1 industrial products scort conference monday, september 23, 2013 columbus, oh jim wilson marketing...
TRANSCRIPT
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Industrial Products
SCORT ConferenceMonday, September 23, 2013Columbus, OH
Jim WilsonMarketing Director – Metals & Construction
Industrial Products
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)
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Industrial Products
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
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Industrial Products
Shale Plays in the United States
Industrial Products
Marcellus/Utica Inputs – 2012
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State New Wells
Rail Cars Truck Equivalents
PA 1,264 54,352 217,408
OH 348 14,964 59,856
WV 339 14,577 58,308
Total 1,951 83,893 335,572
Shale Wells - Raw Material Opportunities
Commodity Units/Well Carloads Rail OpportunityFresh Water 5 million Gallons 167 0Brine Water 1 Million Gallons 33 0
Sand 3,500 Tons 35 35Drill Cuttings 1,100 Tons 11 1
Pipe 15,000 Feet 5 5Other (barites, crane mats, cement,
stone, fuel) N/A 8 2
Total N/A 259 43
43 Rail Cars per Well, but Increasing
Industrial Products
Utica Output Growth – Potential by 2017
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NGL Production YE 2012 ~ 57Mb/d
1.2% of U.S. ProductionBy YE 2017,
Production to Reach480 Mb/d
Source: Bentek
40% Ethane
60% Other NGL’s
288 Mb/d Production 150,000 Annual Carload Rail Equivalent
Industrial Products
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
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Industrial Products
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
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Industrial Products
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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-milesSource: AAR, FRA
Industrial Products
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0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
1988 1991 1994 1997 2000 2003 2006 2009 2012
Truck
Railroad
HazMat Incidents By Year & Mode
Data Source: US Dept. of Transportation
Railroads now have 5% of the hazmat incidents that trucks have, despite roughly equal hazmat ton-mileage
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2
4
6
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All Private
Industry
Injuries and Illnesses Per 200,000 Employee Hours
RRs Mining
Barges
Farming
Construction
Manufacturing
GroceryStores
Trucking
Air Transportation
Source: BLS
Rail Industry Comparisons
Industrial Products
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
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Industrial Products
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
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Industrial Products
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
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Industrial Products
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Thank You