Sept. 21 (Bloomberg) -- U.S. Silica Holdings Inc., the nation’s second-largest provider of hydraulic fracturing sand, is considering buying additional mines as it faces increasing demand for the material from energy producers.
U.S. Silica has sold out of its fracking sand for the rest of the year and expects demand to increase as much as 20 percent a year, Chief Executive Officer Bryan Shinn said today in a telephone interview. The company, which plans to open its 14th plant in the first quarter, may need to buy new mines because the sand that works best for fracking can mainly be found in Illinois, Wisconsin and Minnesota, he said.
“We want to continue to grow and add capacity,” Shinn said today in a telephone interview. “But I think as an industry, it’s going to be a challenge to be able to do that and meet the oil and gas demand.”
U.S. Silica, based in Frederick, Maryland, sells the sand to oil and natural-gas producers who inject it with water and chemicals into wells to gain access to the fossil fuels. The company, which began supplying oil and gas producers in about 2008, also sells sand that ends up in everything from toothpaste to the glass on Apple Inc.’s iPhone, Shinn said.
“Even though we’re a 112-year-old industrial minerals company, we have the growth curve of a tech startup,” he said. “We’re going to grow earnings by those targets more than 50 percent this year.”
An increase in the demand for fracking sand was one of the reasons the company began trading publicly in January. U.S. Silica has fallen 18 percent since its debut. The company fell 1.6 percent to $14 at the close in New York.
In many of the potential properties U.S. Silica has considered buying in the past, the costs were too high and the operations were spread too far.
“We’ve gotten, over the last couple of years, all kinds of pitches from companies who’ve bought property or are in some phase of construction,” Shinn said. “We see a lot of candidates. Certainly if we find the right one, we’d think seriously about it.”
Demand for fracking sand is expected to increase by 7.5 percent in 2013 to about 56 million tons, Senjit Sarkar, a project leader at PacWest Consulting Partners in Houston, said today in an e-mail. Supplies of sand are likely to increase by almost 25 percent next year, he wrote.
Prices for fracking sand are expected to fall by a range of 5 to 7 percent in the next year, according to the e-mail.
To contact the reporter on this story: David Wethe in Houston at email@example.com
To contact the editor responsible for this story: Susan Warren at firstname.lastname@example.org