September 4, 2014

Officials in North Dakota press BNSF on rail delays

Fort Worth-based BNSF Railway says it’s spending $390 million on expansion and maintenance projects in North Dakota to handle record grain volumes and soaring oil shipments.

Officials from North Dakota and other upper Midwestern states urged U.S. regulators Thursday to pressure railroads to fix the logjams that are blocking grain shipments as harvest season approaches.

Congestion on the rail lines operated by Fort Worth-based BNSF Railway and Canadian Pacific Railway, caused by a harsh winter and a growing demand for rail cars to accommodate North Dakota’s oil boom, is costing farmers millions of dollars, Sen. John Hoeven, R-N.D., told the Surface Transportation Board at a hearing in Fargo, N.D.

As grain produced last year sits in storage, waiting for trains to carry it to market, the bottlenecks may get worse as an anticipated record grain harvest begins, officials warned.

“There’s great apprehension in how things will go this fall,” Gov. Jack Dalrymple said.

In June, the board ordered the rail lines to provide weekly updates on how they were addressing the bottlenecks. Regulators can order railroads to prioritize certain shipments over others, although that power is rarely used. Dennis Watson, a spokesman, said the board intervenes only to avoid substantial adverse effects.

Rail executives said that they are investing hundreds of millions of dollars to improve the system and that extreme measures by regulators aren’t necessary. The railroads disputed criticism that that they are favoring crude oil over agricultural products.

Earlier this year, BNSF said it would hire 5,000 workers and add 500 locomotives to expand its network and ease congestion. The company, owned by Warren Buffett’s Berkshire Hathaway, has already added more than 4,700 workers and now plans to hire up to 6,000, spokesman Michael Trevino said.

It has taken possession of 339 new locomotives this year, including some being made at a General Electric plant in far north Fort Worth.

In all, BNSF said it’s spending $390 million on expansion and maintenance projects in North Dakota this year, in part to handle record grain volumes. Since 2009, traffic in and out of North Dakota has increased by 144 percent on BNSF.

Many complaints and questions were directed at Canadian Pacific, which officials said had done a poor job communicating with its customers.

John Brooks, a CP vice president, told regulators that a “perfect storm” of bad weather and growing demand created congestion on the line and that the railroad is working through it. The especially cold winter meant trains couldn’t operate as efficiently as normal, and backlogs at hubs in Chicago and the Twin Cities rippled throughout the system, he said.

CP and BNSF are trying to persuade customers to use more trains dedicated only to hauling grain instead of mixing grain cars with other commodities to improve speed. They are also working with shippers to find alternative routes to avoid congestion between St. Paul, Minn., and Chicago.

The congestion reflects a downside to an oil boom that’s created thousands of jobs and millions in revenue for North Dakota, home to the Bakken formation.

Oil production now exceeding 1 million barrels a day has outpaced pipeline construction. About 60 percent of the crude produced in North Dakota in August left by rail, according to the North Dakota Pipeline Authority.

Staff writer Steve Kaskovich contributed to this report.

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