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Increased Ohio Shale Fracking Drives Demand For Rail Improvements
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The number of hydraulically fractured wells drilled in Ohio has now topped 800. About half of those wells are producing natural gas and oil.
While debates over safety and severance taxes continues, production is reaching critical mass. And that has created need for more railroad capacity. The rail improvements have rippled into Frazeysburg and Columbus.
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 line 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 or were maintained but not for the coal traffic, for other traffic that developed along the line now have this resurgence of basically they’re back in the energy business so too speak, moving energy products,” Dietrich said.
A critical link
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 re-habbing this infrastructure to meet the need,” adds Dietrich.
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. 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 facility to haul oil and natural gas products to refineries and chemical processing plants from Ohio’s shale region. Frazeysburg’s mayor, Gary Middlemus says the rail line improvements are a bellwether of more investment.
“Yes, I think it is because you can tell they’ve added on to it down there and improved it a lot so 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.
More oil, more trains
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 Parsons Avenue manufacturer is making and selling more heavy metal castings and couplings to railcar companies. He suggests taking notice of that rolling train when stopped at a crossing.
“On each end of that car you see two wheels,” says Laird. “Well, 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.”
Laird says the industry is expected to build more than 60,000 new railcars 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 railcars will likely require more employees.
“Given more volume business we would pick up and add a complete second shift. So, we expect business to pick up the coming months,” says Laird.
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.