Train traffic dips

When the Stillwater Protective Association held a public forum in Columbus 3 1/2 years ago to discuss potential impacts from increasing coal train traffic on the Montana Rail Link main line, traffic jams was one item discussed.
At that meeting, Columbus Realtor Joyce Kelley, whose office is right across the street from the MRL mainline, talked about traffic jams at the Pratten Street at-grade rail crossing. “Friday afternoons are ridiculous,” she said.

Coal trains
In November 2012, MRL spokesman Jim Lewis told news media that train traffic on the MRL main line could increase by 8-10 trainloads per day if proposed port expansions on the West Coast were approved. The 4-5 additional trains per day, half of them empty returning cars, would transport an estimated 50 million tons of coal per year to Asian markets.
At the time, Lewis said, MRL was running about 15 trains a day across the state, of which five were coal trains, but environmental groups had been claiming that coal shipments to Asia would amount to 50 million to 100 million tons per year and an additional 19 to 37 trains per day on the MRL system. One forecast was as high as 64 additional trains per day.
Lewis responded to the higher numbers in September 2012 by stating that the maximum capacity of the MRL system could be 25 to 30 trains per day. But to get there, the company would need to invest millions of dollars on infrastructure improvements.
That point was supported by former Republican state Sen. Dick Haines of Missoula in an August 2014 opinion piece. A unit train carrying coal averaged 125 cars and was about a mile and a quarter long, Haines said, while a unit train carrying general freight could have 100 cars. Increasing population and consumption rates were the “main drivers” in increasing railroad traffic, he said.
“In order to accommodate a greater volume of traffic, MRL and Burlington Northern Santa Fe would have to build some additional ‘two lane roads’ and sidings at a cost that would be very great, as would be the physical impact on the land and private property,” he said.

Market changes
The likelihood of huge coal shipments on the MRL line in the near future was set back by Arch Coal Inc.’s Jan. 11 announcement that it was filing for Chapter 11 bankruptcy.
Arch Coal paid Montana $86 million in 2010 for the rights to mine 14 state-owned Otter Creek coal parcels south of Ashland, which contain an estimated 1.4 billion tons of coal. The company also invested millions toward building a shipping terminal in Washington for exporting coal to Asia, and the Otter Creek coal likely would be transported on MRL tracks to the west coast terminal.
The second-largest coal producing company in the U.S., Arch Coal missed a debt payment on Dec. 15, 2015 and has $4.5 billion in debt to restructure. It also owes the Montana Department of Environmental Quality more than $65,000 for work on an incomplete environmental impact project for the Otter Creek project.
On Nov. 25 last year, the Tongue River Railroad Co. announced it was putting on indefinite hold plans for a $400 million railroad track to access the Otter Creek coal tracts. The railroad company, which is co-owned by BNSF Railway, Arch Coal and TRCC Financing, said they asked the U.S Department of Transportation’s Surface Transportation Board to suspend the permitting process for the 42-mile rail line because of delays in obtaining a mining permit and the weakening coal market.
As planned, the new railroad would transport coal from the Otter Creek mine to Colstrip, where it would access existing BNSF tracks. The company said it had expected to start mining at Otter Creek by January 2017, but the recent bankruptcy filing could change the company’s plans.
Recent economic trends have changed the overall rail traffic picture in Montana – at least for now. Oil prices are at a 12-year low, falling 70 percent since 2014, which has reduced the number of oil trains from North Dakota. A weakened Chinese economy and the worst start on Wall Street in history has impacted general freight shipments, while federal climate change legislation coupled with lower coal prices have reduced coal shipments.
Coal and grain shipments nationwide have followed an up and down pattern from 2005 to 2014, with coal around 800 million tons per year and grain around 135 million tons per year, while crude oil shipments saw a rapid increase from less than 2 million tons per year in 2005 through 2009 to about 48 million tons in 2014, according to American Association of Railroads figures. But that all changed in 2015.
Total carload traffic nationwide in 2015 was down about 6.1 percent from 2014, AAR reported. Coal shipments were down 27.9 percent, and petroleum shipments were down 20.5 percent.
“Weaknesses in energy and manufacturing, as well as world economic softening, had a negative impact on both carload and intermodal traffic in 2015,” AAR senior vice president John T. Gray said.

MRL furloughs
In November and December last year, MRL furloughed 19 workers in the Billings area, including eight in operations and 11 in maintenance. Lewis cited “inconsistent freight volumes that occur normally in the railroad industry” in explaining the furloughs.
“MRL’s 2015 coal volume was down 14 percent, nearly 20,000 carloads, as compared to 2014,” Lewis said. “We are also forecasting 2016 coal shipments to be down nearly 50 percent as compared to 2014. Cloud Peak Energy and Signal Peak Energy recently announced they would not be exporting 5.5 million to 6 million tons of coal to exports destinations based on poor market conditions.”
Lewis said the rail company’s plans for infrastructure improvements have not been de-railed by the slump in the coal market.
“MRL has invested heavily in our network regardless of volume levels,” he said. “For instance, we invested nearly $60 million in infrastructure and capacity projects in 2015 with volume levels being down nearly 10 percent as compared to 2014. We are also planning to invest $40 million in 2016 despite forecasts that volume will remain on a downward trend.”
Part 3 will look at Montana’s railroad network and its limitations and how MRL is investing in infrastructure to improve service.