STEUBENVILLE - Completion of the Columbus & Ohio River Rail Road Co.'s mile-long siding to the new natural gas processing, fractionation, loading facility and terminal in Scio can be a game-changer for eastern Ohio's Utica shale play, Ohio Central Railroad's John S. Murray said Wednesday.
Murray told members of the Brooke-Hancock-Jefferson Metropolitan Planning Commission that the rail line, in its final stages of construction, will be "a very efficient means of moving a lot of product into and out of the area."
"It will have minimal impact, yet help bring about economic development of the shale play," he said.
RAIL TALK — Ohio Central Railroad’s John S. Murray, left, talked about railroad improvements Wednesday with Greg DiDinato of the Ohio Mid-Eastern Government Association during a meeting with members of the Brooke-Hancock-Jefferson Metropolitan Planning Commission. - Linda Harris
The Columbus and Ohio River Rail Road Co., or CUOH, signed a long-term agreement in December to serve the Scio plant, which is expected to ship 10,000 carloads of natural gas liquids annually. The plant, billed as the largest integrated midstream service complex in Eastern Ohio and the short-line holding company's largest U.S. customer, should be operational next month, Murray said.
"(It's) going to be key to increased drilling," said Murray, assistant vice president of sales and marketing for Ohio Central.
In addition to constructing the siding, CUOH is rehabilitating a three-mile storage track. The company also spent $2 million to beef up its main rail yard in Newark, where 200 car lengths of track space were added to increase switching efficiency and capacity for growth. The Newark improvements, funded in part by the State of Ohio, will facilitate the sorting of 100,000 railcars per year for 80-plus current customers while also serving new, Utica shale-related projects that have located or are planning to locate on the CUOH.
Murray pointed out the Scio plant will work in conjunction with a state-of-the-art cryogenics processing plant in Kensington, Columbiana County, which will strip the natural gas liquids and ship them via pipeline to Scio. Both are owned by Utica East Ohio Buckeye, a three-company partnership making a $900 million investment in natural gas facilities in Eastern Ohio.
"You can't get product to market without this facility, this is key," Murray said, pointing out Chesapeake alone has more than a hundred wells drilled and capped in the region. "They're waiting for this facility."
The Scio site was chosen because of its proximity to the liquids-rich Utica shale, key natural gas pipelines and CUOH, parent company Genessee & Wyoming said. Murray said CUOH will be working closely with Utica East Ohio Buckeye going forward to "make sure our capacity is there to handle their business."
Murray said the short line to the Scio plant and Newark expansion "are not the end" of the company's investment in Eastern Ohio, which already has seen new jobs created and millions pumped into the local economy during the construction process. He also pointed out that any development tied to the oil and gas industry will invariably help the railroad's longstanding customer base, which includes companies like Colgate-Palmolive, Pepsi Cola bottling and Wendy's bakery.
"All our customers will benefit from the increased infrastructure investment," he said.
"(It's) probably just the beginning. We're volume driven: The more business comes to the railroad, the more people we'll hire, the more infrastructure we'll add. I fully expect to see employees and infrastructure added as our volumes increase."
While the Scio project is outside BHJ's boundaries, Executive Director John Brown said he nonetheless felt it was an interesting case study for his members, noting the rail expansion is a "great example of how many trucks you can take off the roads," thereby reducing the enormous wear and tear on state, county and township roads.