Parsons came to Wheeling & Lake Erie — railroad aficionados prefer calling it “Wandle” — in 1992, two years after Norfolk & Southern spun off the railroad operation as its own company. Back then the business was loaded with debt and barely survived by hauling rock and steel through northern and eastern Ohio.Under Parsons’ direction the company has reached beyond the steel and mining industries, finding new commodities to move and industries to serve. Development of the Marcellus Shale in southwest Pennsylvania and the Utica Shale in eastern Ohio has helped the operation expand.By diversifying its customer base, Wheeling & Lake Erie has grown into an $80 million per year business. Parsons remains at the helm, but this week he will entrust the operation to 31-year-old Jonathan M. Chastek, who steps in as president after the retirement of William A. Callison.
GETTING IT RIGHT
When asked, Parsons says luck is the reason Wheeling & Lake Erie has survived and grown under his leadership. Callison, Chastek and other executives cite Parson’s leadership, vision and drive. But the owner doesn’t back down from his contention that luck has been the key to the railroad’s success. “It’s a matter of being in the right place at the right time,” he says. “We just need to keep our good luck.” But the company also works hard to make its own luck. Money has been reinvested, Parsons and Callison say. The company now has 60 locomotives, three times the number it operated 20 years ago. It also upgraded stretches of track, which allows for a smoother and faster ride and reduces the number of crews needed on some runs. The reinvestments are paying off, Callison said, who spent 21 years with Wheeling and has been president since 2006. So are efforts to develop strong relationships with the nation’s larger railroads. Wheeling & Lake Erie operates on 840 miles of track in Ohio, Pennsylvania and West Virginia, with connections to Norfolk & Southern, CSX and Canadian National.
‘A LOT OF PRACTICE’
Wheeling & Lake Erie’s work with shale drilling is helped by the Canadian National connection at a terminal near Toledo. Natural gas liquids extracted from the Utica and Marcellus formations are shipped west and Wheeling trains return with sand and other materials used for drilling and hydraulic fracturing. Callison likened the relationship with Canadian National to a partnership. Shale drilling has been on Wheeling’s radar since 2008, when companies began drilling the Marcellus formation. The railroad’s lines pass through the well fields in southwest Pennsylvania and West Virginia. Wheeling & Lake Erie made contacts and developed relationships with drilling companies and those connections have carried over as drillers moved into Ohio’s portion of the Utica formation. “We had a lot of practice in the shale industry before the Utica started coming on,” Chastek says.
As drilling in the Utica has developed, Wheeling has added six companies on its system that ship sand used in the fracking process. It’s a specific type of sand, used because of its size, shape and hardness. One of those customers, Fort Worth, Texas-based Superior Silica Sand, transformed a vacant lot on Canton’s southeast side into a sand delivery yard over the course of two weeks. The railroad also helped the Stark Development Board transform the Neomodal intermodal rail yard into a station with three companies that service Utica Shale drillers. One supplies sand and other fracking materials, while two others collect and ship natural gas liquids.
IN IT’S INFANCY
Chastek, who was executive vice president, has been involved with developing the shale business. A Little Rock, Ark., native and graduate of the Merchant Marine Academy, he joined the company nine years ago after spending a year in the maritime industry. He’s licensed to serve as a third officer on U.S. flagged commercial vessels and holds a commission in the Navy. hen he applied for a job at Wheeling, Chastek said he asked Parsons for a management training program. Parsons delivered, having Chastek work in the locomotive repair shop, as well as the car shop and on track maintenance. He became a certified conductor and locomotive engineer, then worked two years as trainmaster.
Finally he moved into real estate and business development. That’s where Chastek learned shale drilling. He’s confident Wheeling — and other railroads — will be working with drilling companies for some time.Utica Shale development is in its infancy and should expand faster in the coming year, Chastek said. Wheeling executives expect the drilling process will keep sand and stone moving into the area for another five to seven years. Production is projected to last upward to 20 years, which means the railroad will be shipping natural gas liquids.
The company already handles about 40 cars each day loaded with liquids and shipped from gas processing centers MarkWest operates in Pennsylvania. Parsons expects the railroad will move between 60 and 80 cars per day from MarkWest facilities near Cadiz.While pipelines are used to move material to natural gas processing centers, rail tankers are key to moving refined liquids from processing centers further along the market, Parsons says. It’s the difference between pipelines and railroad lines. While a pipeline connects two specific points, the railroad has more connections.“The destinations are diverse and scattered,” Parsons says.