Collapse of St. Charles frac sand project causes split among investors

The collapse of a major frac sand proposal in Winona County has caused a split among investors in the project, with one faction pulling out in frustration over Minnesota's anti-frac sand sentiment.

"Me and my partners split up. They went to Wisconsin," said Rick Frick, one of two remaining principals in Minnesota Proppant LLC. "Were they fed up? Yes, that had a lot to do with it."

Wisconsin, he said, has embraced the industry more warmly than Minnesota has — to the point where some communities are "tickled pink" about upswings in jobs and taxes. In the past four years, the nation's oil and gas fracking boom, which relies on silica sand as a main drilling ingredient, has coincided with the permitting of almost 100 new mining facilities in Wisconsin.

But in St. Charles, people rallied heavily against a project that promised 50 new jobs and took pains to address community concerns about truck traffic and water usage. "It turned into a battle every day," Frick said.

The group's ambitious sand project lost a critical vote Tuesday night at the St. Charles City Council.

Still, Frick said he and his partner, Mike Murphy of Winona, are committed to mining and processing frac sand in Winona, Fillmore and Houston counties. They hold leases to mine sand at an array of sites, but they lack the required operating permits; and now they need an additional site with rail access to ship the mineral out of state.

"I'm going ahead with everything," Frick said in an interview. "If St. Charles doesn't want it ... fine. I will find another spot. There is no doubt about it."

Frick's first order of business will be to complete a large environmental impact study that is likely to be overseen by the Minnesota Environmental Quality Board. The study, which could take more than a year, is a major financial commitment for a group that has already sunk more than $3 million into plans that have borne no fruit.

Stuart Hagen, one of the investors who left Minnesota Proppant, wouldn't comment about his experience. He and his son, Gunnar, spent a full year helping to organize and advance the project.

"We're out of it," said Hagen, who lives near Eau Claire, Wis. "I'm not involved any more."

At the Minnesota Capitol, meanwhile, Republican legislators and some DFLers have raised concerns that proposed new frac sand regulations, including a proposed moratorium, are killing the state's chances to participate in a booming industry with good-paying jobs.

On Wednesday, Rep. Rick Hansen, DFL-South St. Paul, moved a new frac sand bill that has no moratorium. He said he's confident the state will figure out a way to regulate and tax the industry without threatening the jobs or jeopardizing the environment, public health, roads or tourism.

Frick said he holds no grudges against opponents in St. Charles. His group's biggest mistake, he said, was to plan what would have been the world's largest frac sand processing and rail-loading facility at a time when the industry was new to everyone.

"We were dreaming out of our heads," Frick said. "I don't want to be the largest in the world. I just want to get sand moving."

He also blamed himself for inadequate communication with city officials. "I'm not mad," Frick said. "Everything was done wrong. It's my fault."

But Frick said opponents of the project used "scare tactics," including unscientific health claims about silica dust, to gain advantage in the public debate.

In the next phase of his quest, Frick said, he will take pains to answer public questions while also emphasizing job creation and other economic benefits. The public is rightly concerned about health and environment risks because the industry is new, he said, but the facts are on the side of the industry.

"It's just sand." Frick said. "People are trying to make sand into a four-letter word."

Tony Kennedy • 612-673-4213