US-based sand and sand-based product solutions provider Fairmount Santrol has signed a 40-year lease agreement for around 3,250 acres of sand reserves located in Winkler County, Texas.
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The solutions offered by Santrol are used by oil and gas exploration and production companies to increase the productivity of their wells.
The lease signed for reserves, located in the Permian basin near Kermit, comprises around 165 million tonnes of fine-grade 40/70 and 100 mesh sand, and has access to the Delaware and Midland basins. It is expected to complement the company’s existing product portfolio.
Fairmount Santrol president and CEO Jenniffer Deckard said: “The unique characteristics of this property, which include contiguous reserves of fine mesh sand, water availability and prime access to existing roads, make this an excellent opportunity for Fairmount Santrol to expand our broad product offering by providing a low-cost, in-basin solution to meet the changing requests from some of our customers.
“By leasing the reserves instead of an outright purchase, we will enhance our net return on investment and ensure greater financial flexibility.”
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By GlobalDataThe company is planning to build a mine and processing facility on the leased land with a targeted proppant sand production of around three million tonnes per annum.
First sand production is scheduled to commence in the second quarter of next year.
In light of increased customer demand, Fairmount Santrol has reopened its Shakopee, Minnesota, mine and sand processing plant.
The Shakopee facility is expected to have an annual capacity of around 700,000 tonnes and scheduled to become operational by the end of this year's third quarter.
Image: Fairmount Santrol president, CEO and director Jenniffer Deckard. Photo: courtesy of Fairmount Santrol.
