern Alberta and northeastern British Columbia. We are also investing $45 million over a multi-year time frame to upgrade our rail lines in northern Alberta to handle frac-sand hopper cars of up to 286,000 pounds gross weight and continue to improve siding and yard capacity along our Whitehall and Barron Subs in Wisconsin. “Our unique frac-sand franchise and end-to-end service focus are paying off and should help us generate $300 million of frac-sand revenues in 2014 – a full year ahead of our 2015 $300 million target – on roughly 82,000 carloads of product. This would represent a strong increase over 2013 revenues of $200 million on 55,000 carloads of frac sand.”
CN will continue to ramp up its frac sand business to meet growing demand in North America – aggregate consumption is expected to reach 78 million tonnes by 2016, representing a 22 per cent compounded annual growth rate between 2013 and 2016.