Results of the latest Federal Railroad Administration electronic track inspection of our 347-mile, 12- county cluster of lines have confirmed the benefit of increased carrier maintenance and capital outlays in the interest of roadway safety. The week-long system tour identified minor gauge variances and known problems in areas where slow orders apply because work is in progress or extensive bridge improvements are scheduled later this year.
Plains Cotton Cooperative Association has announced plans for expansion of its Altus facility to originate unit trains for BNSF delivery to Asian markets via West Coast export terminals. A new 55-car track is being constructed for loading of containerized cotton from the existing warehouse complex. Plant switching and assembly of intermodal trains hauling 220 oceangoing containers will be performed by locally based Farmrail crews.
Among all our different forms of transportation, none can be more “all-American” than Farmrail and many other similar short-line railroads throughout the nation. Our dedicated team of Americans operates locomotives and railcars over steel rails and wooden ties, all made in America, using domestically sourced fuel to haul other commodities produced in America. We have good reason for proudly flying the Stars and Stripes.
Farmrail has seen the first effect of achieving a higher gross weight limit on the north end of its 349-mile, 12-county Western Oklahoma network. The ability to haul 100-ton loads has opened new traffic lanes for shipments of bulk gypsum to destinations beyond traditional trucking distances. Customers situated along both coasts can now consider cost-effective transportation of high-quality product from our mid-American reserves.
Everyday freight operations have been adjusted to the reality of sharply curtailed oilfield traffic. Well completions in regional shale formations have declined to a minor fraction of the midyear 2019 level. Since producing locations are unlikely to be shut in, recovery will depend on the natural depletion rate in shale formations. It therefore is unreasonable to expect meaningful resumption of serious drilling activity prior to 2022.
As political leaders strive to reverse the consequences of outsourcing jobs offshore, there is good reason to repatriate certain manufacturing and processing activities. Western Oklahoma offers a business-friendly political environment, relatively low cost of small-town living with big-city access, willing rural labor force with a strong work ethic, and midcontinent location with rail and highway connections in all directions.
As the national political debate focuses in part on recognized infrastructure needs, Oklahoma officials appear to be well ahead of the game. In addition to Farmrail’s ongoing track and bridge construction under a $16.5-million “TIGER” public-private matching program with federal and state authorities, four more system road crossings have been approved for drainage, surface and signal improvements totaling $1.4-million.
Shut-down sand producers are driving a new demand surge for storage of idled equipment as they release small-cube hoppers used to support oilfield development drilling in shale formations. Nearly half the estimated 125,000 national frac-sand fleet already is out of service, plus other car types idled by the general downturn in rail traffic. Farmrail is close to testing its on-line parking capacity, believed to be more than 3,000 units.
Work on Farmrail’s $16.5-million “TIGER” infrastructure improvement program has progressed beyond rail replacement and tie laying to the lifting of gross-weight restrictions on 16 system bridges. The sharply reduced level of oilfield traffic has enabled construction to proceed on schedule, and the result will be full 286,000-poind gross weight capability on 124 miles of line between the Enid interchange and Elk City.
The Elk City car-repair shop is being commercialized by agreement with Seaboard Mobile Services, an established Oklahoma-based provider of running repairs and accident pickup assistance to carriers and car owners throughout the Southwestern states. The new operator will become responsible next month for maintenance of Farmrail’s fleet, equipment stored for others, and timely performance on foreign cars received in interchange.
Since railroads are deemed to be essential services, Farmrail has operated regularly during the coronavirus period as dictated by inbound and outbound customer transportation demand. Appropriate precautionary measures have been taken to minimize exposure of employees, by avoiding crowding, staggering on-duty schedules, working in pairs, and conducting administrative business from home when possible.
Though railroads are considered essential services, Farmrail has joined many other short lines in taking prudent precautionary measures to contain the rapidly spreading coronavirus that has prompted a national state of emergency. Train crews and maintenance personnel are working in pairs with staggered on-duty times to prevent crowding, while the administrative staff conducts “business as unusual” from home as much as possible.
Farmrail offers an attractive southwestern location for freight-car storage as space permits and can arrange for necessary running repairs if needed. Our “valet parking” program is designed to provide capacity for at least 3,000 pieces of rolling stock. The present on-line inventory includes 600 factory-fresh box, tank and flat cars as well as several out-of-service fleets of covered hoppers that had been used primarily to haul frac sand.
Short-line railroads operating in 49 states received welcome yearend news that Congress had reauthorized an overdue extension of several suspended tax policies, including the effective Section 45G transferable matching credit for infrastructure maintenance first enacted in 2005. Carrier spending on track, bridges and related safety risks is matched to a limit per mile, facilitating funding assistance from taxable rail-dependent customers.
The year ends with a dramatically changed outlook after the collapse of drilling activity in the Anadarko Basin “STACK” formation. A combination of depressed crude oil prices, inconsistent geological experience, and use of local frac sand has led to a sharp reduction in Farmrail operations. The only benefit is in mitigating interference with contractors now in the bridgework phase of our “TIGER” roadway improvement project.
Farmrail’s decision to rely on temporary trainmen and leased power to handle the four-year oilfield traffic boom has proved to be a wise one. One industry trade publication states that “We are in a freight recession” as national rail traffic continues to decline despite the strong economy and Class I carriers discharge unneeded employees. The energy and intermodal categories are most responsible, as our recent experience confirms.
The official opening of Farmrail’s employee-designed operations center enabled politicians, patrons and the public to learn how railroads function, their economic importance to the region, and the safety aspects of moving bulk commodities in heavy equipment. Railroad properties don’t have to be decrepit and dirty, and the modern facility is expected to set an example for broader downtown development in Clinton.
Activity is increasing for the “Storage car specialist for the Southwest” as a continuing slowdown in national rail traffic forces temporary removal of certain types of freight equipment from regular service. Branch and side trackage on Farmrail’s rural 349-mile system offer ample capacity for safe storage of entire unit-train consists as well as manifest equipment subject to unpredictable call-out.
The Department of Transportation is about to implement a program to replace and standardize passive warning signage at all public railroad crossings in Oklahoma. Traditional crossbucks will be reflectorized and supplemented by highway-type “yield” signs positioned to optimize visibility to motorists. Of our system’s 411 such crossings, 349 are not equipped with flashers or gates, so vehicle drivers will experience a decidedly new look.
A rapidly declining rig count and prospect of an extended slump in regional drilling prompts adjustments in personnel and equipment. Temporary trainmen assisting with the three-year surge of sand traffic are being released, the locomotive fleet resized, and operating practices modified. This situation appears unlikely to change until price-depressing supply-demand imbalances in the international oil markets can be corrected.
Oilfield drilling activity has slowed considerably and related rail traffic more so due to the combination of excessive crude inventories depressing prices and local frac sand mines replacing out-of-state sources. An above-average wheat crop and increased movements of crushed stone are helping to sustain rail traffic while major roadway construction to raise the allowable weight limit between Enid and Elk City proceeds.
America’s “dust bowl” became a “mud bowl” from record rains throughout the Midwest and plains states as flood-damaged infrastructure caused numerous service disruptions. Farmrail is thankful for the recently upgraded North Canadian River dam, without which its critical downstream timber bridge might well have suffered extensive damage. The only positive aspect is abundant moisture to improve maturing crop yields.
Farmrail’s new state-of-the-art Clinton operations management center opened this month, incorporating the railroad’s train supervision, dispatching, safety and customer service functions. Appropriately located in our headquarters “Hub City of Western Oklahoma,” the custom-designed facility raises the standard of working conditions for crewmen and related indoor support personnel for the 349-mile, 12-county rail network.
A new motorist safety initiative sponsored by Oklahoma Department of Transportation is intended to reduce mishaps involving inattentive drivers at crossings without active warning or protective devices. All railroads operating in the state are to install reflective crossbucks and highway-type “yield” signs on steel break-away posts. Farmrail has 349 such locations, an average of one per route-mile.
Farmrail’s largest-ever infrastructure project is finally under way to achieve 286,000-pound gross weight compatibility over 132 miles of line between the Enid interchange and Elk City. The phased public-private initiative specifies replacement of 17 miles of obsolete rail, installation of 36,300 crossties, 16 bridge upgrades, 17 crossing renewals, a new 6,000-foot passing track at Okeene, and two industrial sidings in Elk City.
Last year was second-best in history for Farmrail’s service-sensitive railroaders as regional oilfield development continued at a high level. Customers appreciate regular contact with caring owners who have a stake in the outcome and reason to be the best at what they do. Our 51 dedicated teammates include 49 vested shareholders, 34 with at least five years of service and 17 who have been aboard for 10 or more years.
We salute service partner BNSF for aggressively marketing its entire network with connecting short lines and helping to make 2018 second-best in Farmrail’s 37-year history. Other trunk lines are selectively reducing system reach and ceding carload freight to the highways to enhance current profitability. This is not a politically winning industry strategy in the long run if rail access critical to many outlying communities is lost.
The first two of several sand mines proposed for western Oklahoma are now in production. It remains to be seen whether cheaper but lower-quality in-basin proppants will prove cost-effective for shale formations and displace some portion of rail-delivered Midwestern white sand. Potential capacity could easily exceed regional demand and make other targeted mining sites problematic for investment.
President and General Manage Judy Petry has been recognized among ten 2018 recipients of the Railway Age Women in Rail award, based on leadership, vision, innovation and accomplishments. Her 31 years of experience with Farmrail have been expanded to include Chair of the American Short Line and Regional Railroad Association and its interim leader while a search is conducted for a top-executive replacement.
Ground has been broken for Farmrail’s new operations building near the eastern highway entrance to Clinton. Transportation supervision, trainmen, dispatchers, customer service personnel, and safety officials will be based in the custom-designed structure, while administrative headquarters remain on the west side of town. The result will be greater efficiency for the railroad and improved appearance for its home community.
Construction is nearing completion on Producers Cotton Oil Mill’s FMRC-served regional seed-storage facility in Altus. Available capacity more than triples the previous total of 12,000 tons. With a gathering radius of about 50 miles, this facility will become a major shipping point for long-distance rail deliveries. Nutritionally rich in protein, fat and fiber, whole cottonseed is a preferred feed for dairy cattle.
Farmrail again has the privilege of hosting the Federal Railroad Administration’s annual regional Railroad Training and Safety Seminar in Oklahoma City next month. The venue drew record attendance from carriers in four states and Mexico two years ago. Industry and government continue to join forces in a concerted effort to extend an improving national history of public and personal railroad safety.
Farmrail’s commitment to hometown Clinton is being reinforced by extensive renovation of the headquarters office to improve the workplace environment. Across town, construction of a new 3,450-square-foot steel building to accommodate all operations, safety and customer-service functions is expected to begin next month. An adjacent 5,500-square-foot building will be renovated for exclusive use by mechanical personnel.
Continued arid conditions are negatively affecting the 2018 winter wheat crop, prompting further conversion of acreage to upland cotton. Plantings more than tripled over the past three years, accompanied by rising yields due to expanded irrigation, genetic seed modification, and improved management practices. Oklahoma now ranks as fourth largest domestic producer, though wheat still dominates the landscape by a factor of six.
Life on the plains took on a new dimension this month as extraordinarily dry weather led to uncontrollable wind-driven wildfires throughout western Oklahoma. An estimated 366,000 acres were burned and several small communities evacuated during several anxious days before the blazes could be contained. Farmrail facilities fortunately suffered no damage, though a major wooden trestle on GNBC was at potential risk.
Oklahoma Department of Transportation was awarded $9.9-million in federal matching funds for GNBC-FMRC infrastructure improvements to achieve 286,000-pound gross weight capability on 132 miles of track between Enid and Elk City. The $16.5-million project includes rebuilding the 115-year-old North Canadian River bridge, strengthening 16 smaller spans, replacing 17 miles of obsolete rail, and installing 30,000 ties.
Changes in Farmrail’s locomotive roster are under way in anticipation of expiring leases and heavier over-the-road hauls. Ten GP-10s and single GP-9s and GP-20s are being offered for sale; two MP-15ACNs will be leased for assignment to switching at Westhom, and the current fleet of 15 GP-38-2s will be augmented for road power as the year progresses. The result should be more tractive effort from fewer units to be maintained.
The latest additions to Farmrail’s growing customer list, now at 58, selected distribution locations at opposite ends of the state-owned segment of FMRC – Nalco Chemical at Weatherford and Great Basin Brine at Erick. To support sharply increased traffic from resurgent oilfield activity, record capital spending is anticipated for 2018 track and bridge upgrading to handle 286,000-pound loads where freight tonnage is heaviest.
Spurred by renewed federal focus on domestic energy resource development, 2017 set records by all performance measurements. A strong year-to-year surge in sand deliveries and longer train consists demonstrated the operating leverage inherent in higher utilization of available system capacity. It’s a fitting coincidence for Farmrail to be featured on the cover of Oklahoma Department of Transportation’s official 2018-20 railroad map.
Producers Cooperative Oil Mill, served by FMRC at Altus, has authorized a new 30,000-ton bulk-storage warehouse that will more than triple present holding capacity there. Its members include 14 cotton gins and three cooperatives in a surrounding bi-state growing area where increasing planted acreage can easily support such an expansion. Rail routings open up a large year-round seed market for premium dairy-cattle feed.
Farmrail System has been named BNSF’s “Shortline of the Year,” largely for its performance as a receiver of interline frac sand. Former dependence on agriculture changed dramatically with the advent of directional drilling in Anadarko Basin oilfield shale formations. Sand traffic more than doubled over the past five years and already has set a record in 2017. Further gains are expected from expanding development activity.
Elk City has been selected as the sole national testing site for a new type of advance warning signal for railroad crossings to achieve greater visual impact at minimal maintenance cost. Oklahoma Department of Transportation, in cooperation with federal safety authorities, has installed in-pavement LED lighting at FMRC’s high-traffic Seventh Street location in an experiment to augment traditional roadside flashers.
The traffic flow has started at Northwest Investments’ new fertilizer facility on GNBC at Ames. Its first two pods hold 5,000 tons each, and the site plan will permit future expansion up to 30,000 tons. A partnership of agricultural cooperatives at Alva, Burlington, Helena, Waukomis and Weatherford, this enterprise continues a trend of consolidation to realize efficiencies of moving bulk commodities by rail.
Three more energy-related customers have demonstrated confidence in western Oklahoma’s economy and rail transportation at sites on FMRC. Maalt Transport is transloading frac sand at Altus, Centergas has received its first tank cars of propane at a newly established terminal in Sayre, and Ace Completions started up a Clinton location for distributing hydrochloric acid and friction reducer to drilling-rig operators.
Upland cotton farming is booming in our region as genetically modified strains overcome issues of water deficit, soil salinity, and temperature extremes that had been problematic. Seven counties surrounding Altus now account for more than 75% of state production. Planted acreage and average yield have both risen in recent years, and recovered seed from ginning has value as vegetable oil and premium livestock feed.
The ability to manage rapid traffic growth, spread over more territory and involving many new customers over the past two years, is a testament to our ownership culture. Farmrail is the only railroad with a formal Employee Stock Ownership Plan, with 49 participants at least partially vested at yearend 2016. This non-contributory financial benefit provides economic reason for them to go the extra mile to “be the best” at what they do.
Farmrail has made major recent commitments to additional equipment, purchasing two more GP-38-2 road locomotives and leasing four GP-15-1 switchers in anticipation of further changes in its power roster. An additional 50 covered hoppers have been acquired for local grain movements, increasing that fleet to 195 cars, and 13 more open-top hoppers brought the total in captive stone service to 43.
As increased world oil production depresses international crude prices, Oklahoma and Texas have become the epicenter of domestic drilling activity because shallow shale deposits afford opportunities to develop reserves profitably below $50 a barrel. Aside from the depth factor, improved lateral drilling technology enables product to be recovered from up to a one-mile radius of each downhole bore.
Farmrail is on a crusade to raise motorist awareness of the dangers of railroad crossings. The traditional crossbuck warning is the equivalent of a highway “yield” sign and means “stop” if rail traffic is approaching. There is no doubt as to the outcome of a collision with a train that has the legal right of way and takes some distance to stop under any conditions. Close calls are greatest in rural areas where sightings are infrequent.
Last year was third best in Farmrail’s 35-year history as inbound movements of frac sand helped to top the previous record for terminated traffic. Several new customers are a positive sign for western Oklahoma’s economy, based on surging oilfield development activity and an overdue pickup in the drought-affected agricultural sector. The outlook appears promising as new federal leadership reflects the values of America’s heartland.
Barely noticeable 10 years ago, frac sand became Farmrail’s leading commodity in 2014 and has continued to grow. The big change this year was an operational shift to deliveries in 80-car units to multiple transloading locations, totaling 50 trainloads by yearend. A trend toward longer lateral lines and increased proppant impaction means more sand usage per well in a shale formation where spacing is up to eight sites per section.
We’re doing our best to help the environment. Farmrail is making fleet-wide use of advanced biodegradable fuel and oil additives that increase diesel locomotive efficiency by producing a cleaner burn and reducing internal friction. The results are statistically and visually evident and should help not only to extend engine life, but also minimize the risk of trackside fires caused by spark emissions.
Farmrail was instrumental in having the Federal Railroad Administration’s railcar-mounted electronic track-geometry testing device reactivated for a “grand tour” beginning in May that reached Oklahoma last month. To minimize risks of derailment, the car detects deviations in gauge, line, surface and curvature from uniform track-classification safety standards that govern allowable train weight and speed.
FMRC’s seldom-used seven-mile spur to Westhom was heavily retied, ballasted and dressed in preparation for new rail-to-truck sand transloader M2W. The first 80-car unit train arrived only 28 days after contractors started track work. Simultaneous clearing and grading of the four-acre site for road access and installation of an administrative building and industrial scales was achieved despite several periods of rain.
Our teammates were proud to host the Federal Railroad Administration’s biennial Region 5 Safety and Training Seminar in Oklahoma City. Offering a menu of educational programs featuring regulatory and carrier safety experts, this symposium attracted 173 participants from eight states. Industry, government, press and public focus on rail safety has intensified in the aftermath of several headline-making accidents.
The “splunits” are coming. Farmrail is believed to be the first short line to receive trainloads of a single grade of frac sand at interchange for delivery in smaller blocks to multiple on-line transloading destinations, at Okeene, Carleton, Clinton, Weatherford and Elk City. Fairmount Santrol is taking this approach to assure timely product availability and increase the velocity of its dedicated fleet of covered hoppers.
Predictions proved valid, and all Farmrail-served elevators managed to avoid capacity overflows and consequent ground storage of wheat. An ample supply of grain hoppers alleviated that risk, resulting in an unusual number of on-line loads for post-harvest movement to the terminal shuttle-loaders. Farmers were generally pleased with test weights and quality, but disappointed in depressed market conditions.
The 2016 harvest promises to be the best since 2008, when wheat accounted for 44% of system traffic. Though planted acreage in the region is slightly down from last year, higher yields are expected to increase production by about 30% and offset low prices resulting from a weak export market. Elevators are rushing to move carry-over stocks to make room for the new crop, and they seem likely to be full by the end of June.
The modern, 5.2-milllion-bushel shuttle-loading facility east of Altus, accessible to GNBC via BNSF trackage rights, has been acquired by Great Plains Commodities, a partnership of locally based Planters Coop, Producers Grain, and Humphreys Coop. It should become the economic gathering point for southwestern Oklahoma wheat, aided by cost-effective mini-unit rail transfers from country elevators that increase hopper-car utilization.
After serving as a Vice Chair understudy, Farmrail President Judy Petry is starting a three-year term as Board Chair of the American Short Line and Regional Railroad Association. The 103-year-old national trade organization provides regulatory and political representation and informational services for 467 member railroads that now operate more than one-third of the domestic freight-rail network.
Farmrail’s locomotive fleet is being reconstituted through the purchase and lease of 14 GP-38-2 units that will provide more modern, compatible and reliable power for our 12-county system. Several older models are being sold or retired, with the objective of having a regularly available roster of 25 units to accommodate over-the-road movements and industrial switching needs, plus spares.
Five cooperative affiliates of Equity Marketing Alliance (Alva-Burlington-Helena-Waukomis-Weatherford) have broken ground for a distribution facility for soil nutrients and conditioners on a 143-acre GNBC trackside parcel at Ames. Expected to start up in the third quarter, it will be served by a new 3,000-foot rail siding and include two towers with total capacity for 10,000 tons of dry storage.
Welcome late-year moisture holds early promise for 2016 winter wheat production as the new crop enters its normal period of dormancy. Six consecutive years of drought have passed since the last time wheat comprised more than 40% of Farmrail’s annual traffic. With oilfield drilling activity waning due to depressed world crude prices, an agricultural upturn in western Oklahoma would be timely for the regional economy.
Dolese Brothers, a prominent Oklahoma supplier of paving and construction materials, has opened a new stone quarry on a 600-acre tract on GNBC at Roosevelt. This deposit includes an unusual grade of granite suitable for abrasives as well as aggregate for paving, and reserves are estimated at more than 300-million tons. A dedicated loading track with capacity for 25-car mini-unit trains is nearing completion.
Farmrail is addressing concerns about environmental impacts from motorized equipment. Trials of new biodegradable diesel and oil additives are justifying expanded use throughout the locomotive fleet. Tested units are realizing a cleaner burn, increased fuel mileage, lower carbon deposits and associated particulate emissions, extended engine life from reduced friction, and probably less out-of-service downtime.
Erick is returning to Oklahoma’s railroad map following rehabilitation of 12 miles of dormant track to access Wisconsin-based Badger Mining’s new 140-acre complex for distribution of raw and coated frac sand throughout the Anadarko Basin. FMRC will run the first passenger train to that community in 48 years next month for public officials and others who facilitated the largest industrial development project in its 34-year history.
A nationwide summer downturn in rail freight traffic, particularly coal, crude oil and containerized shipments, has sparked demand for temporary storage of idled hopper, tank and intermodal equipment. Farmrail is particularly well suited to accommodate rolling stock to be called out in blocks (rather than individually) and has capacity in excess of 1,000 railcars at competitive rates in a comparatively benign rural environment.
Producers Cooperative Oil Mill eventually plans to close its Oklahoma City facility and transfer operations to Altus. The former peanut-processing facility there will undergo modifications to handle cottonseed and canola, which is becoming a popular rotational crop with winter wheat because of its weed-control and soil-conditioning attributes as well as high product value. Rail movements are anticipated from November through March.
FMRC’s lease of the 78-mile “Sunbelt Line” from Oklahoma Department of Transportation has been extended through 2025. Originally executed in 1981, this public-private partnership was a pioneering effort to restore service on light-density lines affected by the Rock Island railroad bankruptcy a year earlier. The Weatherford-Erick rail corridor has since become a preferred location for Anadarko Basin oilfield suppliers.
An extended period of regional drought was ended emphatically by a succession of tornadic storms producing record-breaking torrential rainfall, causing temporary suspension of all service on the 347-mile system while emergency repairs were undertaken at several washout locations. Extreme moisture devastated the most promising winter-wheat crop in recent years by reducing yield, quality and harvestable acreage.
Farmrail President and General Manager Judy Petry has been named Vice Chair of the Board of the American Short Line and Regional Railroad Association, representing 468 Class II-III member carriers on industry and legislative matters. She will assist new Association President Linda Darr in addressing safety training, infrastructure improvement, member outreach, Class I relationships, data development, and external communication.
With prospects for a “normal” winter-wheat harvest improving, Farmrail has designed an aggressive program giving on-line elevators competitive options for moving grain to market via accessible shuttle loaders or direct interchange with connecting carriers. Growing conditions so far are the best in several years and hopefully will bring an end to an extended period of drought and disappointingly short crops.
An extended labor dispute that escalated into widespread longshoremen’s strikes at West Coast ports and affected marine transloading activity, creating demand for temporary railcar storage space elsewhere, finally has been settled. To assist in alleviating network congestion, Farmrail has provided 11 miles of linear parking capacity on unused side tracks for container-hauling intermodal flat cars, primarily for connecting carrier BNSF.
Farmrail’s J. R. Gelnar has accepted a leadership position as Vice President Safety and Compliance of the Washington-based American Short Line and Regional Railroad Association, which represents nearly 500 small carriers in 49 states. He will initiate and administer member outreach programs concerning safety training and compliance monitoring to extend an improving record of injury avoidance and accident prevention.
Originally an agriculturally dependent system, Farmrail has become oilfield-driven in recent years from revitalization of vast Anadarko Basin reserves by new extraction technology. A sharp downturn in crude-oil prices resulting from world overproduction now raises doubt as to sustainability of the recent pace of domestic development, prompting tighter 2015 budgeting in all categories as the cycle turns less favorable.
Railroad activity in far southwestern Oklahoma is picking up with the establishment of Altus as a transloading point for frac sand. This unusual location in the downsized national rail network is one of few accessed directly by as many as five different carriers (and indirectly by a sixth). Altus also is unique among Farmrail stations by reason of its ability to handle carloads with maximum gross weights of 286,000 pounds.
The TIGER V project to rehabilitate 12 miles of dormant track between Sayre and Erick owned by Oklahoma Department of Transportation will start early next month. Brush cutting, installation of 19,500 crossties, construction of a passing siding and industry tracks at Erick, lining and surfacing, and renewal of two bridges and 17 grade crossings will facilitate the location of two frac-sand distributors at the end of the FMRC-operated line.
Deliveries to two new rail customers started this month. Coastal Energy received the first loads of asphaltic oil for its new paving materials batch plant at the Fransen industrial complex on GNBC south of Clinton. Farther west, Illinois frac-sand producer Manley Brothers has established a presence on FMRC at Elk City to handle its Anadarko Basin business. Both sites offer ready highway access for regional distribution.
Oklahoma Governor Mary Fallin has underscored the national rail-safety initiative by introducing a four-year, $100-million statewide program for improvement of railroad grade crossings. The dedicated funds will enable upgrading of crossing surfaces and warning and protective devices, ranging from pavement painting and crossbucks to advanced light and barrier technology and even grade separation on heavily traveled arteries.
Large volumes of frac sand continue to move into the region from sources in Illinois and Wisconsin in anticipation of further development drilling of extensive Anadarko Basin shale-oil formations. GNBC and FMRC currently support active distributors at eight different locations, and another rail-served facility is under construction. Sand accounted for 40% of all carloadings in the first half of 2014.
Authorization to proceed with the 14-mile, $2.6-million TIGER V track-rehabilitation project between Sayre and Erick finally has been issued. It will include 19,500 ties, 20,000 tons of ballast, a 1,500-foot side track, 17 road crossings, two bridge upgrades, and extensive brush-cutting. The work schedule calls for substantial completion by yearend to facilitate construction of a regional frac-sand distribution facility.
The usual railroad rush associated with the winter wheat harvest won’t occur this spring, as the extreme two-year drought throughout the Southwest had relegated most of the western Oklahoma crop for pasturing long before cutting time. Since ample on-line storage capacity is available, what little wheat is acceptable for marketing is likely to be held in country elevators until later in the year.
Cudd Energy Services is now receiving frac sand at a rail-to-truck transloading point on GNBC at Carleton, a location affording good road access to development sites in a tri-state region. Farther south, meanwhile, Coastal Energy is installing 150,000 gallons of storage capacity and associated asphalt blending equipment at the Fransen industrial park near Clinton, bringing the active customer count to 46.
Western Oklahoma has experienced the oilfield version of a gold rush as would-be players established an early presence by securing rail-served sites for frac sand delivery and crude-oil gathering. Consolidation is now taking place as sand producers decide whether it makes more sense to utilize distributors than to operate their own facilities, and oil marketers are being sorted out by intensified competition for contracted production and refinery destinations.
Recent newsmaking incidents involving derailments of trains hauling crude oil have prompted Farmrail to adopt strict voluntary precautions while industry and regulatory officials investigate the causes and consider formal regulations. Dramatically increased traffic in widely differing types of crude demands maintenance and operating practices that enhance public safety without seriously affecting the normal flow of commerce.
A totally redesigned and more informative corporate website accompanies the announcement of changes in management responsibilities as Farmrail organizes for the future. Judy Petry has been named President and General Manager; J. R. Gelnar, Vice President – Engineering and Safety; and Brandon Friesen, Safety Officer. The appointments recognize their professional accomplishments and ability to assume additional leadership roles.
Over the past two years, Farmrail has reconstituted its locomotive fleet, replacing 1,500-1,750-horsepower switchers with units affording greater tractive effort for hauling over-the-road tonnage. As a result, several GP-9s and GP-10s suitable for short lines or industrial switching operations are available for sale or lease. Most of the offered untis are in good operating condition and available for inspection and testing at the Clinton, Oklahoma headquarters.
Farmrail hosted a gathering of firemen and emergency responders from two counties and nine communities for instruction in dealing with hazardous commodities. Three high-profile derailments elsewhere involving crude oil have spotlighted needs for specialized training. Safety experts from BNSF participated in explaining how railroads strive to minimize risks and what to do if unexpected spillage or inflammation should occur.
Oklahoma Department of Transportation has been awarded a $1.8-million TIGER V grant to extend the “Sunbelt Line” track rehabilitation 15 miles westward to Erick, which has not seen rail service since 2001. That community’s convenient location to Anadarko Basin drilling activity is desirable for both frac sand distribution and crude-oil gathering, and Atlas Resin Proppants has acquired a 65-acre parcel there to for distribution of coated sand.
FMRC has exercised a contractual option to purchase the “Orient Line” it has operated under lease from Oklahoma Department of Transportation since 1993. This acquisition includes the 66-mile segment between Clinton and Altus and extensions north to Westhom (via trackage rights over GNBC) and south to Elmer. The “Sunbelt Line” linking Weatherford and Erick, managed by FMRC beginning in 1981, remains under public ownership.
The Federal Railroad Administration’s TIGER III project to rehabilitate 49 miles of FMRC line west of Clinton to sound Class 2 standards is nearing completion, lifting tonnage and speed restrictions on the key 17-mile segment serving crude-oil transloaders at the Sayre extremity. This upgrading facilitates assembly of mini-unit trains for forwarding to domestic refineries, so far mainly in Arkansas, Illinois, Louisiana and Texas.
Farmrail has largely implemented its adoption of global positioning technology (“GPS”) for the locomotive and motor-vehicle fleets. The automated electronic location devices, enabling instant determination of the whereabouts of trains and supporting personnel, will improve the efficiency of operations and have the safety benefit of critical tracking ability in the event of an emergency requiring prompt response.
Oklahoma’s devastating “tornado alley” turned out to be about 75 miles east of the roughly paralleling GNBC main line, sparing the railroad from the extraordinary destruction that has dominated national news. Though our 32-year history in the area is devoid of material storm damage, the latest disaster has elevated public awareness of the power of nature and prompted serious assessment of needed contingency plans and facilities.
A serial combination of severe drought, repeated frost, and extreme heat has heavily damaged this year’s winter wheat crop and seems likely to make the imminent harvest a non-event. Since our western Oklahoma system was expanded in 1993, June has been the busiest month in all but two years. Similar adverse weather effects occurred in 2009, and last year’s crop was cut early, shifting the traditional seasonal traffic peak into May.
Elk City has purchased a 130-acre trackside parcel west of town for development as the rail-served Big Elk Industrial Park. The first tenant is expected to be an existing local employer intending to expand its operations. The community’s geographic location and civic foresight with respect to forward planning and infrastructure improvement has enabled it to become the focal point of renewed regional oilfield activity.
GNBC’s 25-year operating agreement with BNSF is being replaced to recognize changed circumstances for both parties. GNBC becomes a switching carrier with BNSF, publishing rates for interline traffic via the Enid and Altus interchanges, but customers will continue to be billed by BNSF. A new tariff designed to improve traffic velocity and routing flexibility will be effective April 1 and certain other provisions as of May 1.
Traffic in 2012 set a record, 38% above the prior year, reflecting rapidly growing volumes of Anadarko Basin crude oil. Altogether, oilfield-related carloadings accounted for 66% of a freight-service business that was 60% wheat-dependent as recently as 2000. This transformation should lead to more regularly scheduled operations and also moderate extreme seasonality formerly experienced at the midyear harvest.
Growing oil production in western Oklahoma and the Texas Panhandle is further stimulating activity on FMRC at Sayre, the logistical “sweet spot” for truck-to-rail transloading. Though capacity restrictions remain in effect until extensive TIGER III track upgrading can be completed, FMRC’s first non-grain mini-unit train was assembled for movement last month, transporting high-grade crude to domestic refineries.
Farmrail has achieved record traffic in 2012 as heightened horizontal-drilling activity in the oilfield provided welcome stimulus to the regional economy. Predictably, inbound frac sand again was the leading commodity, following three decades dominated by wheat. Outbound crude oil, which began moving in 2011, was second and could take the lead next year as production ramps up from newly drilled wells.
In anticipation of further growth in movements of Anadarko Basin crude oil, Farmrail is adding seven leased locomotives, increasing the system fleet to 35. The new power includes five fuel-efficient, Caterpillar-powered units to increase tractive effort on heavier road trains and two 12-cylinder switchers to be used in assembling mini-unit consists at the principal truck-to-rail transloading site.
WestOK Logistics has become the fifth crude-oil gatherer on FMRC at Sayre. Meanwhile, JP Energy has established a truck-to-rail transloading operation on GNBC at Carleton, affording efficient access to production from the Mississippian formation in west-central Oklahoma. On the opposite side of the 50,000-square-mile Anadarko Basin, Performance Minerals is distributing frac sand from an FMRC-served site at Altus.
Farmrail’s transformation from an agriculturally dependent system to one driven primarily by resurgent oilfield development is underscored by year-to-date traffic growth. Carloadings for the first three quarters of 2012 will eclipse any full year since the present route structure was assembled in 1993. Frac sand is certain to be the leading commodity for the third consecutive year, with crude oil a likely future contender with wheat for second place.
Work on FMRC’s expedited TIGER III track-rehabilitation project between Clinton and Sayre is set to begin next month. Contractor crews will start at the west end so that the Sayre yard and excepted track comprising 17 of the 49 route-miles can be upgraded promptly to Class 2 standards, enabling longer blocks of originated crude oil to be moved more expeditiously. Completion is expected by the second quarter of 2013.
With major wildfires raging throughout the arid Western states this year, there’s also fire danger on the southern Great Plains as extreme heat and lack of moisture dry out spring cheat and post-harvest wheat stubble. Random sparks from locomotive stacks and brake rigging can easily ignite trackside vegetation, triggering Farmrail’s good-neighbor policy with affected landowners and local fire departments.
The Federal Railroad Administration has issued a temporary waiver allowing movements of 10-car blocks of crude oil and up to 20 empties over excepted FMRC track between Sayre and Elk City. This provision will begin to realize the inherent efficiencies of rail transportation and facilitate work trains delivering materials for the federal TIGER III rehabilitation project expected to get under way next month.
A winter-wheat harvest that normally begins around Memorial Day started three weeks early and was essentially over by the monthend. More planted acreage and favorable moisture conditions throughout the growing season caused statewide production estimates to be double the drought-stricken 2011 total, well above average, and the best since 2008. Good advance planning and field coordination enabled rail operations to function smoothly.
Farmrail and the six other owners of Marquette Rail have sold their interests to RailAmerica, which expects to assume operating responsibility for the Michigan carrier as of May 1. The investors, including three established short lines, founded MQT in 2005 to lease and operate 130 miles of railroad owned by CSX Transportation and extending from Grand Rapids to the Lake Michigan ports of Ludington and Manistee.
Mercuria Energy, an international commodities trading and logistics organization, has opened its new facility for transloading Anadarko Basin crude oil at a site adjacent to the large FMRC rail yard in Sayre. A two-track, expandable design with temporary storage connected to a manifold system enables rapid discharge of product from incoming trucks and simultaneous loading of multiple tank cars.
Farmrail’s locomotive fleet has been augmented and upgraded with the addition of five more GP-38s, bringing the total of that type to 11. Increased traffic requiring longer hauls, heavier trains, and intensive switching at more widespread locations justifies an active roster of 31 units, including spares. System train miles increased 17% last year and locomotive unit-miles 25% as carloadings rose 8%.
The United States Department of Transportation has awarded a $6.8-million TIGER III grant for rehabilitation of the 49-mile, State-owned Clinton-Sayre line of FMRC to accommodate growing volumes of Anadarko Basin crude oil. Improved track conditions will eliminate an inefficient limitation on train length and speed for movement of hazardous commodities from truck-to-rail transloading sites in Sayre.
Farmrail’s transformation to a system driven by Anadarko Basin energy production has continued throughout 2011. Five more GP-38 locomotives are being purchased to handle heavier trains of outbound crude oil as well as inbound frac sand. The railroad is starting to resemble a “pipeline on wheels,” with multiple input locations for sweep trains assembling traffic destined for domestic refineries.
This month marks the 30th anniversary of Farmrail’s arrival in western Oklahoma. The Company has grown from a 35-mile short line linking Clinton and Elk City to a 369-mile network radiating from Clinton and covering 12 counties. Most importantly, the customer base has expanded with the diversification of the regional economy, greatly reducing the railroad’s former dependence on agriculture.
Rail movements of crude oil are growing as additional logistics firms participate in the supply-line gathering process. Mercuria Energy has begun transloading at Okeene, Deeprock Energy Resources at Thomas and Hobart, and Gavilon at Sayre. Marquis Energy also will be locating at Sayre as the shift of regional shipments from road to rail continues in anticipation of strong production gains in western Oklahoma and the Texas Panhandle.
Crude oil is back on the rails in western Oklahoma after an absence of several decades. Anadarko Basin production has been revitalized by horizontal drilling, providing economic access to previously untapped reserves. Petroleum marketer Pacer Energy is loading the high-quality liquid at Sayre and forwarding it to the Cushing storage complex for pipeline delivery to various domestic refineries.
While underground hydrocarbon development activity continues at a high level, farmers on the surface have their eyes on the sky. The extended drought that began last October has seen only two inches of precipitation over most of western Oklahoma, severely affecting the 2011 winter wheat crop and now threatening next year’s. The parched earth contrasts with more northerly states where severe flooding has been the problem.
Since the 1993 expansion of Farmrail to its present configuration of lines, 25 new rail-served customers have been attracted to the region, and 10 others have expanded their facilities. Oklahoma communities able to preserve their rail connections to the national network remain “in the game” for industrial development, as we now are seeing with renewed Anadarko Basin oil and gas drilling activity.
It’s a rare year when Farmrail train crews are not fully engaged on Memorial Day. As expected, the winter wheat harvest proved to be a non-event, and cutting started without a single foreign grain hopper positioned at country elevators or in the order backlog. The only consolation is higher prices, as more northerly crops are threatened by late flooding.
The driest growing conditions in 90 years of Oklahoma meteorological record-keeping assure that 2011 will be the second consecutive year in which wheat is not the primary commodity handled on Farmrail’s lines. A five-month stretch with negligible precipitation has not only resulted in irreversible damage to the new crop, but also heightened the risk of fire.
Horizontal drilling technology has revived western Oklahoma’s active rig count over the past four years. Farmrail has enlarged its work force and redesigned service to accommodate an increasing volume of oilfield traffic and new customers at the system’s extremities. The revised operating plan includes weekend service and night running to avoid congestion at interchanges and receivers’ facilities.
For the first time in the 18-year history of Farmrail’s present configuration of lines radiating from the Clinton hub, wheat was not the system’s largest traffic category in 2010. Frac sand accounted for 40% of total carloadings, which were the third-highest on record. FMRC soon will activate its fifth sand distribution site, and three have been established on GNBC to support Anadarko Basin shale development.
Oilfield supplier Frac Tech Services has broken ground for a sand-distribution facility at a trackside location adjacent to the FMRC-served industrial park at Elk City. Plans call for construction of a new passing siding and double-ended spur for unloading different grades of product. Permanent storage capacity is planned so that cycle time on scarce hopper cars can be improved.
Last-minute Congressional extension of the very successful federal Section 45G infrastructure tax credit will enable short-line railroads nationwide to continue accelerated maintenance and capital programs through 2011. Farmrail’s two common-carrier subsidiaries in Oklahoma have spent $24.1-million to upgrade track and bridges during the six years this incentive has been in effect.
Quest Chemical is the latest oilfield supplier to set up a transloading operation for frac sand in western Oklahoma as energy development activity continues to increase. The five-year-old, Fairview-based company has started handling sand as a natural outgrowth of its original acidizing business, serving horizontal shale drillers from a rail-served site on GNBC at Okeene.
In order to avoid confusion for traffic moving via both of Farmrail’s common-carrier subsidiaries, gross weight limits on GNBC and FMRC have been conformed at 268,000 pounds. Shippers are responsible for derailments or other damage caused by overweight cars, and the new policy will be strictly enforced in the interest of both parties.
Elk City Industrial Authority has been authorized to modify the unloading pit at its distribution facility for crushed stone so deliveries can be made more efficiently with rapid-discharge railcars. These changes should enable Farmrail to increase rail capacity to as much as 300,000 tons annually by scheduling up to two round trips weekly from the quarry at Long.
The first western Oklahoma whistle-stop campaign train in many years will run on Septemberv20 for gubernatorial candidate Mary Fallin, currently finishing her second term as a Washington Representative. Its itinerary includes stops in Thomas, Clinton, Cordell and Hobart. We’re about to see if old-fashioned platform politicking can still be fun.
Weatherford traffic this year already exceeds the 2009 total, when it was Farmrail’s third-largest station. The town has become a hotbed of rail activity as a distribution center for the development of nearby oil-shale formations, and main-line and yard trackage have been upgraded to accommodate increased tonnage of fracturing sand used in lateral drilling.
Construction of a new side track at Tillman Producers in Frederick has set the stage for increased distribution of liquid fertilizers throughout southwestern Oklahoma and parts of Texas. Nitrogen solution is rapidly replacing anhydrous ammonia as the nutrient of choice due to farmer, carrier and producer efforts to reduce exposure to hazardous substances.
The 2010 wheat harvest was the most unusual in Farmrail’s 29-year history. Lack of normal export demand, large carry-over stocks, depressed market prices, and low protein content caused much of an above-average but below-expectations crop to be held in on-line elevators. The usual June surge in carloadings therefore will be spread out over the next 10 months.
Despite the deteriorating state of the national highway system and accompanying stress on maintenance budgets, motor carriers have renewed lobbying efforts to increase truck sizes and weights. The push for greater road and rail efficiency is like the nuclear arms race; a truce should be declared while the country catches up with its infrastructure needs.
Another encouraging sign for continued Anadarko Basin oilfield activity is JKM Ventures’ purchase of trackside property in Elk City. The trucking firm is preparing the former cottonseed-mill site to receive fracturing sand for transloading to drilling locations on the westerly side of the field, complementing similar operations 50 miles away at Weatherford.
The roadway maintenance season has started with the third phase of rehabilitation at FMRC’s Altus yard and interchange tracks, and the Clinton-Weatherford segment is due for tie replacements and surfacing to accommodate increased industrial sand traffic. New rail is being installed at 25 road crossings on the north end of GNBC to remove slow orders.
Another new oilfield supplier, Anchor Drilling Fluids, has joined the GNBC customer list by establishing a sixth operating location in Oklahoma, in the heart of the Anadarko Basin. The Tulsa-based firm has occupied and revamped an existing rail-served building in the Clinton Industrial Park and already received its first delivery of imported barite.
A climatic cycle is evidenced in western Oklahoma by weather events not seen for several decades, but it can hardly be described as “global warming.” Last year began with severe cold spells that seriously affected winter wheat production and ended with early winter blizzard conditions and deep snowdrifts that disrupted all modes of transportation.
Outlays to maintain and upgrade Farmrail’s track and bridges will reach a record level this year despite a severe traffic decline caused by frost damage to the wheat crop, reduced oilfield activity, and general economic malaise. Its subsidiaries have installed 115,000 ties and improved 60 bridges since the federal infrastructure tax incentive was introduced in 2005.
GNBC soon expects to extend regular service via 22 miles of trackage rights between Snyder and Altus, which is to become the primary interchange with BNSF. This arrangement should result in more efficient handling of traffic by both carriers and reduce congestion during the wheat harvest, when back-ups have seriously impeded the flow of loads and empties.
Car storage has become a counter-recessionary balance to declining freight revenue for many short lines with surplus track capacity. Farmrail, which has been in that business for 25 years, is currently hosting a record inventory of out-of-service railcars awaiting an upturn in traffic, including 20 miles of mothballed container platforms.
Oklahoma’s Congressional delegation is unanimously co-sponsoring legislation to extend the federal tax credit for short-line infrastructure investment in effect since 2005. This incentive has stimulated contractor and supplier employment while improving safety and efficiency of long-term assets affording outlying communities access to the national rail network.
The concept of creating private investment accounts to supplement Railroad Retirement benefits has been a reality at Farmrail since 1993. An Employee Stock Ownership Plan gives each eligible participant an equity stake in the business. We want all our people to think like owners, because what’s good for the Company is good for them.
The 2009 excursion season began on Independence Day with “Proud To Be American” trips to honor current military personnel and veterans. Meanwhile, movie makers finished filming “The Killer Inside Me,” a western murder mystery shot entirely in Oklahoma, including 1950s period scenes in Enid and Cordell and on board FMRC’s passenger coaches.
Western Oklahoma’s winter-wheat harvest turned out to be almost a non-event, as severe late frost damaged newly formed heads and rendered most of the crop unmarketable. As a result, the usual June traffic surge will not occur this year. Since country elevators still hold much of the 2008 production, grain will be moving to terminals over the next 10 months.
A fourth GP-38AC and two standard GP-38s are being added to the motive-power roster, enlarging it to a total of 22 units. They will allow some older GP-9/10 locomotives to be placed in reserve status, leased or sold, or used as parts sources. Electronic event recorders and cameras are being installed on the primary fleet as additional safety measures.
Modernization work on FMRC Budd self-propelled railcar demonstration unit 6130 has been completed by Industrial Rail Services in Moncton, New Brunswick. The two companies are offering these versatile, economical, time tested, stainless-steel vehicles for service on light-density passenger routes where operating flexibility and fuel efficiency are essential.
Preparation for the upcoming winter-wheat harvest involves continued high-level outlays for system track and bridge improvements. Main lines were inspected by a geometry car to identify structural deficiencies for remedial attention by Company roadway workers and outside contractors so that a sound Class 2 standard can be achieved by May.
While the nation waits to see how and when massive government intervention in the economy takes effect, Farmrail has provided its own "stimulus package." The most immediate and direct impact can come from employers, and all personnel received yearend bonuses and pay raises so they could enter 2009 with greater confidence than most Americans.
Farmrail is well positioned to withstand the economic recession that now has been confirmed statistically. Record traffic enabled the Company to end 2008 in the best financial condition in its 27-year history, and a two-year extension of the federal infrastructure tax credit will allow for further physical improvement of track and bridges this year.
The latest additions to GNBC’s customer list are at Okeene. Oilfield supplier Skyline Chemical is building a spur to a new distribution facility for hydrochloric acid, while Canadian-based Nexen has established an experimental transloading point for crude oil railed from developing fields in North Dakota that lack direct pipeline access.
The railroads’ ability to transport heavy and oversized loads was demonstrated again last month when a 510,000-pound electrical transformer arrived on a specially designed eight-axle flat car. The shipment originated in Mexico and was delivered to Elk City for transloading to its final destination, an Acciona Energy wind-farm development near Hammon.
Controller Judy Petry received the League of Railway Industry Women’s "Woman of the Year"award at a presentation ceremony in Chicago on September 23. She has become a recognized expert in her field, serving on several industry committees and chairing the American Short Line and Regional Railroad Association’s 2008 national convention.
Brainerd Chemical and United Agri Products are joining the ranks of GNBC customers. Both will occupy rail-served portions of the former cotton-oil mill property in Clinton, completing its redevelopment to other uses. Meanwhile, newcomer Wildcat Minerals is set to receive its first shipments of fracturing sand at an FMRC unloading site in Weatherford.
FMRC plans to undertake phased improvements to the capacity and condition of the Altus yard and interchange in cooperation with Oklahoma Department of Transportation. These facilities proved inadequate for handling peak transportation demand during June, when harvesting speed and volume overwhelmed infrastructure engineered a century ago.
It was “déjà vu all over again” as nature caused two service interruptions at Enid and disabled three locomotives midway through a bountiful harvest. Train and maintenance crews did a splendid job in dealing with adversity, managing to move a record number of carloads in June despite several days of disruption from wind, rain and fire.
Unless late misfortune strikes, as it did last year, the 2008 winter wheat crop will test the railroads’ ability to move heavy traffic in a short time frame. The combination of increased harvested acreage, strong export demand, and high prices should cause a sharp seasonal spike in carloadings as farmers seek to move their grain to market as soon as possible.
With agriculture and energy production thriving, rural western Oklahoma is a pretty good place to be these days. Farmrail’s lack of dependence on forest products, building materials, automotive and intermodal business is enabling the Company to increase traffic in 2008 while the railroad industry generally reports declining tonnage as economic activity slackens.
Long-time Anadarko Basin oilfield supplier Danlin Industries of Thomas became a first-time rail user last month as trucking costs escalate and driver shortages spread. The locally owned, full-service company markets a wide variety of specialty chemical products used in oil and gas production throughout an 11-state territory.
A 6,000-square-foot, Company-owned warehouse in Clinton is being transformed into a base for maintenance-of-way personnel, materials and supplies. Renovations will include a new exterior shell and an addition incorporating office space and crew quarters that will relieve crowding in Farmrail’s other in-town facilities.
Farmrail thanks its many customers who gave their political support to an extension of the expiring three-year federal tax credit for short-line railroad infrastructure improvements. This incentive enabled the Company to enhance safety and reliability by increasing its outlays for track and bridges by more than 55% from the level of the preceding three years.
Farmrail’s recovery from last year’s unprecedented flooding and related physical damage, workforce stress, and financial consequences is complete. The Company enters 2008 with a smoothly functioning service plan and the broadest customer base, best track structure, largest locomotive fleet, and strongest financial condition in its history.
The downturn in national rail traffic has given a boost to temporary car storage. The on-line inventory has included off-lease equipment, new boxcars, hoppers and tanks awaiting their first users, and the longest trains ever seen on Farmrail – strings of intermodal container cars occupying more than 10 miles of track in outlying locations.
In support of the recently adopted system operating plan, GNBC has purchased three 2,000-horsepower Electro-Motive GP-38AC locomotives, increasing the Farmrail fleet to 21 units. The additional power will provide greater flexibility to handle new customer locations, variously sized trains, and seasonal traffic peaks.
A new operating plan is improving transit time for all customers as the extended effects of severe flooding are overcome. It involves running more frequent, shorter trains over smaller territories and coordinated meets to expedite traffic flows. The objective is same-day or next-morning service for most customers and second-day deliveries to the system extremities.
First loads are expected this month for three new rail customers: Ventura Refining and Transmission, Thomas (petroleum distillates); Hampel Oil, Sayre (lubricants); and Livestock Nutrition, Altus (animal feed). These are good signs of an improving regional economy driven mainly by agriculture and natural resource extraction.
The farmer is a winner in western Oklahoma this year. Though the winter wheat harvest fell short of early expectations because of extended wet weather, the region produced some of the better wheat in the nation, and market prices have remained high. The unusual moisture also has improved the outlook for secondary crops.
Unprecedented spring rainfall transformed the “dust bowl of America” into a mud bowl, delaying and then prematurely ending the winter wheat harvest. Farmrail maintenance personnel did a fine job of making tracks passable where flooding and washouts had occurred, limiting a partial service interruption to just four days.
The Company’s GNBC subsidiary soon will take delivery of 48 more covered hoppers for grain-shuttle service to and from terminal elevators in Enid. This purchase replaces older cars that had exhausted their useful lives for interchange purposes and increases the total fleet to 119 units.
This year and next mark the 100th anniversary of construction of Farmrail’s “Orient Line” through southwestern Oklahoma. Planned to connect Kansas City with the Mexican port of Topolobampo, the ambitious 1,451-mile project never reached its destination due to financial difficulties that led to bankruptcy in 1908.
Preparations are under way for a potentially huge winter wheat harvest, starting next month. Additional locomotives, railcars and trainmen are being mobilized to deal with an expected overflow of country elevator capacity and resulting railroad congestion in moving a bumper crop to market.
The shop force has turned out another masterpiece of workmanship. GP-10 locomotive 1981’s unique paint scheme commemorates the Company’s 25th anniversary and the rich heritage of the routes it operates – Frisco, Rock Island and Santa Fe – as all reach or near a century of existence in western Oklahoma.
A slowing domestic economy has increased demand for railcar storage, including entire intermodal unit trains as well as smaller blocks. Farmrail’s 22 years of experience in the storage business, system capacity of more than 2,000 cars, dual Class I connections, and car-repair capability make it an attractive location for fleet owners’ out-of-service equipment.
As a result of the worst harvest since 1957, wheat comprised only 24% of Farmrail’s carloadings last year, down from 60% as recently as 2000. Increased volumes of other commodities, notably oilfield supplies, crushed stone, and feed grains, have diversified the traffic mix considerably in recent years.
Twenty-five years after its founding there, Farmrail has established a new presence in Elk City by purchasing the assets of American Milling’s railcar-repair facility. This acquisition will enable FMRC to perform a wide range of running and heavy repairs on equipment bad-ordered in a region without ready access to other shops.
November 18 marks the 25th anniversary of Farmrail service between Clinton and Elk City, begun in the aftermath of the Rock Island railroad bankruptcy and a time of booming oilfield activity. We salute the people of Elk City for their foresight in recognizing the desirability of preserving access to the national railway network, for their town has become the largest traffic center on the expanded Farmrail system.
Farmrail soon will become the first railroad of any size to use hand-held electronic devices to record freight-car movements. This technology saves trainmen time and improves reporting speed and accuracy by eliminating traditional paperwork.
More than three-quarters of Farmrail’s 46 active customers now bill their rail traffic electronically, either directly with the popular “ShipperConnect” program or through third-party agents and connecting carrier websites. This time-saving technology greatly improves reporting accuracy and minimizes the risk of service errors.
For the first time since the last system extension in 1993, June will not be the peak traffic month this year. The short wheat crop, market conditions, and available storage caused elevator managers to curtail shipments normally made during the harvest period.
Next November 18 marks the 25th anniversary of Farmrail’s founding as a 35-mile short line linking Clinton and Elk City at the time of a previous energy boom. The Company expanded to its present 347-mile regional configuration by absorbing lines of both former connecting carriers, Burlington Northern and Santa Fe, which merged in 1995.
The benefit of diversification will be evident in the coming months after the worst wheat harvest since 1957. System traffic will be down in 2006 for the first time in five years.
Groundwork is in progress for two new rail customers, a pipe yard in Elk City's industrial park and a lubricant-distribution terminal at Sayre, as Anadarko Basin gas-development activity remains at a high level.
While unusually dry growing conditions seem certain to affect this year’s winter wheat crop, natural gas development activity remains at a high level. Inquiries from new businesses seeking to support Anadarko Basin drillers are an encouraging sign of confidence in the future of western Oklahoma’s major source of “clean” energy.
Farmrail’s dependence on the annual western Oklahoma wheat crop continues to decline as other rail business enlarges and diversifies the traffic base. Wheat accounted for just 39% of carloadings in 2005, down from 60% as recently as five years ago.
Farmrail will receive 92 carloads of pipe this month for transloading at Elk City. It is destined for a new transmission line being laid in Roger Mills County.
Farmrail enjoyed record traffic and revenues in 2005, accompanied by a much higher level of spending on infrastructure improvements. A three-year federal investment credit, supported by District 3 Congressman Frank Lucas and a substantial bipartisan majority in the House, provided additional funds to enhance the safety and efficiency of small railroads throughout the country that now operate 30% of the national rail network.
Farmrail has acquired 32 more open-top hoppers for movements of crushed stone. The enlarged fleet of 76 cars will provide capacity to handle up to 350,000 tons annually.
Farmrail is a joint-venture partner in Marquette Rail, a newly formed short line that begins operation of 129 miles of lines in western Michigan leased from CSX Transportation on November 12. All administrative support for the new company is to be performed at our Clinton headquarters.
The most unusual traffic in the railroad’s history, structural components for a new windpower project, are being shipped to Frederick this month from abroad. The oversized loads arrive in specially designed unit-trains for transloading and truck delivery to the development site north of Lawton.
Increased track work is evident throughout Farmrail’s 347-mile system, spurred by a three-year federal tax credit for infrastructure improvement enacted last October. This program will strengthen the most active segments to handle the higher level of traffic now moving over the railroad.
Custer City Co-op has become a regional distribution point for liquid and dry fertilizer to be received by rail and delivered to users by rail or truck. The new facilities - 8,000 tons of flat storage and tank capacity of 4,500 tons - should reduce costs for area farmers by allowing product to be purchased and transported during the off-season for nearby storage.
July 22 marks the 10th anniversary of our Finger Lakes Railway affiliate in upstate New York. The 154-mile cluster of lines confirms the possibilities for revitalizing properties neglected by previous owners. Improved service and aggressive marketing has raised annual traffic from less than 6,000 carloads to nearly 16,000 last year. FGLK not only is doing more business with its inherited customers, but has caused others that had given up on rail transportation to return and also attracted several new industries to locate on line.
Oilfield supplier Weatherford Fracturing Technologies becomes a new customer next month. It will occupy an existing warehouse in Clinton and construct a storage tank for sand formerly trucked into the Anadarko Basin.
Another excellent western Oklahoma wheat crop is expected to be harvested starting this month, placing heavy short-term demands on railroads to move what cannot be stored in country elevators. Car supply and system congestion are likely to cause problems, since the former practice of positioning 1,000 hoppers in advance will not be possible. As was the case last year, trains will deliver some empties from the north and return with wheat to terminals at Enid to ease the heavy flow of grain to export points.
The unloading spur at Elk City’s new stone-distribution terminal will be extended and double-ended to improve switching efficiency for increased traffic there. Construction is to take place during June and July, following completion of several pre-harvest maintenance projects.
Though rail safety statistics continue to improve in terms of train incidents and employee injuries, the number of senseless and preventable deaths from car-train collisions and illegal trespassers remains discouraging. The 849 people killed last year represent a slight increase from 833 in 2003. While “Operation Lifesaver” and various other safety initiatives have been beneficial, there is no substitute for common sense on the part of the public.
Faced with rising maintenance budgets, state transportation officials are realizing the importance of remaining rail lines in reducing shipments of heavy commodities on the highways. Since a 100-ton railcar lading represents four truckloads and a single semi-trailer inflicts pavement damage equivalent to 9,600 automobiles, one benefit of rail transportation becomes quite evident.
Five new rail-served customer facilities were built or reactivated on Farmrail lines during 2004, a good sign for the economy of western Oklahoma. In addition to Elk City's new stone terminal, they included a grain load-out at Hobart, drilling-fluids supplier at Clinton, and liquid fertilizer installations at Custer City and Frederick.
Our employee-owners wish all Farmrail's customers, suppliers, neighbors and friends the best of holiday seasons and look forward to a safe and rewarding new year.
The final phase of 2004 track maintenance and improvement calls for the installation of an additional 12,000 ties, bringing the record total for the year to about 28,000. Rather than dealing with identified problems strictly from a safety standpoint, this program should bring extended portions of the railroad into compliance with Federal Railroad Administration Class 2 track standards for several years, such that slow orders and normal maintenance needs can be minimized in those areas and future work concentrated elsewhere.
Several freight customers already have taken advantage of electronic billing, now offered by Farmrail as a free service enhancement. This time-saving feature improves the accuracy of data transmissions and reduces the risk of clerical errors that can result in shipment delays or misroutings.
Champion Drilling Fluids of Oklahoma City is consolidating its operations serving the Anadarko Basin from four locations to a single facility at Clinton. Construction of a spur track off the State-owned "Sunbelt Line" will begin soon to provide rail access to an existing building now occupied by Champion and additional acreage available for industrial development.
Western Oklahoma enjoyed its best harvest since 1998, as favorable weather produced above-average yields and brought the crop in early and quickly. Farmrail moved 6.1-million bushels between May 26 and June 30, equivalent to 7,168 truckloads.
Farmrail's power roster increased to 19 units with the purchase of an additional GP-10 locomotive, increasing the Company's ability to handle heavier tonnage.
"Quartz Mountain Flyer" passenger excursions will be offered to the public on eight Saturdays this year, beginning July 3. Two-hour narrated round trips for up to 130 persons will depart from Quartz Mountain (intersection of Routes 44 and 44A) at 10:00 a.m. and include a brief stop-over at Lone Wolf. Coach ticket prices are $15 for adults and $10 for children aged 4 thru 12; infants ride free. A very limited number of one-way locomotive cab rides are available for an additional $25. See the full 2004 Public Excursion Schedule and then call 580-846-9078 or e-mail firstname.lastname@example.org for information and reservations to assure seating. Major credit cards are accepted, subject to 24 hours' advance notice of cancellation. Follow up the train ride with lunch at the spectacular Quartz Mountain Resort, an afternoon enjoying the recreational amenities of Quartz Mountain Park, and overnight accommodations if desired. The "Flyer" is a cooperative presentation of the friendly people of Lone Wolf, Farmrail and Oklahoma Department of Transportation.
Possible railcar shortages for the coming harvest affect planning by railroad and shippers alike. Burlington Northern Santa Fe advises that it may unable to supply hoppers for early positioning due to unusual demand throughout its system. A limited supply of guaranteed cars can be purchased on the open market, but tariff orders for interline movements will be filled only by lottery. Elevator managers therefore must be prepared to deal with potential overflow conditions. GNBC’s car fleet will be used only for local traffic to the Enid terminal in order to access additional storage capacity. All orders should be placed with Cathy Pierce at 800-933-7345.
Farmrail's GNBC subsidiary has won the American Short Line and Regional Railroad Association's 2003 Gold Safety Award for carriers of its size. Neither it nor FMRC experienced a reportable employee injury during the year.
Anyone who thinks that a train ride isn't very romantic should consult the young man from Elk City who proposed (successfully) to his sweetheart on a Valentine's Day excursion organized by the Grandview Assembly of God. Two packed carloads of romantics not only enjoyed his good fortune, but also crisp winter weather, tasty food and festive decorations on a three-hour round trip to Clinton.
District 3 Congressman Frank Lucas is among 265 House co-sponsors of federal legislation that would provide tax credits for small railroads to invest in needed track maintenance and upgrading. Many rural carriers like Farmrail operate on infrastructure designed and built nearly a century ago, when the typical loaded freight car weighed about 100,000 pounds. The newest generation of rolling stock weighs 286,000 pounds and cannot be handled safely or at reasonable speeds on many branches. The nation's 500-odd short lines are critical competitive transportation links between outlying communities and the inter-city main-line network that must be technologically compatible. Rep. Lucas and the majority of his colleagues recognize that rebuilding these rail lines keeps country elevators and other local industries competitive in their markets, is essential to future industrial development, and helps to reduce highway pavement damage by heavy trucks (one railcar is equivalent to up to four truckloads). Towns that have lost rail service aren't quite the same once the tracks have been removed.
FMRC is constructing a 1,500-foot spur to a new stone-distribution terminal being built by Elk City Industrial Authority on a 160-acre industrial tract in that community. Granite aggregates will be shipped by rail from the Martin Marietta quarry at Long, Oklahoma in a dedicated fleet of 44 open-top hoppers being acquired by FMRC and the Authority. Start-up is expected in the first quarter of 2004. The high-quality rock will be used primarily in paving projects throughout western Oklahoma and the Texas Panhandle.