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9/19/2011    MOW



Maintenance Of Way Article
Iowa Pacific Holdings to upgrade Texas-New Mexico's track, motive power



Maintenance Of Way
On Friday, Iowa Pacific Holdings L.L.C. (IPH) announced plans to complete “extensive” track upgrades on a Permian Basin oilfield line operated by subsidiary Texas-New Mexico Railroad (TNMR), according to the holding company.

The short line operates the 100-mile line between a Union Pacific Railroad connection in Monahans, Texas, and Lovington, N.M. The line was built in the 1920s when the Permian Basin oilfield was first developed.

IPH has spent about $10 million the past two years to upgrade the track, mostly for crossties and surface/alignment improvements. A new, multi-year track improvement program will cost more than $20 million and include the installation of new, heavier rail to accommodate increased volumes of heavy cars carrying sand, crude oil and other oilfield commodities, IPH officials said in a prepared statement. In addition, the company plans to upgrade TNMR’s locomotive fleet and build a new locomotive maintenance facility in Eunice, N.M.

“Also, we are working to develop an expanded switching facility at Monahans to improve the flow of traffic. This represents a major commitment for us in the Permian Basin, and we are making these investments as a result of comparable investments made by our customers in new shipping facilities attached to our rail line,” said Steve Gregory, IPH’s executive vice president of marketing. “New developments in drilling technology have re-energized this oilfield, and our customers are telling us rail traffic is solid for at least a 10-year period.”

TNMR has experienced “massive” traffic growth because of rapidly expanding oil and gas drilling/production in the Permian Basin, IPH officials said. Carloads have tripled so far in 2011 vs. 2010 and currently are tracking at an annual rate of 7,000 cars per year, they said.

“New customers coming on stream in 2011 and 2012 will result in another tripling of carloads to 21,000,” IPH officials said. “In addition, a proposed crude oil unit-train facility is under development, and could add another 30,000 annual carloads to the railroad as early as third-quarter 2012.”

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