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This is the full-length version of the report.
Mainbar: 2,000 words
Editors: Please note that the town of Sumner recall election referred to in the story is Tuesday, Aug. 14. We will update the story Wednesday with results.
Frac sand boom
creates thousands of jobs
Opponents fear sand rush threatens rural qualify of life
By Kate Prengaman
Wisconsin Center for Investigative Journalism
BLAIR -- Moses Wengerd wears a safety vest as he sits below a giant flat screen, monitoring every phase of the sand processing operation. He can remotely adjust temperatures in the drying plant or slow the speed of sand sliding down conveyors to the rail-loading station.
For the past year, Wengerd has been working right down the road from his home at Preferred Sands. He used to be a construction contractor until the boom in sand mining hit west-central Wisconsin.
“I helped to build it (the plant) last year and now I’m running it,” Wengerd said, grinning.
Wengerd is one of 53 people working full time at Preferred Sands’ facility in Blair, a community of 1,300 midway between La Crosse and Eau Claire. According to the company’s regional manager, Todd Murchison, entry level wages range from $15 to $20 an hour. Preferred Sands also hires local contractors when possible.
“Mines always say, ‘We create jobs’ and we like to stick to that,” Murchison said.
Currently, there are no official employment numbers for the state’s rapidly expanding frac sand industry. But the Wisconsin Center for Investigative Journalism, using job-site estimates developed by the Wisconsin Economic Development Corporation, found that when existing mines and those being built are fully operating, the industry will employ about 2,780 people -- a sizeable number given the state’s overall lackluster job picture.
Asked to comment on the Center’s estimate, WEDC spokesman Tom Thieding said the number appears reasonable, adding, “That’s a pretty significant number for growth from one sector.”
Across west-central Wisconsin, sand mine operators are promising jobs, taxes and new economic life for rural communities. With oil and gas drillers willing to pay nearly $200 a ton for Wisconsin’s sand, plenty of people -- from private landowners to international energy corporations -- expect to make serious money from sand mining.
Wisconsin is the nation’s largest producer of the round silica sand used in oil and gas wells to hold open fractures in the rock so that the fossil fuels can flow out. The natural gas drilling process that uses the sand, known as hydraulic fracturing, or fracking, faces growing scrutiny as lawmakers and regulators consider increased restrictions because of environmental concerns.
Fracking has been linked to or suspected of drinking water contamination in Wyoming, Pennsylvania and other locations. Minor earthquakes in Texas, Ohio and elsewhere also have been linked to the controversial process. There are no fracking operations in Wisconsin, but more regulations could make drilling less profitable and reduce the demand for Wisconsin’s sand.
Despite the recent rush for mining permits in Wisconsin -- the Center found the number of permitted and proposed facilities hasdoubledto 106in just the past year -- sand is not instant money. It’s expensive to transport, and local officials are increasing costs in some areas by charging sand companies for wear and tear on local roads.
If mine growth continues as predicted, the state Department of Transportation estimates frac sand mines could generate nearly 20,000 truck trips a day to and from processing facilities. Those trucks are projected to fill more than 2,000 rail cars daily headed for drill sites outside of Wisconsin.
Not everyone is thrilled with the sand rush. Some residents are concerned that sand mining endangers air quality, uses too much water, generates noise, puts heavy trucks on small roads and threatens tourism. In some communities, opponents protest. In others, they have taken stronger action.
A Buffalo County resident is suing the Board of Adjustment for issuing what he alleges is an illegal mining permit that violates the county’s zoning code and current mining moratorium.
Opponents recently succeeded in blocking a permit for a frac sand processing plant next door to the Cochrane-Fountain City School, a grade K-12 school in Buffalo County. And opposition to frac sand mining sparked a recall of a board member in the town of Sumner, in Barron County.
Sand = jobs
In Chippewa County, the emerging industry already is being described as an economic success story. Mining companies hire local miners and local trucking firms to move the sand from mines to processing and loading facilities along the rail line, said Charlie Walker, president of the Chippewa County Economic Development Corporation.
“The biggest impact we’ve seen is the job creation,” Walker said. “There were 150 unemployed truck drivers in Chippewa County coming out of the great recession. Now, we have a shortage.”
In January, EOG Resources opened its sand plant, the largest in the nation, in Chippewa Falls. EOG employs about 70 people at its processing plant and 30 at the mine sites. The company also contracts with about 100 truck drivers, bringing the direct job total to about 200, Walker said.
In addition to creating jobs, sand mining operations contribute to the local tax base. According to Walker, last year EOG paid $1.4 million in property taxes to the city of Chippewa Falls.
Job creation and property taxes vary widely by facility size. The smallest active mine operates on 11 acres in Barron County. At small sites like this, a few workers with construction equipment can excavate the sand and then haul it off site to be processed.
On the other end of the scale, Badger Mining owns a 2,625-acre property in Jackson County where the company has produced sand for the oil and gas industry since 1979. Large companies, including Badger, invest millions to construct a fully integrated site with mining, processing and rail loading operations.
The U.S. Bureau of Labor Statistics tracks all industrial sand mines together because the production process is the same. Frac sand is included with mines that supply foundries and the glass-making industry. According to the BLS, Wisconsin had 276 jobs at eight facilities in 2008, the most recent year available. That’s up from 189 in 2002.
As of July 1, the Center found 86 mining, processing and rail loading facilities operating or in development in the state, plus an additional 20 in the proposal stage. WEDC estimates 10 jobs per frac sand mine and 50 to 80 jobs for every processing facility or combined operation.
Using the lower end estimates, these 86 facilities could employ 2,780 people, about 2,500 more than in 2008.
Investment ripple effects
When sand mining and processing come to a community, the economic impacts go beyond direct job creation.
In Marshfield, three new sand processing plants are expected to add 150 jobs and about $360,000 a year in tax revenue for the community, according to Marshfield city planner Jason Angell. To determine how the impact of these new businesses would reverberate throughout Wood County, the city hired an economic modeling firm.
That economic impact report showed that in 2013, as construction concludes and production begins, 100 direct jobs would be created in sand processing. The report projected that Wood County would gain 434 additional jobs, including 227 temporary construction jobs building the new facilities, 60 jobs mining and hauling sand and about 150 miscellaneous jobs in areas including health care, education, government and more.
“This is investment income that is new to the region. This brings external money into Wood County,” said Tim Nadreau, the economist who prepared the report. “Think about it on a household level. I’m a construction worker, and I get a new salary. I go buy groceries. The clerk at the grocery story goes and pays tuition. When I inject money in one sector, it has ripple effects.”
Opponents of frac sand mining argue that such economic analyses only consider the benefits of the growing industry, not the negatives.
Pilar Gerasimo, a journalist and anti-mining activist in Dunn County, worries about potential losses of tourism and residential development if the mining operations detract from the quiet and peaceful scenery that draw people to west-central Wisconsin.
“In 30 years when they leave, and they’ve devastated a quaint rural environment, how will that impact economic development?” Gerasimo said.
By road ….
Another concern residents have is that heavy frac sand trucks will create traffic hazards and damage Wisconsin’s roads -- costs that could be passed on to taxpayers.
Several counties, including Chippewa and Wood, have programs to shift the burden of road upgrades and maintenance to the frac sand companies, with differing success. In Chippewa, new businesses go through a traffic impact assessment (TIA) and pay the county up front for needed road improvements.
“We utilize the TIA for any traffic generating facility that comes in, be it a Walmart Supercenter or a frac sand mine,” said Bruce Stelzner, the Chippewa County highway commissioner.
Because frac sand trucks are tough on roads, Chippewa County also charges companies for exceptional maintenance, work that goes beyond what the public normal pays for, such as increased snow plowing or more frequent pavement repairs. According to Stelzner, the large mining companies quickly agreed to incorporate road improvements and maintenance into the cost of doing business, but some of the smaller mines were more resistant.
“EOG, Superior, Preferred -- they’ve all been very good stewards of the public roads, recognizing the impacts that they have. They want to maintain safe highways for the county residents and for their truck drivers,” Stelzner said.
Wood County has a controversial fee-per-mile plan that calls for charging the frac sand processing companies located in Marshfield millions for transportation infrastructure upgrades. Different roads would have different fees, based on the condition of the roads -- the more maintenance the road requires, the higher the fee.
Implementation of the fees has been delayed as the companies and the city of Marshfield challenge the right of the Wood County highway commissioner to impose it. While not commenting specifically on Wood County’s fee, Tom Beekman, the state Department of Transportation's regional planning engineer for western Wisconsin, said local governments have the legal right to impose traffic impact fees as long as they apply equally to all businesses.
Said Marshfield Mayor Chris Meyer: “In a nutshell, I think it’s an unfair and illegal tax on just one industry.”
Increased truck traffic is a safety concern for many rural residents as well. In historically low-traffic areas, such as along Highway 88 in Buffalo County, several new sand mines could more than double the number of vehicles on the roads, Beekman said.
When communities are concerned about safety, the DOT uses computer modeling to project increases in vehicle traffic and recommends fixes to maintain safety, such as wider shoulders or reducing speed through bends.
“The truck drivers are not our concern,” Beekman said. "They are hiring professional fleet services with strict safety rules. These guys are going to be the safest drivers on the road.”
… and by rail
Sand mining also is generating additional rail traffic, adding jobs to that sector as well.
“Frac sand has become good business for rail,” Beekman said.
If mine growth continues as predicted, the DOT estimates that about 60 average-sized mines could produce enough sand to fill 2,250 train cars every day, or about 50 million tons of sand a year. That’s enough to fill the nation’s tallest building, formerly known as the Sears Tower, 21 times.
Demand for frac sand saved a rail line in Chippewa and Barron counties that was scheduled to be abandoned by Progressive Rail. Now, the railroad is increasing service and hiring more employees to meet the new demand.
The industry has grown so fast that some companies can’t buy enough covered rail cars needed to ship their finished frac sand. According to the Minnesota DOT, there are 30,000 covered cars on order across the industry.
“The railroads have been putting in huge capital investment,” Walker said. “It’s providing that infrastructure for other companies. It’s very beneficial.”
More train traffic also means busier rail crossings. In New Auburn, residents have been frustrated with long waits when trains block streets. Long-dormant crossings are busy again, creating a need for new signage and increased awareness.
“The mine-opposing people are looking to us as some higher authority to have a huge trump card, they are looking for a safety issue to stop a mine. The mining companies are looking for a blessing,” the DOT’s Beekman said.
“We just keep watching the middle line. People ask me, ‘Do you think frac sand mining is a good thing?’ That’s not our job.”
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