1. Assessing the Potential Impact of the Expanded Panama Canal on the Wisconsin Frac Sand Mining Industry Students: Aleksei Bogdanov,Andrew Kast, Derek Krivinchuk Mentor: Dr. Richard Stewart, PhD

2. Identifying Opportunities Massive shale gas and oil deposits exist around the world. Hydraulic fracturing requires special types of sand. Frac sand of extremely high quality is mined in Wisconsin. Global demand for the sand will require effective supply chain solutions Wisconsinwatch.org

3. Global Energy Demand Energy consumption to increase by 36% by 2030 Gas and Oil demand continues to grow Emerging markets account for 70% energy increase by 2040

4. Energy Supply & Demand in China  China has a rapidly growing economy.  China imported in 2013: 58% of Oil and 28% of Gas.  Policy to become self- sufficient with aggressive strategies for shale fracking.  By 2050, China’s energy demand will account for 50% of the growth in global energy demand.

5. Identifying and Mappping the Supply Chain Point of Origin- Barron Wi Point of Destination: Two ports in China Travel by truck, rail, or potentially barge to gateway ports. Gateway Ports – South through Gulf Coast and Panama Canal – North through Pacific Northwest Identify constraints, facility capabilities, and duration of routes

6. Superior Silica Sands Have 2 locations in Wisconsin Ship products by rail or truck across North America Served by CN rail at Barron, WI location Volume currently moved Potential volume: 2.4 million tons per year http://www.sssand.com

7. Handling Characteristics of Frac Sand Handled like other dry bulk commodities Chemically inert and non-hazardous Precautions used to avoid dust production www.minnpost.com

8. Gulf Coast Routes CN has service to Mobile and New Orleans Sand could potentially be barged down Mississippi River Travel via Panama Canal to reach a Chinese market Vacuum technology in New Orleans allows shipment in containers Multiple handling if barge used http://portno.com/grain-in-containers

9. Pacific Northwest Routes CN serves Prince Rupert and Vancouver Prince Rupert has shortest nautical distance to Chinese market Bulk facilities exist, but not currently handling Frac sand Rail has larger unit train capacity to Prince Rupert Rail transit times are longer to PR Container Service is available from Wisconsin to PR

10. PR The Best Supply Chain Shorter Nautical distance More volume per train Prince Rupert Port Authority stated that Frac sand could be handled in the future Prince Rupert is capable of handling same size ships as expanded Panama Canal Total Transit Time in Days

11. Cons A single transit route that can only be accessed by CN Rail. Shippers have no price leveraging capabilities. Only one company transporting product.

12. Conclusion If Chinese market developed Pacific Northwest (specifically Prince Rupert) would be best option for Wisconsin Frac sand mining companies. Due to high-potential for future demand, it is likely that Frac sand will be exported to China in the future. Gulf Coast would also be a viable secondary market to export Frac sand. As with any supply chain, the cost is a significant factor, and this may be effected by which port could receive more backhaul products.

13. Thank You Questions???

14. References International Atomic Energy Agency (2012, March). World Energy Demand and Supply. Retrieved from http://www.iaea.org/nuclearenergy/nuclearknowledge/schools/NEM- school/2012/AbuDhabi/PDFs/day1/04_Rogner_World_Energy_D%26S.pdfhttp://www.iaea.org/nuclearenergy/nuclearknowledge/schools/NEM- school/2012/AbuDhabi/PDFs/day1/04_Rogner_World_Energy_D%26S.pdf Chou, E. (2013, July 11). Shale Gas in China – Development and challenges. Retrieved from http://blogs.law.harvard.edu/ellachou/files/2013/07/Shale-Gas-in-China-Draft.pdf Nakano, J., Pumphrey, D., Price, R., Walton, M. (2012, August). Prospects for Shale Gas Development in Asia. Retrieved from http://csis.org/files/publication/120824_Nakano_ProspectsShaleGas_Web.pdf http://csis.org/files/publication/120824_Nakano_ProspectsShaleGas_Web.pdf Wisconsin Geological and Natural History Survey (2014). Frac Sand in Wisconsin. Retrieved from http://wisconsingeologicalsurvey.org/pdfs/frac-sand-factsheet.pdfhttp://wisconsingeologicalsurvey.org/pdfs/frac-sand-factsheet.pdf Wisconsin Department of Natural Resources (2012, January). Silica Sand Mining in Wisconsin. Retrieved from http://dnr.wi.gov/topic/mines/documents/silicasandminingfinal.pdfhttp://dnr.wi.gov/topic/mines/documents/silicasandminingfinal.pdf US Energy Information Administration (2013, July 25). International Energy Outlook 2013. Retrieved from http://www.eia.gov/forecasts/ieo/more_highlights.cfm http://www.eia.gov/forecasts/ieo/more_highlights.cfm MnDOT (2013, October 13). Transportation and silica (frac) sand mining in Minnesota. Retrieved January 5, 2014, from http://www.dot.state.mn.us/frac/