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  Monday September 22nd, 2014    

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Frac sand Winona Port's #1 commodity (07/21/2013)
By Chris Rogers
Until recently, black coal destined for power plants filled barges at the city of Winona's commercial dock. Now, a grittier energy-related substance has taken its place. Shipments of frac sand at the city dock increased sixfold from 2011 to 2012, from less than 10,000 tons to over 62,000 tons. Last year, more sand was loaded at the dock than any other commodity by far, making up a third of the $53,000 in tonnage fees collected by the city. Operators expect to load even more sand this year.

Shipments from the city-owned dock make up only a tenth of the total tonnage loaded onto barges at the island city, according to city staff. Agricultural products (crops, fertilizers, and lime, mostly) loaded at private docks, owned by companies like ADM and CHS, still make up the lion's share of barge traffic, but at the city dock, sand is king.

As late as 2009, coal, road salt, and fertilizer were the only products handled by CD Corporation, the barge-loading company that has leased the city dock for years. Just five years ago, coal dominated the company's shipments. All of that has changed.

Demand for coal plummeted. Coal shipments at the city dock fell by roughly 80 percent in three years. The decision to decommission a coal-fired power plant in Rochester was a major reason, said CD Corporation owner Dan Nisbit. That plant is still running, but has enough coal stored up to last until it shuts down in 2015, he explained.

Since the collapse of coal shipments, the company has branched out, looking for new commodities to take its place. CD Corporation has diversified, trying out new commodities with varied success. The loading of distillers grain (an ethanol byproduct) has fluctuated, with competing demand for the product from local feed markets, Nisbit said. Iron ingots have done well, but demand for sand is on another level.

"Sand probably has more potential than any of the other [new] products," Nisbit said. The silica-rich grains have taken the place of coal as the top commodity at the dock. "As [the use of] coal drops off and they're looking for cleaner energy, people are gravitating towards natural gas," Nisbit explained. Frac sand is used to extract natural gas across the U.S. It is a fortunate coincidence for business at the Winona dock that the city is well-situated to take advantage of the sand industry just as natural gas displaces the dock's former mainstay.

CD Corporation has loaded nearly 60,000 tons of sand already in 2013, according to Nisbit, and he expects growth of that market to continue in future years. With several large sand mines nearby in Wisconsin and more applying for permits, Winona is likely to continue being a hub for the transfer of sand onto railcars and barges.

His operation is set up well to handle sand, Nisbit said, pointing out that, typically, sand offloaded from trucks is directly transferred to barges, avoiding the concerns and regulations associated with stockpiles of sand.

CD Corporation received a variance early this year to double the number of barges it is permitted to load per month from 24 to 48. Frac sand opponents feared the change would allow the company to double its frac sand hauling operation. Nisbit is on track to do just that, though he expects sand orders to be much slower in the second half of this year. While sand may be the new coal for CD Corporation, a spectrum of commodities including salt, fertilizer, iron, and lime round out the business, and the company is nowhere near hauling 48 barges full of frac sand every month. 

 

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