By Michael Pound, Calkins Media
If you work on the railroad, you know the coal business isn’t what it used to be.
But that’s OK — there’s a replacement on the horizon.
As is the case with most segments of the transportation industry, railroads in the United States are enjoying a boost in business because of the shale energy boom, whether we’re talking about Marcellus shale plays in this area or tapping into the new crude oil boom in the Dakotas.
Coal has long been the bread and butter for the rail industry, but as hydraulic fracturing technology opens up new areas to natural gas and crude oil extraction the number of coal cars moved across the country has dropped — by as much as 16 percent in the last year alone — while shipments of petroleum products are on the rise, by more than 54 percent in the last year.
Petroleum products have a long way to go before they replace coal for the country’s rail carriers — 14,000 petroleum cars vs. almost 110,000 coal cars in the third week in January — but the Association of American Railroads has recognized the potential for growth as the shale boom expands.
“As recently as 208, U.S. Class I railroads originated just 9,500 carloads of crude oil,” association economist Dan Keen wrote in a report he completed late last year. “By 2011, this had jumped to 66,000 carloads annually, and in 2012 will exceed 200,000.”
Keen also said the industry could count on new carloads of sand used in the fracking process, scrap metals to be used to produce pipe — not to mention the completed pipe — for the new plays.
“Beyond simply providing transportation capacity, railroads offer energy market participants the ability to shift deliveries quickly to different markets, enabling producers to sell their product to the market offering the best price,” Keen wrote.
The trucking sector also stands to score as the shale extraction business grows.
A survey released in late January by Benesch, a Cleveland-based transportation law firm, the National Tank Truck Carriers and the Ohio Trucking Association showed that industry members were not only enthusiastic about the prospects of adding truckloads to serve shale extractors but thought the growth could also produce significant job growth. (Ninty-seven percent of respondents said they thought the shale boom would have a positive impact on the trucking industry, and 45 percent said they expected to increase their workforce between 5 percent and 15 percent, while more than 10 percent of respondents said they planned to hire between 50 percent and 100 percent more employees.)
The industry needs to haul people, too, and that’s meant a few new flights for Pittsburgh International Airport, with hopes that more might be on the way. Brad Penrod, the airport’s president and chief strategy officer, said it’s not an accident that Southwest will add a new nonstop flight between Houston and Pittsburgh in the spring; he also said the inclusion of New Orleans on the airport’s wish list of new nonstops wasn’t just about getting people to Mardi Gras.
“In both cases, you’re talking about centers for the energy industry, and we’ve seen enough interest in getting those people to Pittsburgh that additional flights make sense,” Penroad said. “Adding flights to the New York area does the same thing, and we’ve been successful in adding new flights to that market.”
The prospect for business growth in the transportation sector is undeniable. But that growth comes with questions about the industry’s effect on the environment — many of which have yet to be resolved — and the health of those who work in it.
A recent study by the National Institute on Occupational Safety and Health, a division of the Centers for Disease Control, found that from 2003 through 2009, 716 people working in the oil and gas extraction industry were killed on the job, for an annual fatality rate of 27.5 deaths per 100,000 workers. The rate for all U.S. workers in that period was 3.9 deaths per 100,000.
And being involved in the transportation side of the industry is even more dangerous, the NIOSH study found. The majority of the fatalities in the industry, 29 percent of them, involved highway motor vehicle crashes.
Environmental questions — particularly those pertaining to the removal of the wastewater produced in the fracking process — persist as well. The exact contents of fracking wastewater aren’t known — energy companies continue to say the exact mix of chemicals pumped into the ground in the process is a proprietary secret — but a recent U.S. Geological Survey study of wells in Pennsylvania and New York showed that the wastewater produced can have levels of radioactivity more than 3,600 times higher than the federal guidelines for drinking water and 300 times greater than the Nuclear Regulatory Commission’s limits for discharges from nuclear power plants.
That wastewater is currently trucked to disposal sites, like many of the deep injection wells in nearby Northeast Ohio, but it cannot yet be transported by barge on the Pittsburgh area’s rivers.
The U.S. Coast Guard regulates the cargo that’s moved on the country’s waterways, and it has yet to decide it it will allow fracking wastewater to be moved by barge, said James McCarville, executive director of the Port of Pittsburgh.
“My understanding is that the analysis has been completed, but we’re still waiting on a final ruling,” McCarville said. “I don’t know a specific time frame for a ruling, but we expect one soon.”
McCarville said he understands concerns about moving fracking wastewater in any transportation mode, but he said transporting the water by barge could be the safest option.
“We safely handle hazardous materials, like oil, gasoline and lubricants, every day,” he said. “I am confident we could do the same with the fracking byproducts.”
McCarville also said the extra business would be welcome.
“I don’t have any estimates about how much extra tonnage we could add, but it’s safe to say it could be substantial,” he said. “And we’re always looking to add extra tonnage, if it’s something we can transport safely.”
This story is part of a project on the shale-gas industry recently prepared by the Beaver County Times, a Calkins Media newspaper near Pittsburgh. For more stories, visit www.timesonline.com. Source: http://www.shalereporter.com/industry/article_3641f81b-8f0f-5451-8cff-ce153d9be79d.html