There is a new land grab going on in the oil-rich fields of West Texas. This time it is over sand.
Big oil-field sand suppliers, Wall Street firms and other investors have been buying up swaths of the West Texas desert. These investors aim to mine and sell the sand to drillers in the region’s booming Permian Basin, which need large quantities of sand to extract oil and gas from shale formations.
Texas energy producers have typically bought the millions of pounds of sand that each well requires from mines located far from their drilling fields. After oil prices collapsed in late 2014, though, cost-conscious drillers reconsidered their well designs and recipes for the slurries they blast underground to unleash fuel from shale formations. Many West Texas drillers discovered that they could replace sand they had been shipping from mines 1,300 miles away in Wisconsin with finer grades found in dunes nearby. Doing so eliminates rail costs that sometimes are equal to or more than the sand itself.
Now investors are lining up to supply local sand to West Texas drillers.
“Local sand is a huge disrupter that is beneficial to the shale producers,” said Ben “Bud” Brigham, an Austin geophysicist who built and sold two oil companies and now is plowing some of his profits into sand pits.