Eastern Railroad Discussion >

“…no, I don’t think so”

Seems the booming energy business has caused a step back for a hard “second” look especially with access to the eastern US refineries, Philadelphia, and New Jersey, that works well with the D&H.

If you have an ear to some of the grassroots local message lists for this region, it seems they are trying with one operating plan, then trying something else…not giving up, however…

Harrison was interviewed in Toronto today on Canada's Business News Network:

http://watch.bnn.ca/#clip821545

With the continually expanding natural gas drilling taking place in NY and PA it might not be the right time for CP divest itself of the D&H.

stevelv Wrote:
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> With the continually expanding natural gas
> drilling taking place in NY and PA it might not be
> the right time for CP divest itself of the D&H.

The situation for natural gas in NY state is certainly difficult to predict. As of now, no new drilling permits are being issued in most of the Southern Tier region, on the NY side. In contrast, the PA side is booming, with huge benefits to the short lines along the border and to the NS. Enormous amounts of sand, fracking liquids, pipe, etc coming in.

Governor Cuomo of NY is under enormous pressure from the left to block drilling. The local governments are split, with some aggressively favoring drilling, while others oppose it. The governor appointed a blue ribbon team to look into the situation, and report back after the election. Their reporting deadline has now been pushed back a second time.

D&H is nicely situated for the northeastern fringe of the Marcellus. I'm surprised they haven't built up a sand trade from the Albany / Lake George area, but the region's industrial base for making pipe, etc has been hollowed out.

Lackawanna484 Wrote:
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> stevelv Wrote:
> --------------------------------------------------
> -----
> > With the continually expanding natural gas
> > drilling taking place in NY and PA it might not
> be
> > the right time for CP divest itself of the D&H.
>
> The situation for natural gas in NY state is
> certainly difficult to predict. As of now, no new
> drilling permits are being issued in most of the
> Southern Tier region, on the NY side. In contrast,
> the PA side is booming, with huge benefits to the
> short lines along the border and to the NS.
> Enormous amounts of sand, fracking liquids, pipe,
> etc coming in.
>
> Governor Cuomo of NY is under enormous pressure
> from the left to block drilling. The local
> governments are split, with some aggressively
> favoring drilling, while others oppose it. The
> governor appointed a blue ribbon team to look into
> the situation, and report back after the election.
> Their reporting deadline has now been pushed back
> a second time.
>
> D&H is nicely situated for the northeastern fringe
> of the Marcellus. I'm surprised they haven't built
> up a sand trade from the Albany / Lake George
> area, but the region's industrial base for making
> pipe, etc has been hollowed out.


Not just any sand will work.

As you say, good luck predicting NY.

GregR27 Wrote:
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> “…no, I don’t think so”
>
> Seems the booming energy business has caused a
> step back for a hard “second” look especially
> with access to the eastern US refineries,
> Philadelphia, and New Jersey, that works well with
> the D&H.
>
> If you have an ear to some of the grassroots local
> message lists for this region, it seems they are
> trying with one operating plan, then trying
> something else…not giving up, however…
>
>
> http://watch.bnn.ca/#clip821545


Trouble is, they do not have access. They hand the traffic off in Harrisburg.

One would also have to wonder what the list of potential buyers would look like too. To sell there needs to be a buyer willing to pay the price that's out out there.

NYSWSD70M Wrote:
-------------------------------------------------------
> GregR27 Wrote:
> --------------------------------------------------
> -----
> > “…no, I don’t think so”
> >
> > Seems the booming energy business has caused a
> > step back for a hard “second” look
> especially
> > with access to the eastern US refineries,
> > Philadelphia, and New Jersey, that works well
> with
> > the D&H.
> >

they still have trackage rights into South Philly
> > If you have an ear to some of the grassroots
> local
> > message lists for this region, it seems they
> are
> > trying with one operating plan, then trying
> > something else…not giving up, however…
> >
> >
> > http://watch.bnn.ca/#clip821545
>
>
> Trouble is, they do not have access. They hand
> the traffic off in Harrisburg.

Don't have access? They run to Harrisburg, Philadelphia, Allentown and have trackage rights to New Jersey which they are not currently using.

waivethefive Wrote:
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> Don't have access? They run to Harrisburg,
> Philadelphia, Allentown and have trackage rights
> to New Jersey which they are not currently using.

I don't believe the (NJ) Bayway / Linden refineries currently take Bakken crude. Phillips66 currently takes its product from Angola and Nigeria, and has used Norwegian crude in the past. I don't know where Hess gets its crude.

Does D&H have rights on the (former CNJ) Chemical Coast line necessary to serve these two refineries? I thought its rights were to Oak Island yard which is three or four miles north of the Bayway and maybe seven miles north of Linden/Woodbridge.

Lackawanna484 Wrote:
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> Does D&H have rights on the (former CNJ) Chemical
> Coast line necessary to serve these two
> refineries? I thought its rights were to Oak
> Island yard which is three or four miles north of
> the Bayway and maybe seven miles north of
> Linden/Woodbridge.

No, D&H/CP does not have rights to reach those refineries -- or any others in the mid-Atlantic, which is the lack of access previously cited.

When CSX & NS were battling over CR, NYSW had made a deal with CN to be an eastern leg to north NJ and at same time were talking about going after rights(trackage or haulage) to the chemical coast. I figured at the time it was just leverage that Walter Rich was using to not get lost in the sea of the 3 giants. But what I found interesting at the time is DH/CP never fought for better access to NJ other than their closed in facility in Oak Island. Again Monday morning QB is always easy, and who knew in 10-12yrs fracking would redefine the southern tier.

When CP planned the investor day back in the summer....I suspect they figured they would have the D+H issue resolved definitively one way or another....after all...it's been stated over and over again...it's never made money. The investor day got pushed back from late in October to early December...and if you recall....in a printed leak early in October ....Hunter stated he would be meeting with leaders of the other railroads in that region the very next week.

In the investor meeting...it was probably more notable for what wasn't said on the subject. Whether the energy sector has enough potential to push this into a comfortable profit zone...is debatable. I suspect there is a bigger picture at play behind the scenes...from a win-win track sharing plan ..or a win-win-win...or a bit of redrawing of the map.

You may recall his statement in press piece to the effect of...the first thing I did ..was look at the map of the railways...and...what if this? or what if that...

I have to wonder if a "Meridian Speedway / Pan Am Southern " type deal could be in the works?

It's been an odd experience, seeing what had been the heart of the D&H freight business (Mechanicville to Binghamton) decline, while the line from Albany north into Canada booms. Back in the 1970s when I first started railfanning the D&H, you didn't bother with the north end, because there were only 2 through trains each way, and they mostly ran at night anyway. During daylinght hours, it was pretty much just locals and the AMT Adirondack. Farther south, you'd have 5 or 6 trains a day each way.

Now the Binghamton line might as well be an NS operation (and a lot of us think it will be eventually) with two pairs of NS autorack/intermodal trains, one pair of NS manifests, and a smattering of coal/salt and other stuff off NS as well. Only one pair of CP trains remains.

Gas development almost certainly will come to NY, but it may be a slow start, for both political and economic reasons. Gas prices are so low now that drilling may be confined to the southern tier counties for a few years.

As for sand, it ain't just any old sand. It has to be largely quartz sand, which in NY is mostly found in the Adirondacks which under the state constitution is "forever wild" and thus very difficult to mine in. Most of the rest of the state, including all of the areas where the drilling will take place, has sand deposits where the sand grains are actually little chips of the shale bedrock. That's not good enough--the grains have to be strong enough to withstand hellacious pressure when the fracking procedure is completed. Otherwise, the sand grains get crushed and the fractures that you just paid millions to create will just close up.

D&H (now CP's) access to Northern New Jersey and Philadelphia is probably still limited to that which was granted in the Final System Plan by the USRA in 1976/1976 when Conrail was created. D&H was supposed to be 'competition' to what they knew was, as designed, a Conrail monopoly. If it is still the same, that would be a transload/intermodal terminal in Oak Island yard, and nothing more, and industries at the north end Greenwich yard in Philly including intermodal, multilevel, and carload traffic along Delaware River, which is much diminished now. They run past the likely place for crude oil termination at the old Arco/Sun facilitiies near Penrose but as far as I know do not have access there. I'm not sure even NS can get in there.

There was a big study in Philly when I worked for the RR in the late 80s 90s. I was on it. It was brought by D&H trying to get access to all of Philly. We rode crews, took notes, etc, but D&H never got more than what they were originally granted, I do believe.

Otherwise, the W&W is doing a good business with westbound sand, more and more cars on CSX. The very fine South Jersey sand must have found favor with fracking interests

tp117 Wrote:
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> Otherwise, the W&W is doing a good business with
> westbound sand, more and more cars on CSX. The
> very fine South Jersey sand must have found favor
> with fracking interests

The fine South Jersey sand works good when you are Fracing a Natural Gas Well, because it is a Gas. When you are Fracing a well intended to produce Oil you need coarser and larger grained sand or similar ceramic proppant. That sand version is only found in the northern-most part of the Driftless Zone (non-glacier covered). The Glaciers ground the sand from the Sandstone covering Central North America. As the Glaciers melted the water outflow flushed the Sand southward towards the Gulf of Mexico, with the heaviest and largest grains of sand settling out first. So identical sand can be found from Wisconsin/Minnesota on the north to northern Texas/Mississippi on the south, but the size of the grains get smaller the further south that you go. So the sand found in Missouri and Arkansas is good for Fracing Gas Wells, but a bit small for Oil Wells.



Edited 2 time(s). Last edit at 12/07/12 22:23 by SOO6617.

SOO6617 Wrote:
-------------------------------------------------------
> tp117 Wrote:
> --------------------------------------------------
> -----
> > Otherwise, the W&W is doing a good business
> with
> > westbound sand, more and more cars on CSX. The
> > very fine South Jersey sand must have found
> favor
> > with fracking interests
>
> The fine South Jersey sand works good when you are
> Fracing a Natural Gas Well, because it is a Gas.
> When you are Fracing a well intended to produce
> Oil you need coarser and larger grained sand or
> similar ceramic proppant. The sand version is only
> found in the northern-most part of the Driftless
> Zone (non-glacier covered). The Glaciers ground
> the sand from the Sandstone covering Central North
> America. As the Glaciers melted the water outflow
> flushed the Sand southward towards the Gulf of
> Mexico, with the heaviest and largest grains of
> sand settling out first. So identical sand can be
> found from Wisconsin/Minnesota on the north to
> northern Texas/Mississippi on the south, but the
> size of the grains get smaller the further south
> that you go. So the sand found in Missouri and
> Arkansas is good for Fracing Gas Wells, but a big
> small for Oil Wells.

That's an exceptionally clear and precise description of what's often a very difficult topic to express.

Thanks for sharing it.