North America
North American energy independence by 2017 or 2018, and become the world’s largest oil producer in the process, more and more areas are opening up to potential shale oil extraction. Indeed there are more than a dozen
shales and basins in nine states west of the Mississippi where oil is already being extracted or is waiting to be found, all of which are or could boost traffic for US railways. Texas in particular offers substantial future opportunities. Major investment has already taken
place in rail infrastructure around San Antonio to support developments in the Eagle Ford shale in the past few years, which now has more than 230 drilling operations. Shortline operator Watco increased trackage at its East Kelly Railport from 4.3km to 12.9km, while Gardendale Railroad has increased track length at its facility from 19.3km to 40.2km. In addition, BNSF and US Silica Holdings opened a 113.3 hectare frac sand facility in Von Ormy in June, and Frac Resources and Frontier Logistics are planning to open the Mission Rail Park, a 404.7 hectare site which will become a centre for oil field service companies. Hondo Railway is also benefitting
from the Eagle Ford boom and has gone through a major transformation since it moved to a new 70.2 hectare site adjacent to BNSF and UP infrastructure close to Hondo, Texas in 2007. From 4km of track and 1800 wagons of traffic
at its start up, the railway now has 25.9km of track and is expecting to handle around 10,000 wagons of petroleum, frac sand, ethanol and agriculture products, and food grade sweetener this year. Five subsidiary companies operate loading and unloading facilities on the site, plus one independent, Baker Hughes. “When we moved our business in
2007 I developed a masterplan of what the yard would look like in 20-25 years, but the growth has been so fast that we have already surpassed that,” says Mr Miles Lee, Hondo Railway’s chief operating officer. “Basically in the six years since we moved we have not stopped laying track. We are not a typical railroad which might use existing infrastructure. Every single piece of rail that we are using we have put down in the last few years.” In addition to Eagle Ford, BNSF, UP
as well as KCS, are increasing traffic in and around the Permian Basin. This includes the largely unexplored Cline Shale which is estimated to have as much as 30 billion barrels of recoverable oil, far exceeding even the Bakken. The three Class 1s are also active in Colorado’s Denver-Julesburg Basin, and the Niobhara Shale in Colorado and Wyoming, which is projected to boost production to 235,000bopd by the end of 2013. BNSF is similarly present in Oklahoma and Texas’ Anadarko Basin, which is in close proximity to Cushing, while railways are active in the Barnett Shale in Texas, the state’s largest oil field. Elsewhere, the Mancos Shale in
Colorado, New Mexico and Utah, and the Monterrey Shale in California, while not active yet, are also projected to become significant producers and could conceivably be served by rail. While it is unlikely that the speed of
developments in these regions will match the rush to the Bakken, they do offer substantial opportunities for railfreight growth. Of course the question of pipelines superseding rail transport remains. Rose says the market will remain
dynamic in terms of the mix and he admits “there is no 15-20 year certainty.” Safety considerations have also intensified following the Lac- Mégantic accident. But the length of time it takes to approve and implement pipeline projects is favourable for railways which already have the infrastructure in place and the capability to ship oil to any location in the country. Certainly Class 1s would have been encouraged by recent news that Kinder Morgan shelved a $US 2bn pipeline plan in Texas because refiners are choosing to move crude by rail due to its greater flexibility. And with oil companies now readily
investing in railway infrastructure - Valero is one of the latest to announce that it hopes to have a fleet of 12,000 wagons by 2015 and is spending $US 30m on rail infrastructure to take crude to its Benicia, California, refinery - the signs are that the western US shale rail boom will last a little longer yet. IRJ
Photo: Tom Danneman
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64