by CHRIS ROGERS
Hi-Crush will shut down production at its Whitehall frac sand mine and lay off 35-40 employees, the company informed Wisconsin officials last week. The decision comes amid declining prices for Midwestern frac sand.
Hi-Crush’s Trempealeau County mine, processing facility, and rail-loading terminal is one of the largest frac sand mines in the area, reportedly employing 80 full-time staff members and 20 contractors at its opening in 2014. The 1,447-acre site sits on top of 81 million tons of silica sand, and the facility is capable of producing nearly 3 million tons of frac sand a year, according to Hi-Crush.
Hi-Crush sent employees a letter on August 6 informing them of the layoffs, and, as is required by state law, informed the Wisconsin Department of Workforce Development (DWD), as well.
“The layoff is necessitated by unforeseeable business circumstances associated with decreased profitability in shipping sand from the company’s CN [Canadian National Railway] plants and the company’s responsibilities to its shareholders to operate cost effectively. Accordingly, the company has no choice but to halt product at its Whitehall plant,” the company informed state officials.
Hi-Crush representatives did not clarify the reasons for the layoffs, but their decision comes during a tough time for Midwestern frac sand.
Minnesota and Wisconsin produce some of the best frac sand in the country, known as northern white sand in the oil drilling business. However, demand for sand fluctuates with oil prices. In recent years, fracking companies in Texas have found local alternatives to Midwestern sand, and oversupply has helped depress sand prices.
The business research company Rystad Energy reported that the price of northern white sand fell from $44 per ton in 2017 to $34 per ton last year. The analysts projected it would fall even further to $25 per ton this year and continue declining over the next five years.
“In this environment, it becomes an even greater imperative to be efficient and provide the services our customers need,” Hi-Crush Marketing and Corporate Communications Director Steve Bell wrote in an email. “At our Whitehall facility, we anticipate significantly reducing the hours of operation while continuing to meet our customers’ needs through the winter, lowering our overall cost profile and fully utilizing other assets,” he added.
Some layoffs take effect at the end of this month, while most will occur on September 6. Production staff, managers, mechanics, administrative staff, and an electrician will lose their jobs.
“We are hopeful that the layoff is temporary, but the duration is presently unknown,” Hi-Crush Human Resources Manager Jami Kabus told employees in a letter. “The company does not anticipate a change in conditions in the foreseeable future and expects the layoff to last through at least the end of 2019.”
Hi-Crush officials encouraged employees to apply for open positions at the company’s other plants in Wisconsin and Texas.
DWD officials stated they would offer laid-off workers help finding new jobs.