A Houston-based company is planning to invest up to $40 million in a rail spur and transportation loading center near Kingfisher.
Sarah Terry-Cobo writes in the Journal Record that the development, by Solaris Oilfield Infrastructure, will help supply drillers with sand that is used in hydraulic fracturing.
Solaris Chief Financial Officer Kyle Ramachandran told investors in August that the infrastructure is critical as Oklahoma’s STACK play moves from exploration to full-development drilling mode. The location was chosen because of its proximity to that play and the SCOOP, which is farther south on Highway 81. Those plays are just behind the Permian Basin for the most drilling activity in the nation.
Terry-Cobo told KGOU that energy analysts predict there will be more drilling this year, which increases the demand for sand. One full train with 120 railcars holds enough sand for 400 trucks.
“It will include these tall silos that will hold the sand. So trains come in, they unload the sand into the silos, and then trucks come in and load the sand into their trucks and take it to the well site,” Terry-Cobo said.
City leaders in Kingfisher say the $40 million investment will help the area’s economy, but they worry about the increased truck traffic.
“That will provide a boost to the whole region, even though it's not in Kingfisher city limits, that rail spur. But they're pretty wary about the number of trucks that could come with it,” Terry-Cobo said.
Discussions are currently underway to help alleviate some of the traffic concern, Terry-Cobo says.
“Solaris folks are talking to ODOT, with the county commissioners to upgrade some of those rural roads nearby, and then also to add some signs to make sure those contract truckers, because they’re contractors, stay on those main roads and away from residential areas,” Terry-Cobo said.
Jacob McCleland: If the Business Intelligence Report, a weekly conversation about business news in Oklahoma. I'm Jacob McCleland. I'm joined by Journal Record senior reporter Sarah Terry-Cobo. Sarah thank you so much for talking with us.
Sarah Terry-Cobo: Great to be here Jacob.
McCleland: Sarah, I want to talk about a new 40 million dollar railway spur and transportation loading center near Kingfisher. The new center will help accommodate increased drilling this year in the SCOOP and STACK oil plays by increasing the amount of sand that could be hauled to the area. There's quite a bit to unpack here, so let's start with the drilling projections. What are energy analysts saying about drilling in Oklahoma this year?
Terry-Cobo: Well we haven't seen any company drilling plans just yet, but in general when oil prices rise above a certain point then operators are more likely to drill more wells. The break-even price, as they call it, is roughly between 40 dollars per barrel and 50 dollars per barrel, depending on the company size and where they're drilling. And crude has been hovering in the mid 50s to low 60s per barrel for the last few months. So most think there will be more drilling this year compared to last year.
McCleland: So more hydraulic fracturing means an increased demand for sand, which is used in the fracking process. Is that why Houston-based Solaris Oilfield Infrastructure is constructing this this hub in Kingfisher?
McCleland: Yes, in part. So they say they chose to Kingfisher because they got a spot right off the railroad, right next to Highway 81. From there you can easily get to a lot of wells in the STACK play by driving north or you can drive south for about an hour and a half and get to the SCOOP play, and behind the Permian Basin in West Texas, the SCOOP and the STACK plays are the hottest in the nation.
McCleland: Well tell us a little bit about this. This hub that could be coming to Kingfisher what all will be there?
Terry-Cobo: Right. So they are building a rail spur off of a Union Pacific rail line. It's about 300 acres of what used to be farmland and that would include a loop. So trains can pull in and eventually it will include these tall silos that will hold the sand. So trains come in, they unload the sand into the silos, and then trucks come in and load the sand into their trucks and take it to the well site. And there's expansion space there to add to more of those slots that are just about the same size as the first phase.
McCleland: So what do city officials in Kingfisher think about, think about all this activity?
Terry-Cobo: Well they're very excited about the money which could be up to 40 million dollars. That will provide a boost to the whole region, even though it's not in Kingfisher city limits, that rail spur. But they're pretty wary about the number of trucks that could come with it. So the amount of sand that a train can carry, a full train, is 120 railcars. It would take 400 trucks or more just to unload a single train. And a train can come in and unload and trucks can load all that sand up in 48 hours.
McCleland: So that's a lot of trucks on the roads there around Kingfisher. What are Solaris and local leaders doing to accommodate all of the additional truck traffic?
Terry-Cobo: It's a bit of a work in progress but Solaris folks say they are this project overall is going to reduce the number of truck miles that are driven now because they're consolidating routes. So rather than driving from other sand terminals that are of like a hundred miles away or farther. That's also why they chose a spot right near the highway. But they're talking to ODOT. Solaris folks are talking to ODOT, with the county commissioners to upgrade some of those rural roads nearby, and then also to add some signs to make sure those contract truckers, because they’re contractors, stay on those main roads and away from residential areas.
McCleland: So you've talked about all of these tons and tons and tons of sand that'll be coming to this area. Where does that singing come from in the first place?
Terry-Cobo: Well that's a great question. I don't really know. There are some sand mines in Wisconsin but I'm not really sure where this particular sand originates.
McCleland: Sarah Terry-Cobo is a senior reporter for The Journal Record newspaper. Sarah thank you so much for your time.
Terry-Cobo: Absolutely. It's great to be here, Jacob.
McCleland: KGOU and the Journal Record collaborate each week on The Business Intelligence Report. You can find this conversation at kgou.org. You can also follow us on social media. We're on Facebook and Twitter @journalrecord and @kgounews.
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