11.6.06

REOPEN THE PEORIA GATEWAY. Ethanol doesn't travel well in pipelines.
Ethanol and railroads. They may not seem the perfect match, but consider this: ethanol, a Midwest-grown, cleaner-burning alternative fuel that can't travel in petroleum pipes because it picks up impurities, faces ever-climbing demand. And railroads are investing record amounts in infrastructure to better serve customers and bolster a booming business.So, perfect. Except for one thing: all the other stuff that needs moving these days.
Most of which, after years of consolidation, downsizing, and abandonments, passes through the Chicago gateway. (Many of the containers are trucked from one railroad to another to expedite (!?) them.

Jim Redding, spokesman for Aventine Renewable Energy Inc., an ethanol plant in Pekin, in central Illinois, said the problem of Chicago bottlenecks presents an easy solution to ethanol-carrying freight trains: Go around it.

"You could probably move the product quicker if you bypass Chicago," he said.

The problem, in Chicago and elsewhere, boils down to capacity, Thompson said. For years, the railroad industry was in decline. It laid off workers, freight cars aged, and little was done to enhance the sprawling network.Capacity to transport liquids is further limited by a shortage of tank cars, which hold 30,000 gallons each. Car makers have a backlog of a year and a half, according to Dave Maechling of tank car manufacturer American Railcar Industries Inc.

Today's tank cars require additional safety appliances, and the ethanol cars likely require special linings. The sprawling network has been reduced to a core system, with entire stretches of the granger railroads and some of the eastern trunk lines abandoned. The Illinois-Indiana belt lines that permitted interchange at Peoria or Springfield rather than St. Louis or Chicago are also gone, or much reduced. In some places, railroads are replacing a second track that was lifted years ago.
For its part, CSX Corp. is improving its Chicago-to-Florida line by constructing sidings, short stretches of track that enable trains on the same line to pass, according to spokeswoman Meg Scheu. The company also is hiring more people, including 3,000 additional conductors and engineers, and purchasing more locomotives.
Many of these investments are irreversible, and railroad managers are not yet convinced the increase in traffic is permanent.

[Tom] White [of the Association of American Railroads] cautioned that the challenge of adding several billion gallons to total capacity poses some uncertainty, because ethanol is a relatively new
commodity, and thus funding sources may determine how much ethanol ultimately will move by rail.

"We get our investment capital from Wall Street, just like everybody else," he said.

Where the return on investment competes with the returns expected on other investments.

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