Long-Stalled $1.5B Utah Railroad Project Now On Right Track
Plans to build an 80- to 100-mile-long railroad to transport crude oil, natural gas and agricultural products from Utah’s northeastern Uinta Basin and the surrounding area to refineries have been debated, studied, partially planned and abandoned multiple times since the early 1980s.
But while past attempts have been unsuccessful, this spring and summer, proponents of the project achieved several key goals, raising hopes the project may be on track this time.
Currently, products from the basin are carried overland by truck. The natural gas and waxy crude oil produced there now go to refineries near Salt Lake City.
But a railroad would connect the area to established lines in the South and West. That would allow the oil to be sent to Gulf Coast refineries, where proponents say they will get better prices for their products.
“The Uinta Basin has only been restricted from Gulf Coast and overseas refiners as a result of limited takeaway capacity,” said Mark Michel, a managing partner at Drexel Hamilton, in a company statement. “We are going to change that.”
“A few things are different this time than in the past,” adds Michael McKee, executive director of Utah’s Seven County Infrastructure Coalition, which has been promoting the project. “The studies and work done in the past have all been helpful and informative and helped us get to this point. We’re further along in the process than we’ve been before.”
Last year, proponents settled on a public-private partnership arrangement to deliver the project. A national RFP launched earlier this year resulted in the selection of New York-based Drexel Hamilton Infrastructure LP, which agreed to provide the estimated $1.5 billion in design and construction costs through private financing. Drexel Hamilton will partner with Fort Worth-based Rio Grande Pacific Corp. in a joint venture to build and operate the line.
McKee says the group has the support of the Utah congressional delegation, as well as state and local leaders.
The planning phase of the project, involving public meetings and comment, is nearing an end. Proponents had favored a route known as Indian Canyon, but public input encouraged a new preferred route, known as Whitmore Park. It will shift the line farther from some rural residential areas, and the new route has been included in the National Environmental Impact Study.
According to Mark Hemphill, senior vice president and program manager for Rio Grande Pacific Corp., the environmental impact statements for the four proposed routes will soon be sent to the Surface Transportation Board (STB) for review.
Not Like Building a Highway
Hemphill, a veteran railroad builder, was hired by Rio Grande Pacific after 13 years working with rail projects for international engineering and architecture firm HDR.
“I’ve actually been involved with this project since about 2014 when some of the counties got funding from the state to do a study for a railroad line with the Utah Department of Transportation, and HDR led that study,” he says. “At that time, the costs looked like they were too high and the project was dropped. The DOT had looked at this as a public-works project that included some highway infrastructure along with railroad infrastructure.
“A railroad is not like a highway for a lot of reasons,” he adds. “In the end, I don’t think building a commercial railroad was what the state was looking for. That is why we’ve ended up with the public-private partnership we have now.”
Hemphill says his immediate role will be working with Drexel Hamilton to finalize agreements with producers in the region, then get the line built and into operation.
“There is not a project until shippers agree to ship product on the railroad,” he says. “Just like any infrastructure that is privately owned, nothing happens until you have customers. No one is going to build a billion-and-a-half-dollar railroad on an ‘if you build it, they will come basis,’” Hemphill says.
The team has set itself a date of March 2020 to have agreements from shippers confirmed, he adds.
Hemphill says another challenge ahead of the team will be earning the official endorsement of the Ute Indian Tribe, which owns land in the project area.
“The coalition is ahead of schedule and ahead of where I thought they’d be, and one reason for that is they’ve had a productive relationship with the Ute Tribe. They (the tribe) are a potential equity partner in the railway. The tribe has not officially backed the railway, but they are considering it, and it is going through their process,” says Hemphill.
“The preferred route passes through tribal land. It’s also important because the tribe controls about a third of the mineral rights in the basin. About a third of the oil-producing land is tribal land, so they are always going to be a very important part of the project,” he adds.
Hemphill says that after review by the STB, and if commercial agreements are completed by the March 2020 date, organizers will finalize designs.
“Once we get those agreements, we’ll do a selection of an engineering firm for final design. We will likely do a CM/GC delivery for the construction, and our goal is to start construction as soon as the decision (from STB) is issued—so if it is issued in December of 2020, we’ll start construction in January of 2021,” Hemphill says.
“We figure two construction seasons to build the railway. The long-lead item will be boring the 3.1-mile tunnel that’s on the preferred route,” he adds.
The approximately 81-mile Indian Canyon route and the preferred Whitmore Park route will travel along just 10 miles of mostly flat land. The bulk of the track will be built on slopes with elevations ranging from 4,500 to 9,000 ft.
Other routes being considered pass through what is known as Argyle Canyon, also to the south and west of the basin, as well as routes headed east into Colorado with a terminus south of Craig. The east-running option would be more than twice as long as the preferred route but travels over less challenging terrain.
According to organizers, if the project is approved, it will be the first greenfield railroad built in the United States since the late 1970s when the Burlington Northern from Chicago constructed a 126-mile line to access coal deposits in Wyoming’s Powder River Basin.