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Environment


Shale drives demand for Ohio short-line railroads
Some railroad companies have struggled for years with the decline of manufacturing and coal shipments, but now the new oil and gas production is changing that.
Story by TOM BORGERDING


 
Black Run Terminal
Courtesy of Tom Borgerding
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In The Region:

The number of hydraulically fractured wells drilled in Ohio has now topped 800, with about half of those wells producing natural gas and oil.

While debates over safety and severance taxes continue, production is reaching critical mass. And that has created a need for more railroad capacity to move the oil and natural gas from drill sites to refineries and processing plants.

For Ohio Public Radio, WOSU’s Tom Borgerding reports on how rail-system improvements have rippled into Ohio towns, large and small.

Hear more on how drilling is helping Ohio railroad companies survive.

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The need to quickly transport oil and natural gas liquids away from Ohio shale drill sites is spurring new short-line rail construction. 

Matthew Dietrich at the Ohio Rail Development Commission counts 32 short-lline railroad companies. Some struggled for years as manufacturing and coal shipments declined.  But, the new oil and gas production is throwing them an economic lifeline.

“What you’re seeing now are some lines that were either preserved and had very little traffic ... have this resurgence. Basically, they’re back in the energy business so to speak, moving energy products,” Dietrich said.

Dietrich says Ohio’s short-line railroads provide critical links between storage terminals and the national rail network.

“What we’re facing is a bit of a challenge in Eastern Ohio in rehabbing this infrastructure to meet the need,” Dietrich said.

Investment impact
Dietrich says both public and private monies are being used to upgrade short line rails. And the investments are being felt in Ohio communities large and small.

In the village of Frazeysburg, 55 miles east of Columbus, it’s mostly quiet on a week-day morning.

While walking along Second Street, the sound of front porch wind chimes blends with the occasional car or truck heading for the main village crossroads. Little-used train tracks bisect the town.

Four miles outside the village, a Texas company is spending$6 million to re-activate a storage and rail transfer terminal. It will be the first rail facility to haul oil and natural gas products from Ohio’s shale region to refineries and chemical processing plants.

Frazeysburg’s mayor, Gary Middlemus, says the rail-line improvements are a bellwether of more investment.

“I don’t think they’ve been putting all that money in there if they don’t plan on something,” Middlemus said.

The company, Enlink Midstream says the spur railroad at Frazeysburg will move crude oil and other products at a rate of 24,000 barrels per day.

National resurgence
While more tank cars begin moving out of Frazeysburg, executives at a Columbus foundry are also seeing effects from shale production, not only in Ohio but nationwide.

Columbus Castings Sales Executive Jeff Laird says the manufacturer is making and selling more heavy metal castings and couplings to rail-car companies.

He suggests taking notice of rolling trains when you're next stopped at a crossing. 

“On each end of that car you see two wheels,” Laird said. “Those two wheels are held together by a large casting that goes over the axles and the bearings of those cars, which holds those together. Those are the castings that we make here as far as probably our bread and butter.”

New rail cars on the way
Laird says the industry is expected to build more than 60,000 new rail cars this year.

Nearly half of those cars will be tankers designed to haul oil and natural gas liquids.

Columbus Castings currently employs 900 workers. But, Laird says demand for new rail cars will likely require more employees.

“Given more volume business, we would pick up and add a complete second shift,” Laird said. “So, we expect business to pick up the coming months.”

The resurgence of short-line railroads in Ohio is part of what oil industry officials call the midstream or next phase of the shale play.

Well production in counties that hug the Ohio River is substantial enough now to convince private and public investment in transportation.

So far, nine short-line rail improvement projects have been started in eastern Ohio.  Continued improvements in Ohio’s freight rail network hinges on the price of crude oil. 

 

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