Frac Sand and Transportation

Transportation Impacts from

Non-Metallic Mining in Wisconsin

LOGISTICS, LOGISTICS, LOGISTICS

‘Triad’ of potential highway trips from fracture sand industry Mine Site =>Processing Site => Bulk Load Out Site

Most mines are on local road system creating local road issues. WI Statutes allow local units to assess highway impact fees

Most processing is on a rail line connection which eliminates one potential truck trip from processing to load out site.

A number of locations have mining, processing, and rail load out contained within a single site and involve no trucking.

STH impacts Short-term – Intersections or convergence points. Longer-term – Pavement deterioration on certain segments. Low Risk – Segment length reconstruction or capacity.

Railroads become the critical link in the triad.

SAND BOOM (2009- EARLY 2012)

POTENTIAL STATE HIGHWAY IMPACTS (EARLY 2012)

Frac Sand and Transportation

Maturation and Stabilization

Summer/Fall 2012

PROPOSED vs. REAL

• Only about 1/3 of proposed facilities are actually active

• “Active” = operating or under construction

• Many large proposals have done nothing

LIMITS ON TOTAL MARKET DEMAND

North American Market only No International Market New Technology

Alternative Proppants Other Than “Northern White” Alternate Methods to fracking Other Energy Sources

Indications are that over the next five years, a ‘reasonable’ market demand of 40 Million TPA with some high end potential of 60 Million TPA .

LIMITS ON WI SHARE OF FRACTURE SAND MARKET

“Northern White” is also found in Illinois and Minnesota.

Two large market players, UNIMIN and U.S. Silica, alone are producing almost 10 Million TPA in those states.

“Brown Sand” is widely available in multiple states, including Texas in close proximity to fracture drilling.

Could put WI share of market at 25 Million TPA or less.

LOCATION AND LOGISTIC LIMITS

PROCESSING CAPACITY

Demand based on 40 Million TPA

Processing Plants (1.2 TPA AVG)

WIS SHARE (50%)

Frac Sand 30.8 TPA 26 13

Resin Coated

5.2 TPA 5 3

Ceramics 3.6 TPA --

Other <.4 TPA --

Total 40.0 TPA 31 16

Current ‘Active’ West Wisconsin Processing Plants 18

Based on Market Demand

GEOGRAPHIC AFFINITY AND RAILROADS (FALL 2012)

LIMITING FACTORS ON GEOGRAPHIC LOCATION

Physical challenges to rail access Example: BNSF and CP along Mississippi River and

bluffs

Political issues with access to rail Local moratoriums on mines, processing, and rail

load out Federal Scenic Byway, WI Scenic Easement

Restrictions,

Contractual relationships between producers, shippers, and users. ‘Put/Take contracts’

POTENTIAL STATE HIGHWAY IMPACTS (FALL 2012)