Genesee & Wyoming likely to ship more coal, crude carloads
Washington (Platts)--4Dec2012/532 pm EST/2232 GMT
Coal and coke will continue to be the biggest commodity group by
revenues in North America for Genesee & Wyoming, once its $1.4 billion
purchase of RailAmerica is finalized by the US Surface Transportation Board,
a company executive said Tuesday.
T.J. Gallagher, the Greenwich, Connecticut-based short line railroad
holding company's chief financial officer, speaking at an investors'
conference in Chicago, said the combined railroad will have a diverse
commodity mix and geographic footprint.
G&W agreed to buy Jacksonville, Florida-based RailAmerica, also a
short line railroad holding company, in July and closed the deal in October.
It is awaiting approval by the STB.
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In his comments Tuesday, broadcast over the Internet, Gallagher said the
company expects a decision from the STB no later than January 4.
Once the acquisition of RailAmerica is complete, G&W will operate 108
railroads in North America, Canada, Australia and Europe. Using 2011 figures,
the combined company earned $1.1 billion in pro forma revenues and derived
11% of its pro forma revenues from coal and coke.
Worldwide, agricultural products will be the combined company's
largest commodity group, due to G&W's existing operations in South Australia.
Agricultural products would make up 13% of commodities by revenue, using 2011
In North America, Gallagher said, growth opportunities for the new
company, particularly in energy, are likely to be substantial.
A G&W short line, the Portland & Western Railroad, currently serves
the Port of St. Helens, Oregon, along the Columbia River west of Portland. It
is the site of two proposed coal export terminals, and would allow the
railroad to take advantage of the potential for coal exports to Asia,
Gallagher also noted growth opportunities in crude oil and natural
gas. He said the company is shipping Bakken Play crude to St. Helens but
didn't provide additional details.
With regards to natural gas, G&W announced Monday it will start
serving a new natural gas liquids fractionation hub in Scio, Ohio, being
built by Utica East Ohio Midstream.
The facility will be served by Columbus & Ohio River Rail Road, a G&W
short line, and the company expects it will ship 10,000 carloads from the
Though one small project, it adds up, Gallagher said.
"Ten thousand carloads, if you multiply that by our average revenue
per carload, $500, there's $500 million in revenues," Gallagher said. "With
crude terminals, you are bringing in unit trains of crude. You could see
similar types of revenues."
Gallagher said the company has railroads uniquely situated in the
regions covered by the Utica and Marcellus shales, both of which should
continue to provide growth opportunities in the future, not just in carloads
of drilling pipe and frack sand, but also in crude,
Responding to an investor question about how big of an opportunity the
company has in the Utica and Marcellus shales, Gallagher said it's soon to
"The Utica region is only two or three years behind Bakken, and they're
only now drilling and developing the infrastructure, so were not sure how big
it can be," he said.
--Andrew Moore, email@example.com
--Edited by Richard Rubin, firstname.lastname@example.org