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THERE’S A WHOLE NEW CONVERSATION going on in America’s freight rail industry. For years, the question was not whether tracks would be abandoned, but where and how many miles Now, thanks in large part to the oil boom — i.e. hydraulic fracking, a technol- ogy for extracting previously inaccessible oil and natural gas — old long abandoned trackage is being revived and refurbished by the oil industry. Take North Dakota, where the fracking business has created frontier-like boom- towns. The state has about 30 per cent less track than it had back in 1920 (when high- way traffic was about to expand). That downward trend is now in reverse. Add to that the 2012 predictions by ener- gy industry insiders and others that North America could be oil independent by 2025, and one begins to see several factors coming together that could show a boom in railroad expansion not seen since the 19th century. The railroads over-built in that long-ago era, and that, along with highways and jet air travel, led to the late 20th century downsiz- ing in track mileage. That trend is now mostly but a memory.


Though many analysts believe that the calculation of our total energy independence by 2025 is optimistic, there is no getting away from the reasonable assessment that happy day is not too distant in the future. Will the railroads be ready? They’re present- ly playing catch-up with the advances and meeting the demand ’round the clock for both Bakken shale oil and natural gas. By the time oil independence day arrives, they will no doubt have been in a mode to keep up with — if not stay one or two steps ahead of — the rapidly expanding market opportu- nities. A new era for the rail industry that will have arrived to coincide with an end to oil reliance on the Middle East and other places, some hostile to America.


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And it isn’t just the energy industry by itself that has ginned up the freight rail business. Each of the wells in North Dakota and else- where that enable the fracking requires be- tween 3000 and 10,000 tons of sand. That in turn has spurred the construction of 60 new sand mines in Wisconsin alone. The Min- neapolis Star-Tribune reports that “voracious demand” for the hard, round sand of Wiscon- sin and Minnesota “has abruptly reversed a decades-long decline in the region’s railroads.” Railroads are signing up the processing plants of the new reviving sand industry. And it’s jobs, jobs, jobs for the rail business, not on- ly in terms of more trains on long-dormant lines and the upgrading of tracks, but also for the construction of new rail yards and load- ing stations all across the Upper Midwest. All the major railroads are expanding throughout the region to meet the sudden spurt in demand for sand. For example, Union Pacific has experienced a 265 per cent hike in sand shipments for fracking and Canadian Pacific has struck deals with sand processing plants and, in fact, is building


one of its own in North Dakota.


All of this industrial development is not without its detractors, including environ- mental groups and the ubiquitous NIMBY’s (not in my backyard). NIMBY’s have their local pressure points. Well-funded profes- sional environmentalists are leaning on the feds to have fracking banned outright. But much of small town America benefits be- cause it depends on freight rail traffic for jobs and delivered goods.


Refinery in Philadelphia Nonetheless, the ripple effects of the new boom in oil production on American soil and its concurrent rail expansion have reached into


other venues besides sand


mines.


Among the most interesting are ongoing plans to rescue a huge 1866 oil refinery in Philadel- phia. Until recently, The Sunoco oil company had planned to shut down the facility. Now, the Carlyle Group, an Alexandria, Va.-based private equity firm known for undertaking large projects of this type, has acquired about a two-thirds interest in the refinery so as to update it for the age of fracking. The Washington Post reports Carlyle wants to turn around the refinery by “tapping into energy sources that even a year ago were not readily available: cheap Pennsylvania shale gas and growing supplies of North Dakota shale oil.” Carlyle hopes to build on that property (about twice the size of New York City’s Central Park) a power plant that would run on shale gas and “a high-speed railroad terminal” to unload shale oil. (Note: Readers of this column — in fact, of this magazine — are well aware that “high speed” as applied to the freight trains in- volved in this plan bear no resemblance to the super high-speed service associated with passenger trains. Perhaps the most precise definition would be relatively high speed — by freight standards.)


CSX’s Role In the Rescue CSX, which already serves the refinery, ap- parently will see its role considerably en- hanced under the 21st century makeover en- visioned by Carlyle. The Bakken crude oil could ship from North Dakota by rail via BNSF to Chicago and switch there the CSX network, no doubt expedited by the rail in- dustry’s CREATE project, which is un- snarling the complex maze of trackage in the Windy City, historically the nation’s pri- mary railroad hub.


Phil Rinaldi of the Carlyle Group tells the


Post that Bakken crude accounted for nearly 50,000 barrels a day of the refinery’s sup- plies in September, even before the en- hanced “high-speed” terminal is built. Once the rail facility is in place, he predicts, the daily load will be more than doubled, with two 120-car trains a day, each carrying 70,000 barrels, and a third train stored in the refinery. CSX would leave its engines in the refinery yards. That speeds up the whole operation, allowing the refinery itself to be in control. Apparently, the words “wait and “delay” will not appear in the upgraded re-


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