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3/2/2011



Rail News: Rail Industry Trends

Watco, Kinder Morgan to build transload centers for crude oil


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Watco Cos. L.L.C. and Kinder Morgan Energy Partners L.P. recently reached an agreement to jointly construct and operate several rail transload facilities in key markets for loading and unloading crude oil and other oil/gas industry commodities.

The markets include Dore and Stanley, N.D., Stroud, Okla., and Houston. Watco and Kinder Morgan also plan to build several loading facilities in south Texas’ Eagle Ford Shale area. Each facility will be designed to handle large unit-train volumes and manifest train commodities, such as frac sand, pipe and drilling supplies.

To open in September, the first phase of the Dore transloading facility, which will include Pioneer Oil L.L.C., will feature more than 10,000 feet of track and warehousing space. To open in October, the Stroud facility will provide customers direct access to Cushing, Okla. The other facilities are in the design phase and are slated to launch operations in first-quarter 2012.

The network of transload centers “will give our customers multiple options to ship by rail and provide them with a seamless solution from key production areas to key destinations,” said Kevin Goins, senior vice president and chief operating offer of Watco Transload and Intermodal, in a prepared statement.

In December, Kinder Morgan and Watco reached an agreement under which Kinder Morgan will invest up to $150 million in Watco through 2011 in exchange for a preferred equity position in the short-line holding company. Watco owns and operates 22 short lines, 23 industrial contract switching locations, 14 rail-car repair shops, four locomotive shops and 19 mobile mechanical shops; and manages 12 transload facilities, seven warehouses and one intermodal terminal.


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