Energy Demands Driving Rail Car Industry Backlog -- TribLiveBusiness

Updates

Monday, December 8, 2014: see update on Greenbrier at this post.
 

Original Post

TribLiveBusiness is reporting:

There are 124,000 rail cars on back order as of September 30, [2014] according to the latest figures available from the Railway Supply Institute in Washington. That's up 25 percent from June 30, and an all-time high.

The larger manufacturers such as Trinity Industries Inc., FreightCar America Inc., and Greenbrier Co. Inc., have backlogs that represent as much as two years of deliveries at the current rate.

....strong demand for car types apart from tank cars and frack sand, especially for automotive, plastic and grain cars. Coal cars are one of the only car types for which demand remains lukewarm.

McKees Rocks is located in western Pennsylvania (think Marcellus), population, 6,000 or so. From wiki:

In the past, McKees Rocks was known for its extensive iron and steel interests. Also, there were large railroad machine shops, and manufacturers of locomotives, freight and passenger cars, and springs, enamel ware, lumber, wall materials, plaster, nuts and bolts, malleable castings, chains and forgings, tin ware, concrete, and cigars. The Pittsburgh, Allegheny and McKees Rocks Railroad is located in an area known as the "Bottoms."

At McKees Rocks (think Marcellus), according to the linked article:

At least 600 rail cars filled with sand arrive each month by train at Jim Lind's shipping terminal and warehouse in McKees Rocks

They're destined for Marcellus shale wells.

Each hopper car carries 100 tons of the sand, said Lind, president and co-owner of McKees Rocks Industrial Enterprises, one of a dozen companies in the region that handle sand for shale-gas drillers, much of it delivered by railroads.

“Frack sand is white-hot right now,” Sterne Agee analyst Sal Vitale said. It has been one of the principal drivers of the all-time high rail car industry backlog of 124,000 rail cars. That includes tank cars for oil, covered hoppers for sand, grain and other agricultural products, and multi-stack cars for vehicles.

Lind's company handles 3,500 to 4,000 rail cars of sand a year. The demand required him to more than triple employment from 20 to 70 since 2009, he said. “We've added more sites in Youngwood, Sayre and two in Ohio, Niles and Hannibal,” he said.

Switching gears, EOG is using upwards of 14 million lbs of sand to frack a single Bakken well. Divided by 2,000 lbs/ton, that works out to 7,000 tons.

7,000 tons divided by 100 tons of sand/hopper works out to 70 hopper cars. That sounds about right. A 100-unit fracking sand train for one to four Bakken wells depending on how much sand is going to be used.

A reminder: I often make simple arithmetic errors. If this information is important to you, go to the source and confirm the calculations.

This article was of interest to me for two reasons:

• a reminder of the backlog in tank cars for the railroad industry
• the sand-delivery industry in the Marcellus

By the way, it's my understanding the US truck manufacturing industry also has a backlog.