Western Railroad Discussion > CP seeks expressions of interest for 660 miles of D&ME

This has just come across the news wires in the last few minutes:

Canadian Pacific today announced its intention to explore strategic options for its main line track from Tracy, MN west into South Dakota, Nebraska and Wyoming and is inviting expressions of interest from prospective partners.

The line includes approximately 660 miles of track which encompasses CP's current operations between Tracy, MN and Rapid City, SD, north of Rapid City to Colony, WY, south of Rapid City to Dakota Jct., NE and connecting branchlines. CP has operated the rail line in this area since it assumed operational control of the Dakota, Minnesota & Eastern (DM&E) railroad in 2008. A number of grain, ethanol, clay and merchandise customers are rail-served in the area.

"This portion of the CP network would be an attractive and highly viable opportunity for a low-cost operator. There is a strong long-term franchise here for an operator willing to maintain high quality service and explore growth opportunities with existing and future customers," said E. Hunter Harrison, President and Chief Executive Officer. "CP has successfully built many partnerships with shortline and Class 1 railroads throughout its system and we look forward to assessing the ways interested parties could work together with us to deliver quality service to customers on the west end of the DM&E through an innovative partnership."

2008... I stop and think what might have been if everything hadn't tanked. We might've had the new coal line constructed after all.... now, it appears that EHH will use his CN cutting skills to really carve CP to the bone... stay tuned.

Some rumors floating around about interest in these lines by BNSF.

What's in Tracy, MN that makes the line viable that far for CP? Grain elevators?

Calling Omaha? Or Ft Worth...? place your bets, folks.

State of SD will fight the BNSF over any move to buy the DM&E. The BNSF pretty much has a strangle hold on the traffic in SD impacting the agri economy. The farmers and State do not want to give up any more to the BNSF.

Daze Wrote:
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> What's in Tracy, MN that makes the line viable
> that far for CP? Grain elevators?

Bingo! Same here...why Tracy??? Why not Mankato or Waseca or Owatonna or....

If CP wants to sell this line to someone then 'ol Hunter should try and make it as attractive as possible. How many customers does CP have west of Huron or, for that matter, between Huron and Rapid City? Off the top of my head I can't think of any between Pierre and Rapid City...I guess I need to do some research.


Allen

It's a pretty well known Business strategy to buy a route so that your competitor doesn't use it. I'd say that was a bit of CP's rationale for buying the line outright instead of buying in as a partner.

An interesting move would be a Coal company buying the line. If it headed West maybe an offshore energy Company would be interested.

How about buying the DME, then building a connecter with the former MLW mainline Pacific Extension ROW to the Pacific, then relay track towards a connector near Spokane!!!! We can dream cant we...if only we had money like Buffet..... LOL!

TCnR Wrote:
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> It's a pretty well known Business strategy to buy
> a route so that your competitor doesn't use it.
> I'd say that was a bit of CP's rationale for
> buying the line outright instead of buying in as a
> partner.
>
> An interesting move would be a Coal company buying
> the line. If it headed West maybe an offshore
> energy Company would be interested.

Which is probably one of many reasons the former management is now gone.

How hard would it be to extend tracks into southern Montana? Current political climate aside there is a ocean of coal in southern Montana that doesn't have a railroad close to it. BNSF has been working to build the Tongue River Railroad for years to access that part of the the PRB coal fields. Perhaps another railroad would want access to untapped areas? Another 75 to 100 miles from current end of tracks over not too rough terrain will get you close to coal rich areas. I always wondered why DM&E chose to build 260 miles of new railway into areas that already had BNSF and UP service when the could have built 100 miles and serviced an entire new region. Back when they were first proposing they likely could have gotten one of the coal company's to invest but now it has less chance than a snowball in you know where.

I am surprised with Tracy as well. To me Huron, SD would be more logical to capture the Ethanol traffic from Aurora, SD. Cutting the line at Tracy puts the BNSF connection at Florence, MN into the mix for a prospective purchaser. Likely CP would consider other options for sale depending on the offered price. If for example no one offers enough money, I could see CP selling the west end for anything more than scrap value, then keeping the line to Huron, and scrapping everything in between.



Edited 1 time(s). Last edit at 12/04/12 12:13 by SOO6617.

howeld Wrote:
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> How hard would it be to extend tracks into
> southern Montana?... BNSF has
> been working to build the Tongue River Railroad
> for years to access that part of the the PRB coal
> fields...

I think you answered your own question.

mapboy

SOO6617 Wrote:
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> I am surprised with Tracy as well, although there
> is an Ethanol plant at Tracy. To me Huron, SD
> would be more logical to capture the Ethanol
> traffic from Aurora, SD. Cutting the line at Tracy
> puts the BNSF connection at Florence, MN into the
> mix for a prospective purchaser. Likely CP would
> consider other options for sale depending on the
> offered price. If for example no one offers enough
> money, I could see CP selling the west end for
> anything more than scrap value, then keeping the
> line to Huron, and scrapping everything in
> between.

Where is the majority of plant(s) for the ethanol we see roll east on CSX / and Via CP ?

bradleymckay Wrote:
How many customers does CP have west of
> Huron or, for that matter, between Huron and Rapid
> City? Off the top of my head I can't think of any
> between Pierre and Rapid City...I guess I need to
> do some research.
>
>
> Allen

Some pretty good size shuttle loaders west of Huron and one the old Onida branch. Most of the grain traffic west of Huron is handed over to the BNSF (entire BNSF train, locos and cars) for movement to the west coast. From Blunt to Pierre there isn't a whole lot of originating or terminating traffic. Ft Pierre has some grain traffic. Midland loads grain. Phillip loads grain and takes fertilizer loads. Wall loads grain. Box Elder has a transload spot east of town and then Rapid has business.

GregR27 Wrote:
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> Where is the majority of plant(s) for the ethanol
> we see roll east on CSX / and Via CP ?


This might help answer your question:

http://www.ethanolrfa.org/bio-refinery-locations/



Allen

rsanchez Wrote:
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> bradleymckay Wrote:
> How many customers does CP have west of
> > Huron or, for that matter, between Huron and
> Rapid
> > City? Off the top of my head I can't think of
> any
> > between Pierre and Rapid City...I guess I need
> to
> > do some research.
> >
> >
> > Allen
>
> Some pretty good size shuttle loaders west of
> Huron and one the old Onida branch. Most of the
> grain traffic west of Huron is handed over to the
> BNSF (entire BNSF train, locos and cars) for
> movement to the west coast. From Blunt to Pierre
> there isn't a whole lot of originating or
> terminating traffic. Ft Pierre has some grain
> traffic. Midland loads grain. Phillip loads grain
> and takes fertilizer loads. Wall loads grain. Box
> Elder has a transload spot east of town and then
> Rapid has business.

Thank you for the info...it's more than I thought.


Allen

I like this listing of the Bio-refineries a little better because it gives the capacity of individual plants rather than company totals.

http://www.neo.ne.gov/statshtml/122.htm

Here is the official list of Grain elevators served by CP's US subsidiaries including the DM&E. It has both elevator capacity, and rail siding capacity.

http://www.cpr.ca/en/customer-centre/shipping-guides/grain/Documents/us-grain-directory.pdf

Great info Thx for both replies