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SCORT Conference Monday, September 23, 2013 Columbus, OH Jim Wilson Marketing Director – Metals & Construction

SCORT Conference Monday, September 23, 2013 Columbus, OH Jim Wilson Marketing Director – Metals & Construction. Who we are…. One of Seven Class 1 Railroads in the United States Employ ~31,000 People Operations in 22 States + District of Columbia Primarily Eastern United States

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SCORT Conference Monday, September 23, 2013 Columbus, OH Jim Wilson Marketing Director – Metals & Construction

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  1. SCORT Conference Monday, September 23, 2013 Columbus, OH Jim Wilson Marketing Director – Metals & Construction

  2. Who we are… • One of Seven Class 1 Railroads in the United States • Employ ~31,000 People • Operations in 22 States + District of Columbia • Primarily Eastern United States • 20,000+ miles of rail operations • 36,000+ miles of track • Own or Lease 4,074 Locomotives and 86,290 Freight Cars • $11.0B in Revenue (2012) • 7.1M Rail Shipments (includes Trailers & Containers)

  3. What I’ll cover… • Railroads Involvement in the Emerging Energy Market • Focus on Marcellus & Utica Shale • Why Rail Makes Sense • NS’s Observations of the Shale Plays • What NS is Doing to Keep Pace

  4. Shale Plays in the United States

  5. Marcellus/Utica Inputs – 2012 43 Rail Cars per Well, but Increasing

  6. Utica Output Growth – Potential by 2017 NGL Production YE 2012 ~ 57Mb/d 1.2% of U.S. Production By YE 2017, Production to Reach 480 Mb/d 40% Ethane 288 Mb/d Production 150,000 Annual Carload Rail Equivalent 60% Other NGL’s Source: Bentek

  7. The Railroads’ Involvement • In 2012, 83,000+ Rail Shipments of Inbound Products • At 7% annual growth = 115,000+ Rail Shipments by 2017 • By 2017, Potential of 150,000 Rail Shipments of Outbound Products • Overall, Potential of 265,000 Rail Shipments Annually by 2017 • 1 Rail Car = 4 Truck Loads

  8. Why Rail Is Important • 1,000,000+ Trucks Off The Road • Alleviates Highway Congestion • Minimizes Wear & Tear on Highway Infrastructure • Reduces Carbon Emissions • Rail Infrastructure is Already Present for Traffic Growth to Meet the Needs of the Country • Shipments By Rail Safer Than Highway

  9. Railroad Investments Drives Safety • From 1980 through 2012, US freight railroads reinvested $525 billion back into their networks • More than 40% of every revenue dollar • * Capital Spending + maintenance expenses on infrastructure and equipment • ** Total train accidents per million train-miles • Source: AAR, FRA

  10. HazMat Incidents By Year & Mode Railroads now have 5% of the hazmat incidents that trucks have, despite roughly equal hazmat ton-mileage Data Source: US Dept. of Transportation

  11. Rail Industry Comparisons Injuries and Illnesses Per 200,000 Employee Hours Air Transportation Grocery Stores Construction All Private Industry Barges Farming RRs Mining Manufacturing Trucking Source: BLS

  12. NS’s Observations • Inbound: Supply Chain Evolution • Rail-to-Truck Transloading • Vertical & Horizontal Storage • Unit Train Operations • Outbound: Still in Infancy • Fractionation Plants Being Constructed • Gathering Systems Still Being Built • Future will be Same as Inbound • Supply Chain Evolution

  13. NS’s Observations • Utica Shale – Little to No Information • Well Results Reported Only Every April • 2012 Only Had 50+ Wells Reported • Rig Counts No Longer Germaine • Multi-Well Pad Drilling • Improved Drilling Technology • Focus on Cost Control

  14. What NS is Doing • Focused Sales & Marketing Efforts • Vigorous Industrial Development • Coordination with Outside Entities • ORDC • Short Lines & Regional Railroads • Continued Infrastructure Investment • Equipment Acquisition & Refurbishment • Route/System Optimization

  15. Thank You 15

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