Frac Sand Company Emerges From Bankruptcy, Back In Compliance With Chippewa County

A frac sand company in Wisconsin has re-emerged from bankruptcy and has brought its Chippewa County mine back into compliance with state and local regulations.

Texas-based Emerge Energy Services filed for bankruptcy July 15, 2019. That left an uncertain future for five frac sand mines operated in Chippewa and Barron counties under its subsidiary, Superior Silica Sands.

Last October, the Chippewa County Land Conservation and Forest Management Department told a federal bankruptcy court the company’s mining permit had been suspended because the company failed to install required groundwater monitoring wells or set aside enough money for the county to fill in and restore the mine site if the company dissolved.

But since the end of February, Chippewa County has reported Superior Silica Sands has installed the required monitoring wells and has set aside a total of $4.65 million for mine reclamation. Chippewa County Administrator Randy Scholz said the company responded quickly to the county’s concerns once the company emerged from a months-long bankruptcy process.

“Once they came out of it, they were able to communicate with us again and work towards getting their permit reinstated,” said Scholz.

In an email to WPR, Superior Silica Sands CEO Rick Shearer confirmed the company is “fully out from our bankruptcy process.”

Shearer wrote the company is now owned by HPS Investment Partners based in New York City. He said through bankruptcy, the company was able to reduce its debt from around $300 million to $50 million.

“We are now able to compete in today’s challenging frac sand market with anybody,” Shearer said.

Chippewa County still plans on addressing elevated levels of arsenic and other heavy metals found in mud left over from the frac sand washing process at a Superior Silica Sands mine. Scholz said the county is working with the state Department of Natural Resources and is planning to schedule a public presentation on the matter in the coming weeks.

Meanwhile, a sharp drop in global oil prices is expected to put even more pressure on frac sand mines in Wisconsin and around the country.

Rystad Energy analyst Ryan Hassler said anxiety about the spreading coronavirus and a dispute between Russia and Saudi Arabia over oil production levels caused the price of crude oil to drop by 30 percent. He said that means the price of frac sand, also known as proppant, is also being depressed.

“So that translates into obviously lower proppant demand, lower demand for pressure pumping services,” said Hassler. “So, certainly hard on everybody involved, service companies and operators alike,”

Rystad projects if oil prices of $30 or $40 a barrel are sustained, sand producers in Wisconsin and even those in Texas, near the nation’s busiest oilfields, will struggle to make a profit.