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Shale & Railroads Marketing & Operations Impact

This presentation by Marty Pohlod, Vice President of Commercial for Genesee & Wyoming, delves into the significant impact of shale production on rail operations and marketing strategies in the Ohio Valley region. Covering key shale locations like Ohio's Utica and Pennsylvania's Marcellus, the discussion highlights the logistics of shipping natural gas liquids (NGLs) and crude oil via rail. Pohlod explores infrastructure needs, safety implications, service impacts, and the competition between pipelines and railroads, emphasizing the necessity for public policy alignment and investment in rail infrastructure.

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Shale & Railroads Marketing & Operations Impact

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  1. Shale & RailroadsMarketing & Operations Impact Marty Pohlod, Vice President – Commercial Genesee & Wyoming – Ohio Valley Region September 23, 2013

  2. Key Shale-by-Rail Locations • Natural Gas/NGLs Locations • Ohio: Utica Shale (liquids rich) • Pennsylvania: Marcellus (dry gas) • Louisiana: Haynesville (dry gas; activity down) • Crude Oil Locations • Texas: Eagle Ford Formation and Permian Basin • North Dakota: Bakken • Canada: Alberta tar sands

  3. G&W Lines and U.S. Shale Geography

  4. Utica Shale In Ohio • Utica Shale = rich natural gas liquids (NGLs) • Ethane, Propane, Butane, condensate and/or natural gasoline. • Utica Shale does not produce significant crude oil • Western portion potentially crude oil rich, not yet economically recoverable. • Production to grow dramatically with new processing and fractionation is available • Processing: Separation of NGLs, water and other impurities from dry gas • Fractionation: Separation of NGLs into components (e.g., ethane, propane, butane, etc.)

  5. Shale to Rail – What Does It Mean? • Site prep ~ 200 railcars of stone • Inputs ~ 30+ railcars per well: • 4-6 railcars of OCTG (pipe) • 15-30+ railcars of sand • ½ railcar of cement • NGL Outputs ~ 10+ railcars per well: • 4-6 railcars of drill cuttings • 2-3+ railcars of NGLs/day • Crude Outputs • Multiple unit trains per week

  6. Railcar Storage Impact • More storage required than traditional rail customers • Frac sand terminal 5+ grades, may need 1-2 miles car storage. • NGL Fractionation plants require even more track. • Varying tank cars by commodity • Multiple shippers/marketers in one facility

  7. Liquids Shipments Safety Implication • “Key Train” Status • 20 or more haz-mat placard cars • No unattended trains • Close coordination at interchange • Stays on mainline when passing other trains • More detailed haz-mat traffic lanes identification • More interaction with FRA at key haz-mat locations

  8. Service Impact • Not incremental traffic – Trainload(s) of new traffic • Design train service to fit commodity & customer demand • Careful pre-planning • Close communication with customers • Hiring of additional operating employees • Premium service and cost

  9. Big Picture Rail & Shale • Defining the market • Pipelines vs. rail? Competition amongst shale plays and end-markets? • Committing to long-term track investments • Capacity is available and scalable • Optimizing use of sites (particularly in East) • Maintaining service to existing (non-shale) customers • Strong competition between railroads for projects • Public policy alignment • Private RRs invest significant private capital • More rail shipments make roads safer and last longer (saves everybody $) • Encourage road funding & TSW policies to work with, not against RRs

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