For years railroads have had coal as a huge moneymaking commodity. Now we hear that due to natural gas costs, coal shipments are dramatically falling. Meanwhile, ethanol movements are steady and Balkan oil is beginning to flow by rail.
What does all of this mean for the railroads? I hear that PRB coal is down, but does anyone know by how much? I do not hear nearly as many coal trains on the CSX as before. Is PRB coal moving west for export?
Is there a website indicating what the average number of trains loaded out of PRB? I recall hearing that number years ago, but am curious how it is holding up.
A comparison of costs for natural gas vs coal would be interesting, including transmission or transportation costs. I can see railroads possibly entering a very slow growth era if the coal continues to pass to gas.
Perhaps oil movements will help, but at some point in time pipelines will assume transportation of the majority of the oil…correct?
Just trying to get a handle on this changing energy landscape.
Most of the info you seek is proprietary information for those who generate the information. The information gets disclosed when those organizations desire to release it to shore up a argument they are making in a negotiation or legal case. BNSF & UP in the past have released loading info about the PRB when it suits their purposes to publicise record loadings.
Change is inevitable except from vending machines. A railroad is not a vending machine. Coal, as we’ve known it for almost 200 or more years is no longer what it used to be. So things must change: marketing has to change, railroads have to change and power generating is changing. Other countries (China) want the coal, so the transportaion aspect will change.
PRB generated apprx 75% of UP’s energy carloadings with 132.5 cars per train. With 1,542,000 cars generated that is 31.8 trains per day.
1Q energy carloadings for UP were DOWN 8%. Revenue per carload was up 14% for an overall increase in energy revenue at 5%.
2011 crude oil carloadings were 25,000 with estimated 2012 carloadings to be 400% of that.
So…if UP PRB coal carloadings drop 8% for the year that would be a drop of 123,360 cars of coal. If crude oil increases 400% from 25,000 to 100,000 that is an increase of 75,000 cars of oil.
Looks like the crude oil will help offset the loss of coal.
Gas drilling also leads to shipments of drilling pipe, drill rigs and equipment, fracking sand, bentonite clay, and other chemicals, plus outbound moves of “natural gas liquids” or “NGL” (casinghead gasoline ?) as well as the natural gas itself; and I suspect crude oil production is similar. Even though some of that is “1-time only” shipments, altogether there’s quite a bit more than just the 75,000 additional cars of crude oil being moved this year, to offset the loss of coal traffic.
NS has also pointed to autos, forest products (for new houses ?!?), and intermodal as growth traffic in lieu of coal.
Directly from Wikipedia: Heavier gaseous hydrocarbons: ethane (C2H6), propane (C3H8), normal butane (n-C4H10), isobutane (i-C4H10), pentanes and even higher molecular weight hydrocarbons. When processed and purified into finished by-products, all of these are collectively referred to as NGL (Natural Gas Liquids).
With a vapor pressure of ~550 psi at room temperature, ethane would be a bit of a pain to transport as a liquid. Propane and heavier hydrocarbons liquify at more moderate pressures and thus are easier to transport as liquids. Somewhere around pentane, the hydroarbons will exist as liquids at standard atmospheric pressure and temperature.
On another forum that is mostly rail workers from all over, someone with the BNSF out of Lincoln, NE said they were down from 600 coal sets to 198 sets. I don’t know what the time period use is or if that’s all BNSF coal or just those through the Lincoln area. I’ve heard what the UP numbers are, but don’t remember them. IIRC, they aren’t much different. I do know that I remember going to work at the far end, and seeing 20 crews on duty in front of me. Now we have about 20 starts in each direction for the entire day. The reduction is mostly from coal. It’s put me back on the extra board for now. Of course running 2 mile long freights reduces the number of jobs, too. The other day I had one of them.
Right now, the UP seems to be focused on sand used by the oil/gas industry. They told our union people that for the near future that is where the money is to be made. (Supposedly $4800 profit per car. The revenue from a unit train of sand equals that of three 135 car coal trains.)
I’ve read about pilot projects to make ethanol using a chemical process. From what little I’ve read, it might be possible to use non-corn feedstocks easier (such as other plant materials, although corn could still be used) and it would be able to be transported by pipeline. My question is, with the decline for the foreseable future of coal for domestic use, what happens if ethanol becomes more pipeline friendly and more pipelines for petrolium use get built? What will be left for the railroads? Will railroads try to go after freight that they previously seemed to turn their nose up at? Maybe trying to expand beyond long hauls into more medium haul markets or going after smaller volume shippers? (Not so much one car per day customers, but maybe 25 cars of grain from 3 or 4 elevators is almost as good as 75 or 100 cars from 1 elevator.)
Irrespective of all the talk of ecological factors depressing present day coal traffic. The major factor that is depressing coal traffic TODAY, is the generally warm Winter that we just experienced. Most, if not all, coal fired electric plants have their coal stockpiles filled to capacity, as such they don’t need ANY coal at the present time. As they begin to work off their present stockpile levels, they will begin to accept coal shipments again. This is a part of the normal business cycle.
Changing a existing power plant from one form of fuel to another is not snap type decision - there are many LONG TERM considerations that have to be argued in finally coming to any decision. While natural gas has become the cheap alternative TODAY, will it continue to be the cheapest alternative - after demand for it increases - forecasting such things is a black art at best.
Balt, your second paragraph virtually contridicts the first. And the second paragraph is more accurate. Yes, there was a warm winter but the closing of coal stations and conversions to gas were really in the plans before the warm winter. Our electric supply system in the investor stage where foreign companies have bought up our companies and are trimming the fat, getting rid of people and plants that aren’t putting enough money to the bottom line. This system is augmented by companies who only deliver the electricity, not produce it. They also are in the investor stage but hampered by monoplitic delivery systems…if you buy electricity from any company, only one company at the moment brings the wire into your house or business. But with lower gas prices, with high pollutants from coal, and with new owners, there will eventually be less coal and more other sources for electricity.
Coal has been such a cash cow for railroads, almost a monopoly. No doubt the electric producers are just ecstatic to have other sources of energy.
This goes to the marketing of coal by railroads…squeeze every dollar out of coal while you can, because at some point in time…it burns up, literally and figuratively.
Fracking sand (heavily used in natural gas extraction) looks like a big revenue source for the rails. A friend in western Wisconsin has observed new mines being developed and large increases in production, most of which gets transported by rail (BNSF in his area).
But if we read what is happening in the Marcellus Shale debacle this sand is not that big a cash cow. Oh, it will be shipped and rails will make money but…with price of gas down, wells aren’t being drilled at the rate they were; NY has not given the green light to drill as yet; gas companies told people of the riches to be had by drilling gas but did not tell of the costs, including pipelines which also have to be built but are getting yellow if not red lights; and the fact has been stated by the “experts” of the gas company that there is only a 10 to 20 year supply of gas in the Marcellus Shale region. And that is not a very long term cash cow.
Claiming 20 year life expectancy for oil and gas wells has worked out pretty good for the petroleum companies for well over a century now. It is the difference between what can be legally proven and what is fact.
But the point here, Bruce,is that 10 to 20 years is not the equivelant of 175 years of coal hauling.
As far as the oil and gas companies go concerning Marcellus Shale, the way they’ve approached people and politicians, what they’ve claimed they were doing, going to do, the side effects, costs, virtually everything they’ve said about anything and everything to everybody has been about 90% false. It is to the point that I can’t tell if they are telling the truth about anything. And it is going to cost the taxpayers a lot…it already has in fact.
I may have been too subtle in my approach. Wells could conceivably last 40-60 years, which is still well short of the over a century of production for some coal mines.
The way the petroleum biz has always worked is, you hype the (bleep) out of the latest new play to get investors in on the “ground floor”[(-D], but then you begin to manage expectations to keep input costs under control, and to curb governments zeal for ever larger amounts of taxes.
I’m not trying to argue with anyone. All of these recent threads about “oil on rails” has gotten parts of my brain working that I haven’t exercised in a long time, and I’m really enjoying it.
Changing the fuel of a power plant is nigh impossible. There is virtually no commonality between a coal fired plant and a gas fired plant. 18 miles from my house is APS Sahuaro, a 2 unit gas fired plant. It was overhauled 4 years ago and has run only a few days since. A gas fired steam plant is VERY expensive fuel wise. The trend for gas fuel is combined cycle plants which have absolutely no commonality with a coal fired plant except needing a piece of land to build on. To change means tear one down and start over.
In NY there have been seveal coal to gas conversions and in fact one is being done right now: Milliken Sta. on east shore of Cayuga Lake north of Ithaca…it seem quite common except where coal plants are closed down altogether which is more often as you suggst.
As for well coming in for years and years. SO what in terms of railroads. Unlike coal which the rails haul out forever, rails only get the construction materials coming to the well site and the suicidal pipeline. Only now are rails being seriously considered again for mass hauling of product. (WWII, lots moved by rail but there were no pipelines then.) So the rails have had quite a different relationship with oil and gas than with coal.