BNSF Railway will make capital expenditures totaling almost $4.1 billion in 2013, up about $450 million from the $3.6 billion spent last year on track, equipment, and technology, the company said Friday.
BNSF, based in Fort Worth, Texas, is the first Class I railroad to announce its investment plans for the upcoming year.
About $2.3 billion will be spent on upgrades of network assets, such as tracks, ties and signals, and another $1 billion on locomotives, freight cars and other equipment acquisitions. The spending plan includes about $250 million for continued installation of federally mandated positive train control technology and $550 million for terminal, line and intermodal expansion and efficiency projects.
“This record capital plan continues our long-term focus on ensuring our network is prepared for the growing U.S. demand for freight rail,” Chairman and Chief Executive Officer Matthew K. Rose, said in a statement. “We are focused on investing to meet our customers' expectations and to expand capacity where growth is occurring. Given the importance of our low cost supply chain to the U.S. economy, our privately funded rail infrastructure is well positioned to ensure the U.S. ability to compete in global markets.”
Much of BNSF's expansion activity will focus on building capacity for its fast-growing intermodal and crude-oil franchises. The company's high-tech Kansas City Intermodal Facility is scheduled for completion this year. The boom in crude oil production from the Bakken Shale formation in North Dakota and Montana offers the railroad dual opportunities: moving specialized sand, chemicals, drilling equipment and other materials to the region for energy customers and hauling crude oil in tank cars to refineries.
Last year, BNSF spent $197 million on projects in those states and increased its capacity to transport 1 million barrels of oil per day out of the Williston Basin. The company, part of Warren Buffett's empire, projected in September that its crude volume would reach 90 million barrels in 2012.
In a recent interview with Bloomberg Businessweek
, Rose said BNSF will spend about $200 million this year on infrastructure to get oil from the Plains states to refineries. The company expects crude volume to increase 40 percent and that by the end of the year it will be hauling 700,000 barrels of petroleum per day, he said.
BNSF's network additions will also give agriculture shippers in the region more access to rail transport.
Railroads are playing a major role in distributing oil because the rapid development of the shale fields in the Plains and other parts of the country has taken place outside traditional pipeline networks. Railroad infrastructure can be built much faster than pipelines and provides energy producers benefits such as market flexibility, product integrity and faster delivery to refineries. - Eric Kulisch