students : aleksei bogdanov ,andrew kast , derek krivinchuk mentor : dr. richard stewart, phd
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Assessing the Potential Impact of the Expanded Panama Canal on the Wisconsin Frac Sand Mining Industry. Students : Aleksei Bogdanov ,Andrew Kast , Derek Krivinchuk Mentor : Dr. Richard Stewart, PhD. Identifying Opportunities. Massive shale gas and oil deposits exist around the world. - PowerPoint PPT PresentationTRANSCRIPT
Assessing the Potential Impact of the Expanded Panama Canal on the
Wisconsin Frac Sand Mining Industry
Students: Aleksei Bogdanov ,Andrew Kast, Derek Krivinchuk
Mentor: Dr. Richard Stewart, PhD
Identifying Opportunities• Massive shale gas and oil
deposits exist around the world.
• Hydraulic fracturing requires special types of sand.
• Frac sand of extremely high quality is mined in Wisconsin.
• Global demand for the sand will require effective supply chain solutions
Wisconsinwatch.org
Global Energy Demand• Energy
consumption to increase by 36% by 2030
• Gas and Oil demand continues to grow
• Emerging markets account for 70% energy increase by 2040
Energy Supply & Demand in China
China has a rapidly growing economy.
China imported in 2013: 58% of Oil and 28% of Gas.
Policy to become self-sufficient with aggressive strategies for shale fracking.
By 2050, China’s energy demand will account for 50% of the growth in global energy demand.
Identifying and Mappping the Supply Chain
• Point of Origin- Barron Wi• Point of Destination: Two
ports in China• Travel by truck, rail, or
potentially barge to gateway ports.
• Gateway Ports– South through Gulf Coast
and Panama Canal– North through Pacific
Northwest• Identify constraints,
facility capabilities, and duration of routes
Superior Silica Sands• Have 2 locations in
Wisconsin• Ship products by rail or
truck across North America
• Served by CN rail at Barron, WI location
• Volume currently moved• Potential volume: 2.4
million tons per yearhttp://www.sssand.com
Handling Characteristics of Frac Sand
• Handled like other dry bulk commodities
• Chemically inert and non-hazardous
• Precautions used to avoid dust production
www.minnpost.com
Gulf Coast Routes• CN has service to Mobile and
New Orleans• Sand could potentially be
barged down Mississippi River
• Travel via Panama Canal to reach a Chinese market
• Vacuum technology in New Orleans allows shipment in containers
• Multiple handling if barge used
http://portno.com/grain-in-containers
Pacific Northwest Routes• CN serves Prince Rupert and
Vancouver• Prince Rupert has shortest
nautical distance to Chinese market
• Bulk facilities exist, but not currently handling Frac sand
• Rail has larger unit train capacity to Prince Rupert
• Rail transit times are longer to PR
• Container Service is available from Wisconsin to PR
PR The Best Supply Chain• Shorter Nautical distance • More volume per train• Prince Rupert Port
Authority stated that Frac sand could be handled in the future
• Prince Rupert is capable of handling same size ships as expanded Panama Canal
Total Transit Time in Days
Cons
• A single transit route that can only be accessed by CN Rail.
• Shippers have no price leveraging capabilities.
• Only one company transporting product.
Conclusion• If Chinese market developed Pacific Northwest
(specifically Prince Rupert) would be best option for Wisconsin Frac sand mining companies.
• Due to high-potential for future demand, it is likely that Frac sand will be exported to China in the future.
• Gulf Coast would also be a viable secondary market to export Frac sand.
• As with any supply chain, the cost is a significant factor, and this may be effected by which port could receive more backhaul products.
Thank You
Questions???
References• International Atomic Energy Agency (2012, March). World Energy Demand and Supply. • Retrieved from
http://www.iaea.org/nuclearenergy/nuclearknowledge/schools/NEM-school/2012/AbuDhabi/PDFs/day1/04_Rogner_World_Energy_D%26S.pdf
• Chou, E. (2013, July 11). Shale Gas in China – Development and challenges. Retrieved from • http://blogs.law.harvard.edu/ellachou/files/2013/07/Shale-Gas-in-China-Draft.pdf• Nakano, J., Pumphrey, D., Price, R., Walton, M. (2012, August). Prospects for Shale Gas • Development in Asia. Retrieved from
http://csis.org/files/publication/120824_Nakano_ProspectsShaleGas_Web.pdf• Wisconsin Geological and Natural History Survey (2014). Frac Sand in Wisconsin. Retrieved • from http://wisconsingeologicalsurvey.org/pdfs/frac-sand-factsheet.pdf• Wisconsin Department of Natural Resources (2012, January). Silica Sand Mining in Wisconsin. • Retrieved from http://dnr.wi.gov/topic/mines/documents/silicasandminingfinal.pdf• US Energy Information Administration (2013, July 25). International Energy Outlook 2013. • Retrieved from http://www.eia.gov/forecasts/ieo/more_highlights.cfm • MnDOT (2013, October 13). Transportation and silica (frac) sand mining in Minnesota.
Retrieved January 5, 2014, from http://www.dot.state.mn.us/frac/