Riding the rail for shale countryRiding the rail for shale countryhttps://www.recenter.tamu.edu/news/newstalk-texas/?Item=70582013-06-17T06:51:00Z2013-06-17T00:00:00Z

SAN ANTONIO and SOUTH TEXAS - The domestic oil boom has South Texas companies — from refining giant Valero Energy Corp. to wildcatter Rod Lewis’ Lewis Energy Group — riding the rails.

Railroads shipped a record 97,135 carloads of crude oil in the United States during first quarter, up 166 percent from the same period last year.

“If you have a pipeline, for the most part, you have one place where you input and one where you output,” Valero spokesman Bill Day says. “With rail you can bring in crude from a variety of places. It makes a lot of economic sense.”

And while rail is pricier than pipe, it also has a speed advantage, Day adds. Cars can whisk along crude shipments at speeds of up to 60 miles per hour, while transferring crude cross-country via pipeline can take a week or more.

Valero, arguably the most active refiner in rail, hopes to build a fleet of 12,000 rail cars by 2015. The company will spend up to $190 million to build a rail off-loading facility at its Jean Gaulin refinery in Quebec and another $30 million on rail infrastructure to bring inexpensive mid-continent crude to its Benicia, Calif., plant.

In the Eagle Ford — zig-zagged by miles of existing pipeline — rail development is exploding. Lewis Energy’s LaSalle Railway affiliate began developing an $11 million rail park in Encinal, 40 miles north of Laredo, as a way to bring in its own supplies. It’s now fielding inquiries from businesses interested in moving everything from crude to frac sand.

Given the interest, Lewis Energy Vice President Rick Smart says he expects the facility to support up to 150 jobs by the middle of next year.

“We already have at least four different opportunities developing right now,” he says. “It’s almost turned out to be a ‘Field of Dreams’ thing: If you build it, they will come.”

The newly developed Live Oak Railroad near Three Rivers will begin switching rail traffic in the next 30 to 45 days.

The 250-acre development — backed by San Antonio’s Howard Midstream Energy Partners LLP — will benefit both from the export of shale crude and the importation of supplies like sand, pipe and chemicals into the shale, says managing partner Bart Simpson.

“The bottom line is rail is more versatile when it comes to moving a commodity,” Simpson adds. “A pipeline goes one place, but rail can go a number of places. You can go wherever the market is.”

An hour away, Cotulla’s Gardendale Railroad Inc., once nearly abandoned, now is selling its third development phase of a rail park adjoining its 28 miles of track. The facility is expected to handle 20,000 railcars a year as it expands.

Read more at the San Antonio Business Journal.

San Antonio Business Journal
San Antonio-New Braunfels
Infrastructure & Transportation
http://www.bizjournals.com/sanantonio/print-edition/2013/06/07/shale-plays-are-driving-rail-usage-by.htmlRead more at {Source}

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