* CP to be the exclusive rail service provider at Sparta
* U.S. Silica's shipments to focus on Bakken shale
* Facility expected to be fully operational in Q1 2013
June 22 Canadian Pacific Railway Ltd,
Canada's second-biggest railroad, said it signed a multi-year
deal with U.S. Silica Holdings Inc to transport
drilling sand from the U.S. company's mine in Sparta, Wisconsin.
CP, which ships sand used in the hydraulic fracturing
process to the North Dakota shale formation and crude oil out of
the Bakken, said it will become the exclusive rail service
provider at the Wisconsin mine.
U.S. Silica, which went public in April, is the No. 2 U.S.
commercial silica maker. Its largest end market is oil and gas
proppants, which are used in an exploration and production
method called hydraulic fracturing that has spurred production.
The company is building a new frac sand facility located on
the CP's rail line in Wisconsin that will produce Northern White
sand for use in shale basins across the United States and
A boom in oil and gas drilling has driven up demand for
fracking materials such as proppants. These materials were in
short supply in the Rockies, Bakken, South Texas and Permian
The Wisconsin mine, expected to be fully operational in the
first quarter of 2013, will ship three different grades of dry
sand to the Bakken shale.
U.S. Silica recently said it would partner with Berkshire
Hathaway Inc-owned BNSF Railway Co to build a silica
sand storage facility in Texas to cater to the rapidly growing
oil and gas activity in the Eagle Ford shale formation.
U.S. Silica, backed by private equity firm Golden Gate
Capital, operates 13 facilities and has 315 million tons of
reserves, according to the company's latest filing with
Shares of Calgary-based CP closed at C$74.25 on Thursday on
the Toronto Stock Exchange. U.S. Silica shares closed at $11.37
on Thursday on the New York Stock Exchange.