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Students : Aleksei Bogdanov ,Andrew Kast , Derek Krivinchuk Mentor : Dr. Richard Stewart, PhD

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.

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Students : Aleksei Bogdanov ,Andrew Kast , Derek Krivinchuk Mentor : Dr. Richard Stewart, PhD

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  1. Assessing thePotentialImpact of theExpandedPanama Canal onthe Wisconsin Frac SandMiningIndustry Students: AlekseiBogdanov,Andrew Kast, Derek Krivinchuk Mentor: Dr. Richard Stewart, PhD

  2. 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

  3. 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

  4. Energy Supply & Demand in China China has a rapidlygrowingeconomy. China imported in 2013: 58% of Oil and 28% of Gas. Policy to becomeself-sufficientwithaggressivestrategiesforshalefracking. By 2050, China’s energy demand will account for 50% of the growth in global energy demand.

  5. 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

  6. 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 year http://www.sssand.com

  7. 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

  8. 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

  9. 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

  10. PR The Best Supply Chain Total Transit Time in Days • 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

  11. Cons • A single transit route that can only be accessed by CN Rail. • Shippers have no price leveraging capabilities. • Only one company transporting product.

  12. 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 Fracsand 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.

  13. Thank You Questions???

  14. 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/

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