Union Pacific expanding operations in Permian Basin
It’s no secret that the oil boom affects many aspects of life in the Permian Basin, and now Union Pacific Railroad is responding by expanding with millions of dollars worth of projects under way.
This month Union Pacific will begin a project to add six tracks to its rail yard. The project is expected to be completed by the second quarter of 2012 with the results aimed at increasing capacity and reducing delays.
“Crews deliver sand and pipe to drilling locations and then in some locations they haul crude oil out of the site. It has brought a lot of employment opportunities to the area,” UP spokeswoman Raquel Espinoza said. “We are spending millions of dollars to expand our infrastructure to make sure we can handle the increased demand.”
That’s about $10 million on this project, she said, which will more than double the existing capacity of the yard at Business Interstate 20 and JBS Parkway, which currently has five tracks. Espinoza said drilling companies contract the railroad company to haul their goods, and the need has increased in the past year enough to warrant expanding the Odessa yard. A new yard with four tracks will also be constructed in Monahans at a cost of about $17 million.
“It’s definitely a healthy investment that we’re making here. But certainly we’re also supporting the drilling efforts in Eagle Ford Shale in South Texas as well,” Espinoza said. “It’s one of those things that we’re perfectly suited to support because the rail lines are already there.”
Because of the sudden need for the extra capacity, Espinoza said Union Pacific paid an additional fee to expedite the process to get the Odessa and Monahans yards finished within a year.
Guy Andrews, executive director of economic development for the Odessa Chamber of Commerce, said he didn’t expect the rail growth to be spurred by the oil boom.
Although oil is the main factor, the Summit Power Group’s Texas Clean Energy Project also is causing some of the growth, he said.
“We’ve had booms before, but it’s a nice change to see that this particular boom seems to be driving it,” Andrews said. “It makes it less expensive to ship the pipe in and you can obviously ship a whole lot more pipe in by rail that way.”
The rail company is also shelling out about $41 million for additional tracks next to existing tracks that will add capacity, Espinoza said.
Other projects currently under construction, such as a switch at Interstate 20, are also taking place throughout the Permian Basin, she said, adding millions of more dollars to the equation.
Espinoza said the company has hired 54 employees since January 2011 and continues to hire employees to work the extra capacity it is building.
Andrews said although oil and large companies will be serviced first in Union Pacific’s expansion, the company also most likely will serve the smaller companies, as well.
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