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Shale & Railroads Marketing & Operations Impact

Shale & Railroads Marketing & Operations Impact. Marty Pohlod, Vice President – Commercial Genesee & Wyoming – Ohio Valley Region. September 23, 2013. Key Shale-by-Rail Locations. Natural Gas/NGLs Locations Ohio : Utica Shale (liquids rich ) Pennsylvania: Marcellus (dry gas)

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Shale & Railroads Marketing & Operations Impact

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  1. Shale & RailroadsMarketing & Operations Impact Marty Pohlod, Vice President – Commercial Genesee & Wyoming – Ohio Valley Region September 23, 2013

  2. Key Shale-by-Rail Locations • Natural Gas/NGLs Locations • Ohio: Utica Shale (liquids rich) • Pennsylvania: Marcellus (dry gas) • Louisiana: Haynesville (dry gas; activity down) • Crude Oil Locations • Texas: Eagle Ford Formation and Permian Basin • North Dakota: Bakken • Canada: Alberta tar sands

  3. G&W Lines and U.S. Shale Geography

  4. Utica Shale In Ohio • Utica Shale = rich natural gas liquids (NGLs) • Ethane, Propane, Butane, condensate and/or natural gasoline. • Utica Shale does not produce significant crude oil • Western portion potentially crude oil rich, not yet economically recoverable. • Production to grow dramatically with new processing and fractionation is available • Processing: Separation of NGLs, water and other impurities from dry gas • Fractionation: Separation of NGLs into components (e.g., ethane, propane, butane, etc.)

  5. Shale to Rail – What Does It Mean? • Site prep ~ 200 railcars of stone • Inputs ~ 30+ railcars per well: • 4-6 railcars of OCTG (pipe) • 15-30+ railcars of sand • ½ railcar of cement • NGL Outputs ~ 10+ railcars per well: • 4-6 railcars of drill cuttings • 2-3+ railcars of NGLs/day • Crude Outputs • Multiple unit trains per week

  6. Railcar Storage Impact • More storage required than traditional rail customers • Frac sand terminal 5+ grades, may need 1-2 miles car storage. • NGL Fractionation plants require even more track. • Varying tank cars by commodity • Multiple shippers/marketers in one facility

  7. Liquids Shipments Safety Implication • “Key Train” Status • 20 or more haz-mat placard cars • No unattended trains • Close coordination at interchange • Stays on mainline when passing other trains • More detailed haz-mat traffic lanes identification • More interaction with FRA at key haz-mat locations

  8. Service Impact • Not incremental traffic – Trainload(s) of new traffic • Design train service to fit commodity & customer demand • Careful pre-planning • Close communication with customers • Hiring of additional operating employees • Premium service and cost

  9. Big Picture Rail & Shale • Defining the market • Pipelines vs. rail? Competition amongst shale plays and end-markets? • Committing to long-term track investments • Capacity is available and scalable • Optimizing use of sites (particularly in East) • Maintaining service to existing (non-shale) customers • Strong competition between railroads for projects • Public policy alignment • Private RRs invest significant private capital • More rail shipments make roads safer and last longer (saves everybody $) • Encourage road funding & TSW policies to work with, not against RRs

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