The rail industry has seen the demand for its services rise exponentially due to the growth of exploration projects in the Utica Shale in Ohio. As new processing facilities and pipelines rapidly develop, the region is in great need of ways to transport oil and gas products in order to have them processed, marketed, and sold to consumers. The rail industry has offered an affordable and efficient solution.
A Growing Need for the Rail Industry
When development of the Utica Shale in Ohio first began, transportation was in high demand, but many transport providers didn’t have the safety standards and regulations in place to perform the job. Because the rail industry has long been a highly regulated sector and has transported hazardous materials across the country for many decades, it became the most logical option when oil and gas transport was required, and as the Utica Shale region has grown and developed, the need for the rail industry’s services has too.
The rail industry provides a highly extensive network of routes and lines that allow materials to be transported almost anywhere in the country. As many companies await proprietary midstream capabilities in their regions, railways can provide a reliable option in the meantime. It is also a much more affordable form of transport, as pipeline construction and operation is often an expensive endeavor.
The Rail Industry’s Response
In addition to filling in when transport was needed, the rail industry has also responded directly to the region’s surge of interest. The Columbus & Ohio River Rail Road Co. (CUOH) has built a mile-long rail route to serve the Scio plant and transport its materials to and from facilities, and the route is expected to transport more than 10,000 carloads of natural gas liquids (NGIs) annually. Columbus & Ohio is also working on revamping its existing infrastructure, rehabilitating a three-mile storage track, and upgrading its mail rail yard in Newark in preparations for the growing demand for oil and gas transport.
Oil and gas companies are also recognizing the power of the rail industry. MarkWest Energy Partners recently purchased the Youngstown & Southern Railroad (Y&S), which runs from Youngstown to Darlington, Pennsylvania. MarkWest hopes this purchase will allow the company to play a larger role in the region’s oil and gas industry.
Rail Industry Growth Across the Nation
The Utica Shale in Ohio isn’t the only area creating customers for the rail industry; according to RealClearEnergy (RCE), rail shipments of oil in the United States are up more than 8,000 percent from 2006, and new rail routes and ports are cropping up throughout other growing regions, including the Eagle Ford Shale in Texas and the Bakken Shale region. According to RCE’s report, “crude oil production has nearly doubled, from a declining 1.875 million barrels . . . to 2.3 million in 2012 (2013 figures are not yet available). That’s a result of the unlocking of shale oil, both in the Bakken and in several fields in Texas. But right along with it has gone the increase in oil traffic, since nearly all the Bakken oil is finding its way out of North Dakota by rail.”
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