try seems to have found an alternative route to producing that fossil fuel. The output of crude oil centered in the Bakken Formation in Williston, N.D., also involves extraction of the fuel from rock.
Bakken shale occupies the Williston Basin in a huge area encompassing parts of North Dakota, Montana, and even over the border into the province of Saskatchewan, Canada, though the best prospects for oil are deemed to be on the U.S. side. The railroad most heavily involved in shipments is the carrier with the largest presence in North Dakota. That would be BNSF, where once again Warren Buffett’s reputation for in- vestment acumen has been validated as the Bakken boom started up just as he became a player through 100 per cent purchase of the railroad by his Berkshire Hathaway. The folks at BNSF have supplied me with the following stats that quantify this roar behind the North Dakota economy: Current
production is approximately
510,000 barrels a day; 2500 new well starts are expected in 2012; rail is handling about 25 per cent of crude shipments from the area. (Pipeline and truck haulage are also in the mix. Development apparently is so in- tense, one mode can’t do it all—W.V.); Justin Kringstad of the N.D. Pipeline Authority ex- pects about 730,000 barrels a day by 2013. Some estimates project one million barrels.
Union Pacific and Canadian Pacific, Too Union Pacific is also a major player at Bakken, having in 2011 about tripled its volume of 2010. The credible goal for last year was 16,000 carloads. This growth was led by a 35 per cent increase in non-metallic mineral ship- ments (frac sand) and a 15 per cent increase in steel and scrap shipments (drill pipe). Canadian Pacific has invested $100 mil- lion to expand the company’s operations from 2010 to 2012. CP has experienced growth from the inbound shipment of sand and steel into the basin as well as outbound shipment of crude oil to refineries. In addi- tion, the railroad offers transportation ser- vices to operators in North Dakota’s Willis- ton Basin.
Investopedia adds that Kinder Morgan Stanley Partners is collaborating with Wat- co Companies, a privately owned railroad firm, to build rail loading facilities in North Dakota and other areas. That will facilitate the unloading and loading of frac sand, crude oil, drill pipe, and other materials.
Natural Gas and Political Barriers? Capitol Hill, whose 535 lawmakers answer to constituencies of varying priorities, can rarely be counted on to act in haste on any new significant issue. The current advance- ment in natural gas exploration is no excep- tion. Congressman Ed Markey (D-Mass.) and other lawmakers are leaning on the De- partment of Energy to deny exports of the newly-discovered natural gas despite the willingness of such natural gas companies as Dominion and Cheniere to increase their shipments to Europe and Asia.
Natural gas prices have plummeted due in part to an unusually warm winter in many parts of the U.S. The new exploration efforts have made the product even cheaper and more abundant. Exporting to countries overseas, the lawmakers argue, will drive prices upward for customers here at home. Brigham McCown of United Transportation Advisers brands Markey’s idea as “counter-
intuitive” and “defying both economics and logic.”
“Imagine the backlash,” he writes, “if Congress opposed allowing Caterpillar to sell equipment overseas or the Department of Agriculture placed an export ban on sur- plus corn of wheat. How many farmers would lose their jobs?”
Mr. McCown might well have also asked: How many railroad workers would lose their jobs because of a natural gas export denial by the government? (The rail industry is up to its ears on such issues as the overall om- nibus transportation bill, resisting efforts to allow bigger trucks on America’s highways, legislation to subject railroads to stiffer an- ti-trust restrictions, and extending the PTC deadline. That is just for starters. Presum- ably the question of whether Markey’s ef- forts on exporting natural gas would affect rail’s business in serving America’s ports is a log to be tossed onto the flaming public pol- icy agenda fire when and if it becomes nec- essary.)
Federal Regulation on Both? Of greater concern is another metaphoric log threatened (in the view of industry sources), for the Marcellus/Bakken projects: federal regulation. Speaking of hydraulic fracturing in a Georgetown speech, Energy Secretary Steven Chu said, “We are going to have some regulation on that.” Currently hydraulic fracturing occurs in areas of the country where the states, not the federal govern- ment, do the regulating. That may change. The EPA late last year issued a draft re- port saying the drilling process in fracturing may have contaminated drinking water in Pavillion, Wyo. (Pop.175). Critics of EPA pro- cedures have been picking the study apart, Wyoming Governor Matt Mead for example, calling it “scientifically questionable.” Though the EPA findings are not final, the agency has been working on new rules to regulate fracking. North Dakota Governor Jack Dalrymple said such restrictions “would have a huge economic impact on our state’s energy development.” This column will follow this issue with an eye toward its potential effect on the freight rail industry’s central role.
Bus vs. Rail (Again)
In my little corner of the earth — Mont- gomery County, Md. (Suburban Washing- ton, D.C.) — we have a microcosm of the growing pains that have affected the entire area, as well as most major metropolitan re- gions throughout the country. Population growth and density exceed an aging trans- portation infrastructure that was built for a different time, but fail to meet the require- ments (current and expected) of the 21st century.
Recently the Montgomery County Council voted to implement a Bus Rapid Transit (BRT) system in lieu of light rail (LRT) for a major corridor. The proposal was then sent to Governor Martin O’Malley so that he can make his own recommendation before ap- plying for federal support.
The Issues
Metropolitan Washington is a growing re- gion of 5.5 million people. The organization Suburban Maryland Transportation Al- liance (SMTA) argues that an area of that size needs a transportation system that transcends requirements of those who com-
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