The Hi-Crush frac sand mine in Whitehall closed and the company went through bankruptcy this year. Previous dips in oil prices had temporarily closed the mine, and the pandemic dealt a tough blow to the entire industry.

Once booming, sand mines shuttered


(11/18/2020)

by CHRIS ROGERS

 

Frac sand mining has proven to be a boom and bust industry in Trempealeau County. From creating scores of jobs and bringing in millions in revenues to idling plants — local frac sand companies’ fortunes have fluctuated with oil prices and competition. Since the pandemic crushed global demand for oil, the industry has been at one of its lowest points.

Hi-Crush, one of the largest frac sand mining companies in the region, shuttered its Whitehall mine earlier this year, permanently laid off 35 workers, and went through bankruptcy this year. In neighboring Taylor, Wis., Hi-Crush and Badger Mining Corporation laid off a combined 70 employees. Another mine in Arcadia — owned by  Canadian Silica Industries (CSI) — has also been idled, and the city commissioned a study to make sure the $722,000 the company set aside for mine reclamation is enough.

At its Whitehall mine and adjacent Blair, Wis., processing plant, Hi-Crush created dozens of jobs, boosted the local tax base, and donated to local organizations, but it had intermittent closures and job losses over the years, temporarily laying off over 35 workers in 2018 and 2019. This spring, Hi-Crush permanently laid off 67 employees at the Whitehall and Blair facilities, citing oil prices, and filed for bankruptcy this summer. The downsized company completed its bankruptcy restructuring last month, but whether the Whitehall and Blair facilities will ever reopen is unclear.

Despite its ups and downs, the Hi-Crush mine has been good for Whitehall overall, mayor Jeff Hauser said. “Some employment is always good. They brought some business to some of our small businesses downtown, and I know they made a substantial donation to the fire department for some equipment and donations elsewhere in the community … They were paying somewhere around $270,000 in taxes for our community, and that’s a piece of change that’s pretty important to a budget of our size,” he stated.

Hauser reported Hi-Crush has roughly $10 million in a trust set aside for cleaning up of its large mine. The trust is meant to ensure that, even if mining companies go bankrupt, there is money available to clean up the mines and taxpayers aren’t left holding the bag. Asked what would trigger reclamation of the mine to begin, Hauser responded, “You know, this is all uncharted waters for all of us, pretty much, but I would assume there would be some sort of final liquidation or a full-fledged bankruptcy that says, ‘We are no longer going to operate in perpetuity.’”

In Arcadia, the smaller CSI mine has $722,000 set aside for reclamation, city administrator Chad Hawkins said. The mine has been closed for some time, and, according to Trempealeau County records, owes over $150,000 in taxes. “From a personal level, I understand their hardship right now,” Hawkins said. “Frac sand has kind of tanked. I feel for them.” Still, if the mine is not being used, Hawkins would love to see the land reclaimed and repurposed for some much-needed housing or other developments. The city recently hired an engineering firm to review the reclamation plan. That could lead to a new cost estimate for mine clean-up and a requirement for more money to be set aside, Hawkins reported.

The Wisconsin Department of Natural Resources provides some guidance to local governments on the importance of financial surety for reclamation and how much money is needed for different sizes and types of mines, but it’s up to local governments to implement and enforce. The state doesn’t keep track.

Hi-Crush did not respond to a request for comment. CSI representatives weren’t immediately available.

There have been some hopeful signs for the fracking industry. Oil prices are still low, but rebounded somewhat after cratering early on in the pandemic, and some in the industry are hopeful that demand will fully recover once COVID-19 vaccines become widely available.

 

Minnesota Sands eyed one-off mine in Fillmore Co.

Minnesota Sands looked into opening a single frac sand mine in Fillmore County this fall, but hasn’t formally applied for a permit. There would be big regulatory hurdles for the company to overcome before it could do so.

Minnesota Sands is the company that proposed a constellation of 11 frac sand mines across Winona, Fillmore, and Houston counties in 2012. Because the 11 mines were viewed as one large project, the state was posed to require a rigorous environmental impact study (EIS). The company volunteered to do an EIS, but then never completed the study or pursued the mining projects — until suing Winona County in 2017 over its 2016 frac sand mining ban. That legal battle went all the way up the Minnesota Supreme Court, where the court ruled in Winona County’s favor.

This fall, Minnesota Sands asked Fillmore County officials what it would take to permit a single mine in Fillmore County. It prompted a question for Fillmore County Zoning Administrator Cristal Adkins: Was the EIS requirement still in place? If Minnesota Sands was only pursuing one mine, not 11, could it be excused from the study?

The agency in charge of the EIS requirement, the Minnesota Environmental Quality Board (EQB), considered that question this fall. Some board members were skeptical of whether the company did indeed want just one mine. Previously, Minnesota Sands had tried to be excused from the EIS to pursue a single mine, but EQB members denied the request, citing Minnesota Sands’ lawsuits against Winona County as evidence it was actively trying to open more than just one mine.

Minnesota Sands is in a similar position now.  This fall, Minnesota Sands asked the U.S. Supreme Court to take its case against Winona County. The high court may not take the case, but at the moment, it leaves Minnesota Sands telling regulators it only wants to open one mine while also pursuing legal challenges to potentially open more. Because Fillmore County has not yet received a formal permit application, the EQB didn’t make a decision on whether to waive the EIS. A spokesman for Minnesota Sands did not respond to a request for comment.

Chris@winonapost.com

 

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