Transcript 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.

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 selfsufficient 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 year
http://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/NEMschool/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/