There’s a good article in Railway Age from the President of Iowa Interstate Railroad regarding future prospects for ethanol transporation. He makes a valid point that new ethanol plants will have to be large scale to accomodate unit train operations because smaller carload facilities cannot expedite the cycle of tankers to and from the plant:
The question is - if even ethanol is subjected to a railroad desire for unit train only size and track layout requirements, doesn’t that instantly kill off most start up ethanol plant proposals in the first place? How many areas of the country have enough corn growing acreage available to feed the required size of plant?
What’s going to happen is that in order to effectively run such a plant, they will have to end up trucking in feedstock from hundreds of miles away just to have enough input product to produce the output at optimal economies of scale. Then the end product will only be able to be shipped to a large scale fuel mixing facility, so forget local and regional blending. This will result in higher costs, which will be passed on to the consumer.
Is it possible the unit train concept can actually cause an increase in consumer prices rather than a decrease (ostensibly passed on to the consumer via unit train economics)?
Considering that most of the ethanol production will be concentrated where it can be most economically made, and the blending will likely be done where the petroleum part of the mix is already being handled, unit trains should fit most of the operating scenarios.
That’s not to say that there might not be some carload handling from smaller facilities, but even that can be gathered into unit blocks at some point, much as coal is now.
Assuming all product in and out is brought by unit train, you are going to have at least 4 unit trains of inputs for every 1 unit train of output. And those 4 unit trains of inputs (aka corn) will be a relative shorthaul for the railroads, compared to the long hauls to export facilities. Since it is unlikely that acreages of corn plantings will increase much due to ethanol plants sprouting up, that corn will simply be diverted from long haul unit trains headed for ports, to short haul unit trains running from shuttle elevator to ethanol plant.
Isn’t one unit train cycling a thousand miles more profitable than four unit trains cycling 100 miles at a shot?
Dave-you must not have too many ethanol plants where you live. All the ones around here have a big parking lot for the overflow of trucks bringing corn in. Typically, if you stood on the highest building of the facility and looked in every direction, all you would see is corn fields. You would also probably see the grain elevators in every small town-spaced about 6-10 miles apart. You would also find it near impossible to count the number of grain bins on farms within a few miles of nearly any ethanol plant.
I’m not sure what you mean by large scale mixing facility, but gasoline generally gets to the local and regional distribution facilities by pipeline and ethanol is added there. AFAIK, ethanol whether it’s E10, E85, or E100 can’t travel by pipeline. The various blends required by EPA also vary by region.
Many parts of the Midwest have had E10 for quite a while so the farm, plant, and distribution networks are already established. I suspect the bigger problem is how to serve the west coast and other areas of the country that don’t grow corn in abundance. Part of the answer may be in using something that can be grown regionally, but in the mean time there needs to be a fairly large scale distribution network for those parts of the country.
Small ethanol plants are popping up like wildflowers as venture capitalists see a great investment opportunity, but in terms of volume, ADM is by far the dominant player and also has the resources and political clout to build large scale plants and a distribution network.
Ethanol may run into some of the same problems as MBTE. Wisconsin has already or is the process of outlawing E10 outside of the Milwaukee air quality region due to concerns about what it will do to the states many fresh water lakes. It was also causing major problems in boats with molded-in fiberglass gas tanks and that may become an issue in other states with large numbers of registered boats.
Considering the amount of subsidies involved in the production of ethanol as an automotive fuel, I’m not sure that the consumer isn’t already being stiffed. E85 may be a fraction cheaper than the current gasoline-ethanol blends due to the subsidies, but it gives you less mpg so you wind up using more gallons of it for a given distance than gasoline.
This particular thread isn’t focussed on the plusses and minusses of ethanol, rather that there is a push by railroads to force any potential ethanol plant to be large scale so that unit train operations can be employed.
Quothe up829:
This is a great example of why such proposals might end up getting squelched by the railroads due to the forced “big or nothing” approach.
If all future ethanol plants are forced to be large or nothing, then those local co-ops won’t have a chance to succeed unless their end market is also local. If the railroads would willingly provide carload service, it could be a different story…
Railroads are going to favor unit train operations because they are less expensive to operate and more profitable, even with a rate than a corresponding amount of individual carloads.
Three or four tank cars a day to be gathered up by the daily local freight may be tolerable if the plant is located on a main line since additional incremental costs are small and the freight is already running, but if the plant is located on a branch that only sees bi-weekly or tri-weekly service, a request for daily service is going to run up a lot of additional costs just for operation of additional trains, not to mention the costs of upgrading the branchline’s track.
A railroad can no longer be all things to all shippers, those days passed when the truck was invented.
Thirty-five miles north of me,at Wentworth, S.D. is an ethanol plant built about 5 years ago. It is near the end of a little used brach line to the grain elevators at Madison, S.D. It was built there, knowing full well, that there would never be any unit train loads in or out. And yet, they still chose that location. What do you suppose they know that we (and Dave) don’t. Oh…it’s also in the center of about 10,000 square miles of cornfields, and 10 miles from Interstate 29,and 30 miles from Interstate 90.[;)]
Trucks? Even pipes? How foolish! Everybody should know by now that the laws of nature as prescribed by FM dictate that the grain in and the mash and ethanol out MUST move in railcars!!!
Let me define small v. large first. Small is any capacity under 40 mmg/y. Large is over 100 mmg/y. Regardless of size, both will have a market. Not all product is being moved in unit trains, account too many destinations, and lack of capacity.
Second to the idea that all or nothing in ethanol is the fact the railroad does not call the market, the buyer does. The buyer, based on demand, tells the marketer how much, where and when. The marketer lines up his cars from his pool, and delivers when required. All the railroad does is take the waybill, and deliver as instructed.
There are about ten major marketers, all who “own” their own fleet of tanks. Mix them up with another marketers fleet? NEVER! Ain’t gonna happen in this lifetime. The ethanol plant will contract with the marketer to move his production. The plant has nothing to do with the waybill, or how much. All he does is fill the marketers tanks.
umm just because a buyer wants a railroad to move product doesnt mean a railroad will, take grain elevators bnsf will not load less than 110 cars except for a few places in the north. Grain elevators reguraly call and ask for smaller trains and railroad says no, or gives them a bill that is too large to justify.
rochelle ill. is building a huge one next to bnsf, fulton ill. (by clinton ia.) is building one next to up rr, and miss. river. they are poppin up everywhere.
hope we always get plenty of rain so we have corn for fuel.
if everyone was vegetarins would have to grow only 1/3 of what now. cows pigs chickens eat most of it. become a veggie and save fuel!!!
Ooops, mixed up my posts, oh well. Let’s start with supply. Only plants being built in Texas, Arizona, and California will have issues with corn supply. Mid-West plants get supply from the local producers or county elevator. It is ALL trucked in (or John Deere).
Plant profitability depends on corn cost and fuel. You increase either or, and you have issues. To add transport to corn, no matter where, will require some other balance to keep the place open for very long.
It may not seem like it now, but when fuel prices do stabilized, it will be quite difficult for a plant to make a profit with the expense of transporting corn from far away. Current market prices, especially spot prices, will allow that. But don’t expect that to last very long.
Shuttle trains can be 200 miles and be profitable. UP ran small unit bean trains for Cargill in Iowa Falls from Fairmont, MN in 2002 and 2003. Depends on the customer, contract and so forth. The shipper is the one who deems whether a move is profitable or not. Given local diesel prices, a short haul for the customer will save him money, no matter unit or otherwise.
This is just the enviroment branch line operaters thrive in. They provide daily service 7 days a week if need be. It is their bread and butter. While the class one’s could care less any additional carloads make a huge difference to their bottom line. There will be plenty of peole who are willing to step up and fill in the gaps. It what they do for a living. [2c] As always ENJOY