Intermodal Efforts Matter for Future

4/11/2012 / State Journal

An ethane cracker pales in comparison to the downstream chemical and polymer opportunities
that are attracted to it, according to West Virginia Secretary of Commerce Keith
Burdette.

A cracker is an anchor that “brings to the northeast, West Virginia hopefully being
the center, a low-cost feedstock, maybe some of the lowest-cost ethane-related feedstock
in the world outside of the Persian Gulf,” Burdette said. “And it places that feedstock
in close proximity to its markets, which it’s never really been.  … Our challenge
is not just to attract the anchors; it is to also work on building the infrastructure.”

Burdette spoke at an April 11 Senate Commerce Committee field hearing in Fairmont.

The hearing was focused on meeting transportation, pipeline and rail needs to take
advantage of the opportunity that shale gas presents to renew American manufacturing.

West Virginia Democratic Sen. Jay Rockefeller chairs the U.S. Senate Committee on
Commerce, Science and Transportation and chaired the Fairmont hearing; Republican
Representatives Shelley Moore Capito, from the second congressional district, and
David McKinley, from the first, sought information with Rockefeller from a slate
of invited witnesses.

The two-hour hearing veered often away from its stated intent, spending considerable
time on whether more West Virginians could be hired by gas companies and on the
difficulty for a small sheriff’s office in policing subcontractor truck drivers.

But it did provide a review of, mostly, the state of rail and intermodal transport.

Rail

CSX Transportation is very well situated in West Virginia, according to Dean Piacenti,
vice president for chemicals and fertilizer, when asked by McKinley whether rail
needs to be expanded.

“Our network’s in good shape,” Piacenti said. “There are a few constraint points,
but nothing that we don’t think we can overcome.”

Cheap natural gas from shale has hurt CSX’s coal business, he said, but at the same
time provides offsetting opportunities. CSX transport is in demand within the industry
for sand for hydraulic fracturing, for pipe, and for natural gas liquids and crude
oil products; it also is finding increased demand among gas industry suppliers for
moving, for example, raw materials for steel.

And while CSX chemical company customers were shuttering plants just a few years
ago because of high natural gas costs, he said, today there are new transportation
opportunities in the chemical industry.

“For the first time in my eight years in this position, we’re finally seeing opportunities
to export chemical products off the east coast,” he said.

Piacenti resisted suggestion under questioning by Rockefeller and McKinley that
“captive rail,” or sites served by single rail providers and therefore possibly
subject to monopoly rates, drove Shell Chemical to pursue a Pennsylvania and not
a West Virginia site last month for its cracker — or that captive rail could hurt
future development efforts.

CSX happened to be opening a third West Virginia terminal for hydraulic fracturing
sand in Fairmont after the hearing.

Intermodal

The economy of the 21st century depends on an intermodal transportation
system with global connectivity, said Patrick Donovan, director of maritime and
intermodal transportation at the Nick J. Rahall Appalachian Transportation Institute.

The West Virginia Public Port Authority recently received a federal grant of $12
million toward the planned Prichard inland intermodal terminal on the Big Sandy
River near Huntington, Donovan said. Construction is set to begin this spring.

The Norfolk Southern Heartland Corridor now allows double-stack container rail service
between the ports of Virginia and points west through southern West Virginia, he
said. CSX’s National Gateway Corridor, which crosses West Virginia’s eastern panhandle,
also will create a more efficient rail route linking mid-Atlantic ports with Midwest
markets.

And an intermodal inland terminal to be sited in the greater Pittsburgh area will
provide direct intermodal container service for the Utica and Marcellus shale regions.

The north-south orientation of the Ohio River navigation system offers shippers
all-water access into South American markets, Donovan noted. A Marine Highway Maritime
Technology Consortium established by the Rahall Transportation Institute is working
toward the design of a next-generation inland navigation vessel to help integrate
inland navigation into the 21st century supply chain.

Road and pipeline

With regard to roads, West Virginia Transportation Secretary Paul Mattox noted that
his department and the gas industry have worked together to direct industry attention
to road maintenance where necessary.

Chesapeake Appalachia Vice President of Corporate Development Scott Rotruck noted
that his company rehabilitated 150 miles of roads in 2011 and plans to rehabilitate
130 miles in 2012.

Much of the discussion of roads centered not on meeting transportation needs for
manufacturing, but on the unsuitability of hilly, windy country roads for heavy
industrial use and on complaints of inconsiderate and unsafe driving of industry
trucks.

Not much of the hearing was directed to pipeline development, either.

Pipeline and storage company Spectra Energy Vice President Tina Faraca spoke of
pipeline development nationwide and within Spectra’s system, and stressed, as did
many at the hearing, the importance of regulatory certainty and predictability.

Rockefeller asked about the state of knowledge in West Virginia as to where existing
pipelines lie, both for safety and for planning for future lines. He expressed dissatisfaction
with the response from West Virginia Oil and Natural Gas Association Executive Director
Corky DeMarco, who said that, when a company wants to develop a pipeline, it asks
other companies if they have pipelines along the intended route.  DeMarco also
said Miss Utility has some of the information.