Everyone is looking for cheaper ways to fuel their businesses, and railroad professionals are no different.
With the natural gas boom in full swing and a demand more than ever on railroads for transportation necessary to keep the industry rolling along, railroads are emerging and seeking new ways to make a profit.
With the price of diesel at a maximum, some rail leaders are aggressively looking at the possibility of running their trains on natural gas. Not only is the fuel savings appealing, so are the potential decreases in carbon dioxide. Right now Canada National Railways is testing such trains, and railways are taking notice.
Keith Creel, executive vice-president and chief operating officer of Canadian National Railways, said, upon the program’s launch, “CN launched this locomotive test to explore the use of natural gas as a potential alternative to conventional diesel fuel. This reflects CN’s continuing drive to look for ways to improve operating efficiency and advance the company’s sustainability agenda. Natural gas has a lower carbon content compared with diesel fuel, so that locomotives using natural gas – if the railway technology employing this form of energy ultimately proves viable – would produce significantly fewer carbon dioxide emissions.”
CN is also working with EMD, Westport Innovations Inc., and Gaz Métro Transport Solutions, a wholly owned subsidiary of Gaz Métro, on a longer term project to explore a state-of-the-art natural gas railway engine and a standardized railway tender.
Railroad companies seem to believe natural gas prices are going to remain low and stable because of booming production of gas from shale plays, giving it a consistent price edge over diesel – which now sells for $1 to $2 more per gallon than an equivalent amount of natural gas. With industry leaders Union Pacific and BNSF Railway each consuming 1 billion gallons of diesel annually, even a difference of a few cents per gallon can mean tens of millions of dollars in savings.
What else is going on in the rail industry?
- Three San Antonio real estate developers will break ground next month on the Live Oak Railroad, hoping to snag a slice of a South Texas Eagle Ford shale rail boom. Live Oak Railroad aims to open by late March 2013 south of Three Rivers in Live Oak County, with 28,000 feet of track along the Union Pacific line. Plans call for it to serve as a liquids terminal for natural gas and crude oil. The project is being driven by oil and gas production in the Eagle Ford Shale, a 20-county swath of the state that stretches from the border toward East Texas. The partners are working with San Antonio-based Howard Energy Partners, a natural gas pipeline company and an investor in the project, to develop the liquids terminal.
- All across South Texas, rail yards are adding track to service the oil and gas industry. In Hondo, Hondo Railway has grown from 13,000 feet of track to 80,000 feet, moving primarily fracturing sand, crude oil, ethanol and cornstarch. At Port San Antonio’s East Kelly Railport, Watco Cos. recently expanded the tracks from four miles to almost eight miles within the 350-acre site. In Gardendale, in LaSalle County, about halfway between San Antonio and Laredo, Gardendale Railroad has grown from 1,600 feet of track to 130,000 feet of track. Near Gonzales, the Texas, Gonzales & Northern Railway Co. started with 12 miles of track and since last June has added 13 more.
- In Norfolk, Virginia, Trains hauling sand used in extracting natural gas from the Marcellus Shale formation soon will have the ability to unload five times faster thanks to a $20 million upgrade at the Horseheads (N.Y.) Sand & Transloading Terminal (HOST). Owned and operated by Carriage House Partners and RLB Holdings, HOST is in the final stages of constructing a 90,000-square-foot transloading building, scheduled to be completed by Oct. 8. HOST also broke ground this month on a second 90,000-square-foot transloading facility to be opened in 2013, and both buildings are designed for the storage of sand. When completed, these new facilities will allow Norfolk Southern trains to unload 100 freight cars within 48 hours.
- In Ohio, development officials, rail advocates, and a Boardman businessman are exploring whether 13 miles of defunct rail line in southern Columbiana County could be redeveloped to create a direct freight-shipping link from Trumbull and Ashtabula counties to the Ohio River. The project, which could cost upward of $100 million, has gained the attention of a statewide group focused on boosting rail use, an official with the Western Reserve Port Authority and even a local entrepreneur who says funding should not be a problem. The supporters believe that a direct rail link would be a more favorable shipping route for products linked to the natural gas drilling industry, and could help secure other midstream processing and manufacturing plants in the area.