BNSF Railway
Grand Forks, ND
September 18, 2013
Matthew K. Rose
Chairman and Chief
Executive Officer
Rail is making a difference in
domestic crude growth
Topics
• Birth of crude by rail
• Fast track to growth
• Value of rail
• What’s next
The Birth of Crude by Rail
BNSF in North Dakota
For more than a century, BNSF Railway has played an
important role in North Dakota’s economy
• BNSF employs nearly 1,500 in ND and
has hired more than 240 new
employees in 2013
• New or expanded BNSF served facilities
represent investments worth $390
million creating more than 680 jobs in
ND (2010-2012)
• BNSF has invested more than $540
million in ND for capacity expansion
and maintenance (2010-2013)
Ag Shuttle Network as the Model
BNSF learned from our record
with agriculture customers for building
a strong supply chain network
BNSF Shuttle Network
Fast Track to Growth
Growth in Crude Rail Shipments
BNSF Crude Volumes
592,000 bpd average in July, 2013
BNSF Total Volumes
(000s bpd)
Manifest
616
Unit Train
571
499
418
371
329
299
215
181
150 154
120
54
14
40
2010
42
78
58
Feb
Apr
May
2012
Aug
71
45
592
33
70
64
434 452
Jul
626
68
74
57
Jun
655
67
71
43
Mar
66
68
230 258
204
178
139 167
106 114
44
2011 Jan-12
2010 2011
40
48
235
261
82
440
522
69
638
306
Sep
336
Oct
504
587 581 558
547 567
366
Nov
Dec
Jan
Feb
Mar
Apr
May
2013
Jun
Jul
North Dakota Unit Train Rail Facilities
BNSF crude shippers invested nearly $1 billion
developing 11 new Bakken origin facilities
1.Dec-09
2.Jun -11
3.Nov-11
4.Nov-11
5.Mar-12
6.Apr-12
7.May-12
8.Jun-12
9.Sep-12
10.Nov-12
11.Aug- 13
Crude Transportation Package
Upstream, midstream or downstream, operations are
mainstream to the mission of BNSF Railway.
Upstream:
•
Sand
•
Pipe
•
Aggregate
Midstream:
•
Crude Oil
•
NGL
Downstream:
•
Fuels
•
Asphalt
Rail is Filling the Gap
Relieving U.S. Oil and Gas Transportation Bottlenecks
20%
OTHER
6%
RAIL
74%
PIPELINE
2010 Williston Basin
Production
69%
RAIL
23%
PIPELINE
8%
OTHER
2013 Williston Basin
Production
11
Value of Rail
Rail is Providing Unique Value
• Market Distribution Flexibility allows producers to ship in
multiple constructs and to refineries throughout the U.S.
• Investments in infrastructure, people and process ensures
Reliable Transportation Services for producers.
• Decades-long commitment to Safe Operating Practices helps
prevent accidents in the first place.
Vast Origin Network Provides Flexibility
Proving access to all of the nation’s western shale plays
Crude Origin Facilities
14
50 Destination Facilities by end of 2014
West Coast:
19 Destination
Facilities
East Coast:
11 Destination
Facilities
Mid-Continent:
12 Destination
Facilities
BNSF Network
Other Networks
Crude Destination Facilities
Unit Train Facility
Manifest Facility
In-Development Facility
Gulf:
19 Destination
Facilities
15
How Have we Responded Today?
In 2013, BNSF
plans to invest
$400 million
on capacity
initiatives to
support crudeby-rail growth
Safe Crude Oil Rail Transportation
• Rail is one of the safest ways to transport crude oil and hazardous
materials
• 99.997% of rail industry shipments of hazardous materials reach their
destination without a release caused by a train accident
• BNSF hazmat releases continue to decline even as volumes grow
BNSF Total Hazmat Releases
BNSF Number of Hazmat Shipments
250
200
150
216
221
195
172
165
162
169
144
100
50
0
110
105
135
105105
92
112 96 99
80
21
17
17
17
17
23
16
10
12 12 15 10 15 8 15
14 9
10
Non-Accident
Accident
Trend
What’s Happened in the Past 12 Months
Safety: FRA Emergency Order 28 & Rail Voluntary Measures
• The rail industry has exceeded FRA Emergency Order 28 by
implementing tighter controls on the commodity mix.
•
The industry is applying provisions of the Emergency Order to:
•
1 or more loads of Toxic Inhalation/ Poisonous Inhalation materials, including ammonia
solutions, Spent Nuclear Fuel or High Level Radioactive Waste
•
20 or more loaded tank cars of any hazardous material
•
Identified trains will not be left unattended on main line or siding tracks
•
Specific location exemptions require lead locomotive to be locked and the
operating control handles removed
•
All relevant information such as weather and grade for these trains must be
recorded, verified and confirmed between the train crew and dispatcher
What’s Next
Opportunities
• Continued expansion in Bakken
• New production in non-Bakken shales
• Pipeline to rail connections will expand
options for customers
• Destination development continues
• Canadian rail development is coming
20
Challenges
• Spreads have narrowed,
but seems to be
a short-term phenomenon
• Pipeline competition
• Political and
environmental risks
Questions?