#397. Shale Gas a Boom for Norfolk Southern

Posted on | The Agurban
Shale Gas a Boon for Norfolk Southern

A few weeks back, we featured a two-part series on Shale Gas-A Game Changer. Many entities stand to benefit from the growth in the natural gas industry, including Norfolk Southern Railway.

According to Jim Schaaf, Group Vice President of Metals and Construction for Norfolk Southern, “Few opportunities hold as much potential for new business growth than natural gas exploration in the Marcellus Shale.”(The Marcellus Shale is a geological formation that stretches deep underground from Ohio to West Virginia, across most of Pennsylvania and into southern New York.)

As we noted back in April, recent technological advancements in horizontal drilling and hydraulic fracturing have enabled drilling companies to break through the shale to reach the natural gas reserves. As part of the fracturing process, water, sand, and chemicals are pumped into the well bores under pressure to crack the rock and release the gas deposits.

“Hauling those materials to drill sites is where NS (Norfolk Southern) and a number of its short-line partners enter the picture,” says Schaaf.

For Norfolk Southern alone, their carloads have grown from 6,000 in 2009 to 24,000 in 2010, and by August 2011, had already exceeded 2010 by 3,000 carloads.

“These are remote locations where the sites and drills are. Since 2008, NS has established connections at 57 terminals in the Marcellus Shale region that the Class I can reach directly or through one of its short-line railroad partners,” stated Schaaf.

Keeping up with that growth has required NS to invest in infrastructure and equipment, and recruit workers. In Pennsylvania, NS hired 114 conductors and 87 mechanical employees by October 2011, and still had nearly 140 positions to fill.

We believe that shale gas exploration will continue to grow as natural gas is a highly desirable, cheaper fuel alternative. As always, we will continue to watch this vital industry.