Northwest of Kanab, an undulating sea of red sand rises for several miles spanning the divide between Kanab Creek and the East Fork of the Virgin River.

On that southern Utah divide sits a parcel of state trust land that mineral developers hope will be the start of a massive sand-mining operation, yielding millions of tons of silica granules to be used for fracking wells in the West’s oil and gas fields.

But first Southern Red Sands, a new company behind the proposal, must secure water, 1,200 acre-feet a year, needed to process the sand. To that end, it has turned to two public entities: the city of Kanab and the Kane County Water Conservancy District.

The proposal has sparked an outcry from many Kanab residents who say the water transactions reek of self-dealing and the mine could mar scenic vistas and clutter roads with trucks.

“We are concerned about traffic, but primarily our concern is about water. We think it’s horrible. This is high ground between Kanab and Mount Carmel, and they are going to put an $80 million sand-mining plant up there,” said Bart Battista, an executive with Best Friends Animal Society. “Are you serious? You are selling your water in a desert.”

The famous animal sanctuary, the closest private property to the proposed mine, worries the mine’s groundwater pumping could affect its water rights. Battista helped launch a new group to oppose the mine, calling itself Keep Kanab Unspoiled, playing on the city’s marketing slogan, “Magically Unspoiled.”

(Christopher Cherrington | The Salt Lake Tribune)
(Christopher Cherrington | The Salt Lake Tribune)

The Kanab City Council is expected to vote next week on a proposed water-service agreement to supply the mining operation, and the Kane County Planning Commission will decide on a proposed conditional use permit that will establish numerous operational guidelines.

The operation would directly support 40 jobs, depending on its size, which has yet to be determined, according to Chad Staheli, CEO for Southern Red Sands.

“We are fortunate that we have this unique sand in Kane County,” he wrote in response to emailed questions. “We believe that we can harvest the sand and finish it in a responsible and sustainable way so that Kane County can benefit from a viable, well-managed business that will diversify and contribute to the local economy while coexisting with other meaningful activities in the area.”

Critics counter that such an operation is not a good fit for a county so rich in geological scenery and steeped in agricultural traditions. Battista and others say authorities seem too eager to facilitate a proposal that could have far-reaching consequences and undermine the area’s amenity-based economy.

"They say they are responding to the market, but it's not the market. It's crony capitalism," said Battista, an engineer by training who intends to run for Kanab City Council. "Crony capitalism is when you get a sweetheart deal for 600 acre-feet of water."

Southern Red Sands' operations manager is Kane County Commissioner Andy Gant, who happens to be an in-law to Mike Noel, the retired state lawmaker who oversees the Kane water district.

Gant said he does not expect the mine proposal to come before the County Commission, so he is not concerned his interests might get conflicted. Unless the mine requires a variance, approval for the mine’s conditional use permit rests entirely with the county’s Planning Commission, which will render a decision Wednesday, he said.

The water district board discussed the mine’s proposed water-service agreement in executive session seven times over the past year before approving it in a public session April 11.

Noel signed the accord that obligates the district to provide 600 acre-feet of water to the mine, which is to pay $2 per 1,000 gallons of water used, or $652 per acre-foot, under the 20-year deal that the company can extend for an additional 30 years.

Kanab would provide another 600 acre-feet, representing 6 percent of the water rights it controls, under a proposed agreement that could be finalized at Tuesday’s City Council meeting.

Kanab Mayor Robert Houston did not return a phone message, but he voiced support for the deal at a council meeting in February, saying “this comes at a really good time because there needs to be work down to a couple of the water tanks and this could help fund that,” according to the meeting minutes.

Southern Red Sands holds leases on two school trust sections on either side of U.S. 89, covering a total of 960 acres. It is the section south of the highway, which includes a feature called Red Knoll, that would be first developed.

These lands are overseen by the Utah School and Institutional Trust Lands Administration, or SITLA, whose mandate is to generate revenue for public schools.

The leases initially called for a royalty of $3 a ton, but the company renegotiated it down to $1 on each of the first 2 million tons, graduating to $1.50 after 4 million tons.

Southern Red Sands, meanwhile, holds 520 claims, filed last year by another company, on about 12,000 acres of surrounding federal land, according to an online database known as The Diggings. The annual cost to maintain these claims is nearly $89,000.

This suggests the firm intends to expand operations if the initial mine pays off.

Horizontal oil and gas wells are voracious consumers of sand when they are fracked, sucking an entire train load down a bore hole. With a rebound in drilling in recent years, particularly in New Mexico’s Permian Basin, demand for fracking sand increased, forecast to reach 181 million tons by 2024.

Wisconsin has been the go-to source of sand because its deposits of sand granules have the right combination of size, hardness and roundness. Called “proppant,” the sand is injected into bore holes with a water-chemical cocktail under intense pressure. The liquid fractures hydrocarbon-bearing rock formations and is then sucked out, leaving the sand behind to prop open the cracks.

Because of the high transportation costs, Western energy developers have been looking closer to their oil and gas fields for fracking sand. According to industry observers, supply now exceeds demand as new regional sources of sand come on line. Prices have fallen by half to around $23 a ton over the past two years, and are expected to remain flat.

While Kane County is not an oil and gas producer, its sprawling dunes contain sand deposits packed with granules that have fracking characteristics, according to a study commissioned by SITLA.

While the water agreements would guarantee the mine access to 1,200 acre-feet, Staheli said the mine initially would require about 400, the amount used to water 80 acres of alfalfa.

“Since we, too, live in Kane County, we want to play an active role in the water conversation,” he said. “Conservation is a primary goal. We are working with the community to conserve first.”

The mine’s sand also could be used in solar panels, glass, paints, ceramics and recreational products, according to Staheli. He believes initial levels of production would be 700,000 tons a year, which would take 46 trucks a day to ship.

Since the most likely destination is 350 miles away in eastern Utah’s Uinta Basin, the trucks would be routed north on U.S. 89 through Panguitch, he said, rather than south through Kanab. If the sand goes to San Juan County’s oil fields, which are not currently being drilled, or New Mexico, however, the most direct route would pass through Kanab.

Kane County is seeking Bureau of Land Management permission to widen and pave a 1-mile gravel spur road off the highway to the mine site at Red Knoll. Hardening that road would reduce dust emissions.

"The plant itself does not produce meaningful dust," Staheli said, "as the sand is wet during a large portion of the operation."

The sand would be scooped from the surface, washed in a closed-loop system, dried as the water is recaptured, then sorted by grain size through a sieve.

“Our overall process will not disrupt the flow of tourists who visit our area," Staheli said, “or those who come from afar and fall in love with us and want to stay."

Critics such as Battista and residents behind Keep Kanab Unspoiled are deeply skeptical.

“A [frack] sand operation at the gateway to our community may jeopardize Kanab’s reputation as a beautiful place to visit,” the group warned on its website. “Fewer tourists may visit. How many will stay away?”