Article Appears in the Rice Lake Chronotype

8/21/2014 8:57:00 AM New transload facility plans to have propane by winter
Groundbreaking ceremony launches major propane transload and storage project

Rice Lake Chronotype

Ryan Urban Chronotype staff

Unit trains of propane are expected to arrive in Barron County this fall as a multi-use rail transload facility opens south of Chetek.

Wayzata, Minn.-based Northern Rail & Transload held a groundbreaking ceremony last Wednesday at the 220-acre site just south of 5 1/4 Avenue between Hwys. 53 and SS on the Progressive Rail line.

Another Minnesota company, Alpha Development, is also proposing a liquid propane transload and storage facility on the Canadian National line between Barron and Cameron.

Northern Rail & Transload has all necessary permits to begin construction except a Storm Water Permit for Construction Site from the Wisconsin Department of Natural Resources.

Once fully operational in May 2015, frac sand, agricultural products, forest products and road salt will also be handled at the site, said Northern Rail & Transload CEO Brian Gilbertson. The site will feature a sand drying facility, storage silos and stockpiles. The sand will come in the second quarter of next year from a mine operated by sister company Northern Industrial Sands in the Town of Sioux Creek 6 miles southwest of Chetek, said company general manager Larry McGlumphy.

That mine is also awaiting final DNR stormwater approval before site work begins. Approval for both the mine and transload site is expected in the coming weeks, said Gilbertson.

The company has had purchase agreements in place for both sites for several months.

The transload facility will initially consist of two loop tracks, each able to handle an 110-car unit train. A third loop and several spurs are planned for future storage of 500 rail cars.

The operation will be the largest multi-modal rail facility in rural Wisconsin, said Gilbertson.

The facility will employ 50 people with the potential for 60 additional jobs in secondary businesses, according to a company press release.

Regional need

Gilbertson said this project came into being because the area is underserved by rail transport services. “We found big inefficiencies, especially in this area, for companies needing to be served by rail,” he said. Gilbertson said the timing is also important because a pipeline that historically brought LP to the area is serving a new purpose.

The Kinder Morgan Cochin pipeline, which brought Canadian propane into the region through Minnesota for 35 years, was reversed this summer to transport light condensate oil from U.S. shales to blend with heavy crude oil in Saskatchewan. That loss of 380,000 million gallons of propane supply increases the need to move propane by rail.

“The No. 1 thing we envisioned with this project was propane,” said Gilbertson. LP will be transferred from rail cars directly onto trucks for this harvest and winter heating season, but storage tanks will be constructed on the site next year, said Gilbertson.

One unit train can transport up to 3 million gallons of propane. Railroad work

The addition of the Northern Rail & Transload facility as well as a proposed Global Proppant Supply sand drying and transload site directly south of it stand to greatly increase the amount of rail traffic by next year. That traffic is on a north-south Union Pacific line operated by Progressive Rail that is already serving three sand plants and a handful of smaller users.

To handle that traffic, Progressive Rail is continuing to upgrade the line, which has had at least two derailments in the past 2 years.

Progressive Rail CEO Lon Van Gemert said sections totaling 7 miles will be upgraded with heavier track and 14,000 wood ties will be replaced this fall or next spring. He also said side tracks will be added north and south of New Auburn and that two extra locomotives are available as needed. “You have to remember this railroad was slated for abandonment. It was in pretty rough shape when we inherited it. We dumped a lot of money into it and will continue to dump money into it,” said Van Gemert.

More than $13.6 million has been invested in upgrading the line since 2004, according to Progressive Rail. A setback for Progressive Rail has been a high employee turnover, said Van Gemert. He said after employees gain experience, many are lured away by larger railroad companies that offer higher pay. Progressive Rail is trying to counteract that by offering a set schedule instead of the volatile ones used by larger railroads.

Gilbertson said Northern Rail & Transload will seek a strong workforce by offering pay and benefits on par with or better than similar operations. “We want to hire the best. We want people who want to be here. We want low turnover,” he said.

Business partners

McGlumphy said plans are to hire local workers and contract with local business whenever possible. A qualified worker would be expected to have an industrial background, heavy machinery operating experience, computer and math skills or similar experience. Bids were just put out for site prep work and the company contracted with Rice Lake firm Cooper Engineering for much of the engineering work, he said.

Northern Rail & Transload and Northern Industrial Sand are held by private equity firm Northern Capital Partners.

Northern is in no way involved in another proposed LP terminal and storage facility on the Canadian National line near Barron.

The smaller Alpha Development project will consist of a rail spur holding 30 cars, five rail unloading towers, 360,000 gallons of permanent storage and two fill stations for semi trucks on 16 acres formally owned by Lawrence and Shelly K. Jerome.

Despite a local need for propane after shortages last winter, Gilbertson said he does not believe both facilities are needed. “Only one of us is going to succeed,” he said.

Alpha Development representatives could not be reached for comment.