(Reuters circulated the following article on November 7.)
NEW YORK — The biggest U.S. railroad project in a century could get under way next year and ease transport constraints from the primary U.S. coal-mining region, a railroad executive said on Monday.
Construction on a three-year project to carry coal from Wyoming to Eastern power plants could start in late 2006 if an application for $2.5 billion in U.S. government loans is approved, said Kevin Schieffer, chief executive of privately held Dakota, Minnesota and Eastern Railroad (DM&E).
“This is about a lot more than just coal. We have capacity problems all across the country,” Schieffer said on conference call with analysts. “Everybody’s service is going to improve as a result of this,” he said.
The railroad’s plan depends on a loan from the Federal Railroad Administration, part of a $286 billion transportation bill enacted earlier this year. A law authored by South Dakota Sen. John Thune amended the agency’s loan rules to tailor them to the project, Schieffer said. The FRA has to make a decision within 90 days of a completed application.
The 1,300-mile reconstruction includes a new 262-mile rail extension to the Powder River Basin, a region in Wyoming and Montana with vast coal reserves. The loan package would also fund unrelated line upgrades in three states.
Rivals Union Pacific Corp. and Burlington Northern Santa Fe, which jointly operate a line into the region, have struggled to boost capacity to meet demand from utility companies. The railroads are still recovering from two major derailments in the area this year.
Sioux Falls, South Dakota-based DM&E said it could eventually haul 100 million tons of coal a year, once upgrades are in place.
Coal accounts for more than half of all U.S. power generation. Powder River Basin coal is lower in sulfur and can be burned more cheaply.
Schieffer said the success of the project, which faces some opposition from landowners and environmental groups, will ride on demand from utilities.
“Competitors will be off to the races to pick off potential customers,” he said. “If the utility industry allows that to happen, this project will not be built.”
The plan would be the largest new railroad construction in the United States since a 1909 link between Seattle and the Midwest.