Black Mountain Sand is expanding into the Eagle Ford Shale with the acquisition of 2,300 acres in Atascosa County. Construction on our third in-basin frac sand mine will begin immediately with anticipated delivery of our first commercial tons serving South Texas by year-end 2018. Once fully commissioned, the Eagle Ford mine will employ 75 people and produce 2.2 million tons of sand annually. The mine’s total annual capacity is already sold out under long-term contracts.
The Eagle Ford mine will serve as Black Mountain Sand’s first expansion beyond the Permian Basin and is the direct result of our customers’ requests to service their activity in and around Atascosa County.
Until recently, most frac sand consumed by Texas operators was shipped by rail from out-of-state mines in the Midwest, approximately 1,200 miles away, adding substantial logistics costs and inefficiency to the supply chain. The adoption of in-basin sand delivers cost savings by significantly reducing these shipping expenses, which can account for 50 percent of frac sand costs. Current estimates indicate using in-basin sand will reduce the total cost of drilling and completing a well up to 10 percent – which can amount to over $500,000 in savings per well. With drilling activity projected to grow in the Eagle Ford Shale, the aggregate potential cost savings are significant. In 2017, 2,123 total drilling permits were issued, and 2018 numbers are anticipated higher, with 582 permits issued in Q1 2018.
Permian Basin Update:
In the Permian Basin, our Vest and El Dorado facilities are quickly approaching nameplate capacity of 10 million tons annually, the largest in the basin by a significant margin. To help meet growing demand for our Winkler White® frac sand, we are in the last stage of evaluating the addition of a fifth dryer at each location, which will enable us to increase production to a combined total of 12 million annual tons, or the equivalent of over 520,000 truckloads of sand per year.