U.S. railways are growing and expanding as opportunities increase right along with shale oil transportation demands.
The big need that railways can fulfill is transportation of sand. Hydraulic fracturing requires tons of sand—between 3,000 and 10,000 tons per horizontal well.
In Wisconsin 60 new sand mines are in the works, and railroads are making deals with the sand processing plants. Such endeavors are waking up sleepy rail lines and sparking infrastructure improvement and development.
The Upper Midwest region of the U.S. has seen in expansion in all of the major railroads. Union Pacific recorded a 265 percent increase in frack sand shipments in the last two years. Union Pacific has had to make many infrastructure changes to meet the demands of the shale industry. Rail industry experts predict railroads in western Wisconsin will boom for the next 10 to 20 years, maybe even 30 years.
This railway boom is evidenced by recent announcements from some of the nation’s other rail companies.
BNSF Railway announced last week that it has expanded its Bakken rail capacity from North Dakota and Montana.
“BNSF has been hauling Bakken crude out of the Williston Basin area for over five years. In that time, we have seen the volume increase nearly 7,000 percent, from 1.3 million barrels in 2008 to 88.9 million in 2012,” said Dave Garin, BNSF group vice president, Industrial Products. “We see this trend continuing and we are committed to serving this growing market now and in the future.”
BNSF is investing $197 million in 2012 on projects in North Dakota and Montana. Some of those projects include 2,188 miles of track surfacing, two new inspection tracks, raising track at Devil’s Lake, replacement of 121 miles of rail and about 332,000 rail ties, as well as signal upgrades and equipment acquisitions.
Since 2011, BNSF has hired more than 560 new employees to fill existing and newly created positions in North Dakota and Montana. These employees include crews to help deliver the inbound freight that supports drilling efforts and the outbound crude to destination markets throughout the U.S.
There has also been expansion on smaller scales in the Western Pennsylvania where D&I Silica is reopening its Kittanning Transload Terminal facility. D&I Silica transports sand for hydraulic fracturing. Two tracks are now available at the station. As the industry expands, D&I hopes to expand its development of Kittanning Station as well.
According to the Association of American Railroads, overall rail productivity is up 164 percent and every dollar spent on investments in our freight railroads — tracks, equipment, locomotives, bridges, etc — yields $3 in economic output. The associate reports that each $1 billion of rail investment creates more than 17,000 jobs.
Rail lines will likely become increasingly more involved in the shale oil process. They don’t require approval and construction like pipelines because they are already there. All that’s needed is a partnership between the rail lines and the drilling companies.