Tuesday, June 12, 2012

Short line infrastructure grows for nat gas access

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Short line infrastructure grows for nat gas access

Pennsylvania's Lycoming Valley Railroad will be the beneficiary of a new industry track construction project near Muncy, Pa. The project involves building 2,300 feet of new track and restoring another 1,800 feet of existing track.

nat gas drill crewThe project will improve rail access to the existing Koppers-Susquehanna Plant and provide rail access to Halliburton's new gas drilling support complex, a 55-acre site, which processes sand, minerals, chemicals, and others products used in natural gas development.

The SEDA-COG Joint Rail Authority (JRA), which is overseeing and administering the project, funded the project through a state grant to the Industrial Properties Corp. (IPC), affiliated with the Williamsport/Lycoming Chamber of Commerce.

Meanwhile, Credit-Suisse in early June issued an exhaustive report on Southwest Energy (SWN) that is full of useful stuff about the nat gas biz in general. Marcellus Shale et al are included under the "unconventional production" rubric.

"While we share the market's near-term pessimism on gas given bloated inventories as well as limits on coal-to-gas switching this summer, we believe an under-appreciated and under-analyzed part of the supply equation is potential declines in conventional production, which is generally at the higher-end of the cost curve... Our model suggests conventional production peaked in 1Q12 and is poised to move lower given weak gas prices and unfavorable drilling economics for conventional drilling... Marcellus Shale should support an 8% annual production growth rate through 2015 ... Lycoming County is one of the three most attractive parts of the [Marcellus] play."

Roy Blanchard

Roy Blanchard is principal of The Blanchard Company and a Contributing Editor to Railway Age.

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