Right now, though, the economic benefits of that drilling are planting roots throughout the upper Midwest. It’s obvious in North Dakota, the epicenter of the oil and gas boom. But it’s also showing up in Minnesota in places you might not expect.
The Federal Reserve Bank of Minneapolis notes the sand mining in southern Minnesota and western Wisconsin is triggering a resurgence in local freight rail. The Fed writes:
In Wisconsin, many sand mining companies have built facilities adjacent to rail lines–a cost-effective way to ship raw or processed sand, often in “unit trains” of over 100 cars. In response to increased demand, railroads have ramped up their operations and rehabilitated little-used or dormant lines, at a cost of roughly $1 million to $2 million per mile.
Lakeville, Minn.-based Progressive Rail operates a 62-mile line running north from Chippewa Falls to Rice Lake and Almena, in Barron County (see accompanying map). Freight volume has increased fivefold to about 1,800 cars a month since EOG Resources completed a new sand processing plant in Chippewa Falls last December, said company President Dave Fellon. Over 90 percent of that volume consists of frac sand from the EOG plant and other mining facilities along the route.
Rising revenue has allowed Progressive to invest in human capital (payroll has increased from 65 to 100 workers over the past year) and critical line improvements. Fellon said the firm will spend $30 million to $50 million over the next five years on new railroad ties, bridges, loading facilities and other infrastructure.
Canadian National and Union Pacific have also refurbished long-neglected rail lines linking Wisconsin frac sand operations to distant markets. This summer, CN began clearing brush and laying new ties on a 45-mile section of rail between Cameron and Ladysmith to connect existing and proposed sand mines with a main CN line running north into Canada and south to Texas. The railroad backed out of a pending sale to the state that would have let Progressive operate the line, opting to retain ownership of a potentially profitable sand route.
We’ve seen communities in southeast Minnesota put the brakes on new mining as they try to balance the huge potential economic payoff with quality of life concerns.
But as often happens, the economic payoff gets a huge head start in the debate. It’s hard to have a discussion about long term stability when there are needed jobs being created and big money to be made in the short-term.
– Paul Tosto