To Receive Weekly Updates, Sign up for our Newsletter or
Contact Us: Info@DownHoleTrader.com or Call 407-810-3102

It’s Time to Get That Sand Moved!

As we have shared in the past, winter is not a fracker’s friend and neither is the agriculture harvest, both of which are at our doorstep! The obvious is that cold weather slows everything down, including frack sand mining, drilling, shipping by rail and barge. We have had some challenging winters in the past few years with below freezing temperatures and snow that just wouldn’t quit.

As for agriculture, demand on rail resources can create competition for frackers trying to get sand supplies moved from Wisconsin to southern plays and Central and South America. We will look at that timing later.

First, get your boots ready because the Farmer’s Almanac is out and forecasting a repeat of last winter with freezing temperatures in the central northern region of the country:

“Much of the central United States will see near-normal winter temperatures. This includes the western and central Great Lakes, the upper peninsula of Michigan, Wisconsin, Indiana, Illinois, and most of the Great Plains. In these areas, Ms. Nature will mix intervals of unseasonably mild temperatures with occasional shots of bitter cold; average it out and it comes out–average!……….. Texas and the other south central states will see a cool to cold winter, but nothing too extreme.

“It’s like Winter Déjà vu,” states Geiger of FA, adding “last year our bitterly cold, shivery forecasts came true in many states including the 23 eastern states that experienced one of their top-ten coldest Februarys on record. This year many of these same states may want to get a jump start now and stock up on lots of winter survival gear: sweaters, long johns, and plenty of firewood.”

How Much Snow?!

Precipitation-wise, if you like snow, then you should head out to the northern and central Great Plains (most of the North Central States), the Great Lakes, New England (sorry Boston!), and parts of the Ohio Valley where snowier-than-normal conditions are forecast.

Over the Northeast and Mid-Atlantic States, the winter will be stormy with a good amount of snow. We are “red-flagging” the second week of January and the second week of February for possible heavy winter weather with a long, drawn out spell of stormy weather extending through much of the first half of March. …

An active storm track will bring above-normal precipitation to the Southeast States, as well as the Mississippi Valley, Southern Great Plains, the Gulf Coast, and along the Atlantic Seaboard.

Near-to-below normal winter precipitation will cover the rest of the country, which includes much of the drought-stricken areas in the Southwest.

http://farmersalmanac.com/long-range-weather-forecast/midwest-great-lakes-us/

So, with winter headed our way, it is apparent that the window for moving northern white frac sand to southern plays will start closing soon. Our barging guys say that the northern Mississippi River usually closes down soon after Thanksgiving.

But, there could be even further challenges coming soon with agriculture hitting the railways in September. Predictions on this year’s harvest suggest that it will be a doozy. Volume is already starting to increase. The AAR.org (Association of American Railroads) reported in the Weekly Rail Traffic for the week ending August 22, 2015: farm products shipped by rail are up 7.1% from 2014 to 16,670 carloads.

Visit AAR.org for an interactive chart and other up to date information on rail car activity in the U.S., Canada, and Mexico: https://www.aar.org/data-center/rail-traffic-data

We have had some stellar years in agriculture, which put significant pressures on rail car resources. In previous years, activity starts in September and carries through to November, December, and even January. As a result, it isn’t uncommon for rates for rail and barging to increase during this peak season of demand. Note that June and July of this year are already well above last year’s volume.

Will there be enough rail cars?

Given the downturn in fracking, a few of our rail resources don’t expect a shortfall this year. But, if the harvest is significant, we could see some activity in leasing rail cars.

Oil & Gas companies with surplus of rail cars could cash in on some leasing opportunities to generate revenue from idle assets. If you have resources you would like to market, let us introduce you to several of our logistics experts assisting buyers seeking to resource logistics assets and services for moving drilling commodities.

We also reached out to BNSF. Amy Casas, Director of Corporate Communications, provided this information:

Every year BNSF does everything it can to be prepared for the challenges winter presents to moving customers’ freight as efficiently and reliably as possible. Well before the winter season hits, each of BNSF’s operating divisions has developed a detailed Winter Action Plan, ready to implement when the cold weather arrives. Our ongoing winter preparations include:

Safety training on working in extreme cold to protect our people
Taking inventory of, testing and positioning snow removal equipment
and supplies including salt and emergency generators
Setting procedures for crew transport and adjusting train size and
speed in extreme conditions
Preparing locomotives to operate in cold weather by stabilizing
their operating temperatures
Activating 24×7 Command Centers as needed to bring together key
personnel to coordinate efforts in extreme conditions

Thanks Amy. If you are looking for pricing information from BNSF, contact Russell Huntington, Russell.Huntington@BNSF.com.

In the meantime, with a reduction in the number of distributors willing to buy sand and deliver it to major plays without a committed buyer, ground supplies could come up short for those drillers still actively purchasing supplies. The rush is on to secure product, logistics, and get it moved before winter seriously slows down the flow of supplies and prices go up due to higher logistics demand.

If you are looking for resources for moving product via barge, rail, or truck, or transloading, port services, or warehouse storage, give us a call. We have some outstanding resources in all of the major plays. We will put you direct.

Also, given that we are headquartered in Orlando, Florida, we have made it a policy to cease and desist discussions about the weather after Thanksgiving! Who wants to hear about palm trees, sunny skies, and how cold the pool water is when they are standing in three feet of snow? We are after all, compassionate people. Of course, invitations to the sunshine state are extended to anyone who would like to suffer the heat with us.

Have a great week.

Jen
407-810-3102

p.s. So, How Does the Farmers’ Almanac Predict the Weather? – we thought you would get a kick out of this!

“The Farmers’ Almanac predictions are based on a secret mathematical and astronomical formula. Developed in 1818 by David Young, the Almanac‘s first editor, this formula takes many factors into consideration, including sunspot activity, moon phases, tidal action, and more. This carefully guarded formula has been passed along from calculator to calculator and has never been revealed.

The only person who knows all the formula details is Caleb Weatherbee, our esteemed weather prognosticator. The formula itself is locked in the heart and mind of Caleb. While he is a real person who lives somewhere in the U.S., his true identity and name are secret.

Unlike your local news, government, or commercial weather service, our forecasts are calculated several years in advance. Once the new year’s Farmers’ Almanac is printed, we never go back to change or update our forecasts the way other local sources do.

Though weather forecasting, and long-range forecasting in particular, remains an inexact science, many longtime Almanac followers claim that our forecasts are 80% to 85% accurate.

Print Friendly

Leave a Comment

Your email address will not be published. Required fields are marked *