Marcellus Shale sparks rail boom

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The recession may have affected shortline railroads across the country but not in central Pennsylvania.

“We’re growing dramatically,” says Todd Hunter, director of marketing for the Northumberland-based North Shore Railroad Co., that operates six shortlines.
That is in contrast to a 30 percent decrease in traffic last year on shortlines elsewhere in the United States, says the SEDA Joint Rail Authority.

The authority owns the tracks over which five of the North Shore shortlines operate.
Drilling for natural gas in the Marcellus Shale is a major factor in one of the shortlines doing so well, Hunter says. Lycoming Valley Railroad that serves Clinton and Lycoming counties has picked up 14 customers involved in gas drilling activity, he says.

According to a report issued by the authority, the Lycoming Valley had its first Marcellus Shale-related shipment in 2008.

By last October it was hauling 300 carloads a month of various sizes of pipe, drilling lubricants and sand used in fracturing the shale to release the natural gas.
“We continually have people coming to us saying we need service,” added Richard D. Robey, chairman and chief executive officer of the railroad company.

He credits the natural gas drilling activity with preventing layoffs during the recession. Employees who left are being replaced and he says the company is looking to hire.
The Newberry Yard in Williamsport, is at capacity, says authority chairman Jerry S. Walls. It is the largest rail yard between Harrisburg and Buffalo, N.Y.

The authority is working on a master plan of its rail yards in Williamsport, Bellefonte, Lewistown and Lock Haven as it looks for opportunities to expand and improve utilization, he says.

The $4.1 million bulk transfer facility opened in November in the Newberry Yard that handles plastics, food products and other commodities already has outgrown it capacity, the authority says.

Railway Unloading Services, a subsidiary of Bulkmatic Transport Inc., operates the facility that has a capacity of 40 rail cars. Nittany Oil Co. is building an ethanol transload terminal nearby.

"Williamsport is currently the geographic focus of Marcellus-related business and rail-served properties there are getting snatched up," Hunter says.

That is the reason the authority says it is doing an assessment on where spurs and sidings can be developed to serve more customers.

The Marcellus Shale impact will extend beyond Lycoming Valley’s service area as more companies locate outside the Williamsport area, Hunter predicts.

The Nittany & Bald Eagle Railroad is expected to be one of the beneficiaries, Robey says. Increase in traffic on that line last year is attributed to a new a branch line and yard tracks at the Glenn O. Hawbaker Inc. Whiterock Quarry near Pleasant Gap.

The improvements were made to move limestone aggregate, but they have been used to transport and store rock salt, coal and liquid asphalt, Hunter says.

The Whiterock Quarry accounts for 45 percent of the traffic on the Nittany & Bald Eagle, he says. Low track capacity at the quarry and on the rail line in general remains an issue, although there is space to increase track capacity at Whiterock by 50 percent and storage by more than 100, he says.

Paper products remain a steady commodity on the Nittany & Bald Eagle, unlike general trends in the paper industry nationally, the authority report states.

Besides serving the American Eagle and Smith Eagle facilities in Tyrone, that shortline also has the new First Quality tissue plant at Lock Haven as a customer.

Another new First Quality plant near Lewistown, which makes baby products, has helped boost business on the Juniata Valley Railroad. The Juniata Valley’s biggest customer remains Standard Steel in Burnham.

The North Shore Railroad, that operates between Northumberland and Berwick, benefits from the mix of commodities, the authority says. Generally, if the market is down for one, it’s up for another, it says.

Lumber was down in 2009, chemicals and agricultural products were up and scrap steel and plastics was steady, Brigid Malek Rich, manager of marketing for that shortline, says.

The Shamokin Valley Railroad between Sunbury and Mount Carmel is described as the biggest challenge among the shortlines that operate on authority track. There are five customers on the line and the commodities shipped include anthracite coal, pulp, plastics, and feed and grain.

On its own, the Shamokin Valley line would likely be in jeopardy because, the authority says, there is not enough business to fully support the marketing and administrative staff much less meet the cost of locomotives and rail cars.

But, as part of a system with four other lines, it can share resources with the more successful railroads within the system, the authority says.

Norfolk Southern is a beneficiary of the increased business on the shortlines because it gets 90 percent of the traffic. Canadian Pacific gets the remaining 10 percent.

The one shortline the railroad company owns that does not use authority track is the Wellsboro & Corning that runs between the two communities in its name.

Looking to the future, Hunter and Robey see growth in transload, bulk transfer and intermodal facilities where large loads of material are shipped in by rail, then loaded onto trucks which deliver to end users.

"The future in freight movement is rail for the long haul and trucks for the short haul," Hunter says.