Plans for ethanol plant on hold.

[Anonymous]

QUOTE: Originally posted by farmer03

QUOTE: Originally posted by oltmannd

If we planted every acre possible for ethanol production, the total would not supply even 1/3 of the total transportation fuel requirements. There's not enought THERE there, though it does help.

I believe ethanol is touted more as an ALTERNATIVE fuel source, not a REPLACEMENT fuel source. I'd say it's more of a stepping stone in the path to get off the OPEC teet. I really don't see why there are so many naysayers. It creates a few jobs here and there, keeps the construction folks in work, creates some traffic for your precious (or hated) railroad(s) and creates more markets for all this GMO corn we have in this country that no one else wants.

Sure, in this particular case someone ***ed up, but how often does that happen?

Ethanol plants have the potential to be very good for railroads. The traffic flowing in both directions is one example and the fact that ethanol cannot move by pipeline another that really make rail the most efficient way to transport it. Barges may be a bit more efficient on certain routes, but they are constrained by the river system and other navigable waters.

The problem is that ethanol has never been needed on such a massive scale and there is a gold rush mentality to many of the investment groups in terms of setting up these plants. Often these folks, in their hurry to cash in, forget the costs and realities of transportation and logistics. They are indiscriminately looking for sites all over. Those that build near sources of supply, such as corn or near customers such as refineries or major fuel terminals will likely survive as they have large transportation bills in one direction only. Others built where both corn and ethanol must travel long distances to reach the plant or the markets respectively will not be able to compete over the long term as they will have higher transportation costs and other issues.

So, the answer is that yes, these mistakes do occur and will continue to occur until the gold rush on ethanol ends and the less savy players are shaken out...

LC

[Anonymous]

QUOTE: Originally posted by oltmannd

If we planted every acre possible for ethanol production, the total would not supply even 1/3 of the total transportation fuel requirements. There's not enought THERE there, though it does help.

I believe ethanol is touted more as an ALTERNATIVE fuel source, not a REPLACEMENT fuel source. I'd say it's more of a stepping stone in the path to get off the OPEC teet. I really don't see why there are so many naysayers. It creates a few jobs here and there, keeps the construction folks in work, creates some traffic for your precious (or hated) railroad(s) and creates more markets for all this GMO corn we have in this country that no one else wants.

Sure, in this particular case someone ***ed up, but how often does that happen?

[oltmannd]

If we planted every acre possible for ethanol production, the total would not supply even 1/3 of the total transportation fuel requirements. There's not enought THERE there, though it does help.

[TomDiehl]

QUOTE: Originally posted by futuremodal

It's funny, but the gas and electric companies regularly build their infrastructure into an industry's property, placing the meter (e.g. the dividing line between utility responsibility and property owner responsibility) right up to the factory wall.

Question: Why can these other service providers build infastructure on the customer's property, but the railroad can't?

Most casual observers would conclude that the railroad just doesn't want the new business.

And it is especially ironic, in that the utilities revenues from the new deal are regulated at 9% to 11% ROI, but UP's rates are unregulated and unchallenged by any other railroad competitor for this new business. Are we to conclude that 400% of R/VC will not lead to an ROI of over 11% for this venture?

Wow Dave, I didn't realize that putting in a gas or electric line was as expensive as putting in or upgrading a rail line. So bringing in the electric line will cost a couple Million?

[TomDiehl]

QUOTE: Originally posted by falconer

Ethanol is only a stopgap measure. Ethanol is still not an effective fuel replacement for transportation purposes.

Andrew F.

The people and government of Brazil might be surprised to know this. (See page 2, post 9 of this thread).

[karldotcom]

Ahh, the old Ethanol Bubble....

Good Job UP!

[Anonymous]

Oil is everywhere, is is just messy to handle. We are not going to run out of oil anytime soon. We are just going to make bigger messes with oil.

Ethanol is only a stopgap measure. Ethanol is still not an effective fuel replacement for transportation purposes.

Andrew F.

[jeaton]

"It's funny, but the gas and electric companies regularly build their infrastructure into an industry's property, placing the meter (e.g. the dividing line between utility responsibility and property owner responsibility) right up to the factory wall.

Question: Why can these other service providers build infastructure on the customer's property, but the railroad can't?

Most casual observers would conclude that the railroad just doesn't want the new business.

And it is especially ironic, in that the utilities revenues from the new deal are regulated at 9% to 11% ROI, but UP's rates are unregulated and unchallenged by any other railroad competitor for this new business. Are we to conclude that 400% of R/VC will not lead to an ROI of over 11% for this venture?"(futuremodal)

And the utilities just do that as a big favor? Where did you learn that? And why doesn't the electric company pay for the wiring right up to the outlet socket or light fixture?

And you have it on good authority that the UP was going to set rates at 400% of variable cost for this move? So what if they did and the business still would not generate enough revenue to justify the investment?

Your insistence that railroad investments for capacity improvements should go into the infrastructire for business with the highest R/VC just proves that you have no concept of the impact of volume on revenue generation.

[Murphy Siding]

Dave: I can't really say that the comparison to the gas company is applicable. Note that the gas can't come into this property by way of a government built and maintained highway/street, nor can it come in on the government maintained waterway. Perhaps a more applicable comparison would be the open access scenario [:O]. Multi-modal competition (barge/train/truck) would allow the market to determine who could best serve the customer. Any competitor that decided that it wasn't worth the investment could say "no thanks". If you read the article(s), you'll note that is basically what UP has said. Seeing how this would be such a great investment, couldn't a private party bankroll this project, and pay it off with all the money it would produce?[:-,]

[Anonymous]

QUOTE: Originally posted by TomDiehl

QUOTE: Originally posted by Murphy Siding

QUOTE: Originally posted by futuremodal

What was the shortline viability rule of thumb? 100 carloads per mile per year?

How many carloads minimum would probably ship from this plant each year, more than a few hundred?

If so, then UP can more than afford to pay for a few miles of upgraded spur line. Remember, this plant will be captive to UP, which means UP is getting up to 400% of revenue to variable costs.

Obviously, something else is going on with the railroad's management to derail this project. Something other than reasoned logic and up front honesty.

But as mudchicken points out, the railroads are right and everyone else is wrong!

You're making an assumption that it is automatically the railroad's fault. I guess I don't see anything that leads me to that assumption. One would guess that there are a lot of other things going on behind the scenes that none of us know about. If it's not a profitable deal for UP, they're not going to do it. Would you?

To add to Murphy's comments, industrial spurs and sidings were traditionally the property of the industry, and were the responsibility of the industry to maintain/repair/upgrade. There's no reason whatsoever that the railroad should upgrade someone else's property without compensation or a contract that will have this pay them to do it. The UP's BOD and stock holders would be up in arms about this, and rightly so.

It's funny, but the gas and electric companies regularly build their infrastructure into an industry's property, placing the meter (e.g. the dividing line between utility responsibility and property owner responsibility) right up to the factory wall.

Question: Why can these other service providers build infastructure on the customer's property, but the railroad can't?

Most casual observers would conclude that the railroad just doesn't want the new business.

And it is especially ironic, in that the utilities revenues from the new deal are regulated at 9% to 11% ROI, but UP's rates are unregulated and unchallenged by any other railroad competitor for this new business. Are we to conclude that 400% of R/VC will not lead to an ROI of over 11% for this venture?

[Anonymous]

QUOTE: Originally posted by Limitedclear

QUOTE: Originally posted by farmer03

Yea, you're forgetting they are planning on bring the corn in by rail also. So there will be more than the half dozen tank cars daily. I would assume the loop would be to unload a trainload of corn...?

As the article refers to unit trains of corn blocking crossings I would assume corn in ethanol and probably corn husks/debris out for animal feed.

LC

I missed that part of the article, my bad. I just thought I'd throw that out there since the bulk of the conversation has been about only the outgoing ethanol in the tank cars and not the grain coming in.

There are 3 different ethanol plants going up in my area. One east of Princeton on the BNSF, one in Hennepin on the Iowa Interstate and near Mineral on the IAIS also. There was a fourth proposed in Henry, which is downriver from Hennepin but that was thrown out because of the "impact" it would've had on the recreational boater traffic on the river and the air quality. While I'm sure it's not the highest paying job around, but leave it to this area to put some boaters above some new jobs.

[Anonymous]

QUOTE: Originally posted by farmer03

Yea, you're forgetting they are planning on bring the corn in by rail also. So there will be more than the half dozen tank cars daily. I would assume the loop would be to unload a trainload of corn...?

As the article refers to unit trains of corn blocking crossings I would assume corn inbound and ethanol and probably corn husks/debris outbound for animal feed.

LC

[Anonymous]

Yea, you're forgetting they are planning on bring the corn in by rail also. So there will be more than the half dozen tank cars daily. I would assume the loop would be to unload a trainload of corn...?

[MP173]

A couple of points here...

1. There appears to be a little confusion. Was the grain to be barged to the facility or by rail, or both? So there possibly would be inbound grain and outbound ethanol.
Is there a real solid projection of inbound and outbound traffic flows available?

2. the loop really throws the project for a loop...pun intended. That is a bit more than just rehabbing a line.

3. regarding availability of tank cars...railcar folks are going crazy right now building new tank cars. It would be interesting to see if there is a deficit of equipment projected.

ed

[Anonymous]

Now that we have a new article and even more facts it is interesting to see what the experctations were of the Baard Energy folks.

Note that they were expecting the UP to build an entire unloading loop in addition to upgrading the entire spur to higher weight (probably 286,000lbs) capacity. Up told them they would need at least 80 acres to make the radius of the loop workable. A loop is asking UP to build at least a mile of new track. FOR FREE??!!

Also note that the real figure is 55,000,000 to 60,000,000gals annually with a possible increase to 100,000,000gals annually. So if you discount this new number you might only have 250 to 300 cars first year. Even if the plant grows there is talk in the industry of a serious deficit in the number of available tank cars for this service. Given the competition by other ethanol plants and corn syrup service already existing and the fact that these guys obviously have no clue about railroads what do you think they'll say when someone points out this lack of cars??? HUH? CARS?

LC

[BaltACD]

QUOTE: Originally posted by dingoix

QUOTE: Ethanol:low octane+lousy milage.No thank you.

A Chevy 400 small-block V8 can't ever get good milage when the carberator is set so it turns out 300+HP[:D][:D][:D]

In today's world of Electronic Fuel Injection, no carburated car will ever get as good of milage or performance as engines that have EFI and have the computer mapped to provide the most effective fuel delivery rates for both power and economy.

Carbs are old technology.

[Anonymous]

Railroad knew ethanol plant would overload tracks

Union Pacific Railroad could have told ethanol plant and Sioux City, Iowa city officials months ago it that its railroad spur into an industrial tract could not handle the trains needed to deliver grain to the plant.

Instead, Baard Renewables officials continued planning to construct the facility near Sioux Gateway Airport. Earlier this week, that proposal to build a $140 million plant near Sioux Gateway Airport was derailed by the railroad.

"You don't just pick a site and then come to the railroad," Wayne Borg, senior business manager for Union Pacific's industrial development, told The Journal on Friday from Chicago. "The point is in today's environment, when there is more business on the rail in the history of railroads and to say this is my site and bring the rail here -- those days are over.

"It just doesn't work that way. We could have saved them a lot of time."

He said he first learned of the proposal in February after a city official called him. Baard officials announced their plans to build the plant last November.

"We run every new prospect by marketing, engineering and operating. I'm not sure to what extent they spoke to the rate folks either."

Baard officials said they had been discussing rate charges all along with UP officials.
Borg met with city leaders and ethanol plant representatives Tuesday to discuss the rail spur issue. At that time, he said he told them Union Pacific is not interested in spending $2 to $3 million to upgrade the track to Bridgeport West, the new industrial site near the airport.

Mayor Craig Berenstein told reporters at Friday's morning press conference that construction of the ethanol plant in Bridgeport West "is not likely to occur."

He further elaborated on comments he made Thursday to The Journal about the stunning news that the ethanol plant won't be built at that location. The council had planned to approve a development agreement at Monday's meeting, paving the way for construction to begin.

"We will continue to look for other locations," Berenstein asserted.

Construction of the plant would have been the single-largest capital investment in Sioux City in recent memory.

Don Willoughby, the city's business development coordinator, told the Journal Thursday, "Baard's initial discussions with Union Pacific had led them to believe the only problem might be on rail charges. Union Pacific said they were not going to spend the $2 million to $3 million necessary to upgrade the Wickham Spur, which serves all of Bridgeport, part of Expedition Business Park and the future development of Bridgeport West, because the spur is at maximum capacity now."

The tract in Bridgeport West is owned by The Siouxland Initiative, which has partnered with the city on the project.

Baard officials said that site is no longer desirable if grain can't be delivered to the plant by rail. The company also planned to move grain by barge on the Missouri River.

"Everybody's disappointed on this," Craig Conner, Baard's vice president of finance, said from Cincinnati, Ohio. "Information like this coming up this far into the process usually doesn't happen. That Wickham Spur was designed and built for smaller loads than what we were going to be putting on it. That's where our due diligence fell down."

Baard switched developers mid-project, which resulted in the rail spur issue not being checked thoroughly.

"That probably was a piece of information that didn't get handled real well. That's why you do these things," Conner noted.

Baard officials have been talking to Union Pacific representatives throughout the planning stages on rate charges. Willoughby said those discussions took place with UP's rate division and not its industrial development division.

"That's basically what happened," Conner said.

Berenstein said, "We're very disappointed that this location does not appear to be a viable location. We will continue to work with Baard to find an appropriate location in this city. There was a lot of hard work we put into this. We're not going to let it go. It's still viable."

Conner said, "We're still interested in the Sioux City area. We like the area. The city has been helpful with us. They're a very knowledgeable group of people."

Last November, Baard executives announced they planned to build an ethanol plant, which would produce between 55 million to 60 million gallons of the fuel additive. Conner recently told the Journal the company planned to double the size of that plant, producing between 100 million and 110 million gallons.

Ethanol typically is blended with unleaded gas to make fuel burn cleaner and to meet federal air pollution requirements.

Willoughby showed Conner several alternative sites this week. However, those tracts of land are in private ownership.

"In a sense we're not necessarily going back to Square One, but close to starting over. In looking at other sites, we have to make sure the utilities and rail service are there," he said.

The city has not asked if UP would expand the spur if the city foots the bill.

"This just happened Tuesday night," Willoughby explained. "They said it would take a minimum of 80 acres to put in the necessary trackage because of the rail curvatures. You would have a big circle (for the track) and the plant would have to sit in the center of it. The Bridgeport West acreage is more rectangular than square. We would have to have some additional discussion with The Initiative on that. ... We're not going to quickly make a snap decision" to offer to pay for the spur.

City officials plan to meet with The Siouxland Initiative officials to look at options.

Conner said, "I think there's a better solution that the railroad would like better, the city would like better and we would like better" at a different location.

City and the Initiative have planned to expand industrial development in Bridgeport West.

"We have a large industrial area we're trying to fill up and a lot of other vacant spaces out there in Bridgeport West and the Expedition Business Park," Willoughby acknowledged. "Now they're saying the spur's full and they can't handle any more cars."

Railroad accessibility would be a requirement for a number of companies, but not to the degree that an ethanol plant would require.

"They said a unit train would block four intersections at a time as it came into the Bridgeport West area," he said of a train transporting grain to the ethanol plant.

Berenstein said he would be willing to discuss the impasse with Union Pacific executives, adding, "I'm not convinced that would be very productive."

The Siouxland Initiative owns that 109-acre site. As part of an earlier public-private partnership, the city spent $1.4 million to put in utilities and other infrastructure for the bare land.

The city had planned to buy about 60 acres needed for the project at $10,000 an acre, the same price the Initiative paid for it. In turn, the city planned to sell that land to Baard Renewables for $1. In return, the company would agree to a minimum assessed valuation and to create between 50 and 55 new jobs.

The city's no-cost offer of the shovel-ready land, which has a market value of about $35,000 per acre, played a major role in Baard's decision to locate in Sioux City.

Baard Renewables is the renewable fuels division of Baard Energy, a Vancouver, WA-based company. The renewables division has two other ethanol projects in Raveena, NE, Coshocton, OH. - Lynn Zerschling, The Sioux City Journal.

[Anonymous]

QUOTE: Originally posted by miniwyo

QUOTE: Originally posted by dingoix

I don't see why some of you are against ethanol. Because that oil deep down in the earth WILL run out someday.

It will be a LONG LONG time before they run out though, They are Projecting a Boom in the Jonah Field north of Rock Springs to produce oil for the next 10-15 years, estimated to contain about 10.5 trillion barrels, and remember, when the Geologists calculate the amount of oil or gas it is always on the low side. By the time this field runs out, they will find a way to get the Keregin(sp?) (like oil) out of the oil shales in this area of Wyoming, we will be set for a very long time. The estimated amount of oil in the oil shales in SW Wyo. is about 1.1 TRILLION barrels, which is way more than the whole world has even used up to this point in time. Althoughthey will only be able to get about 60% of that, it should be enough to keep us in oil for years to come. Yes, I agree that we need somthing to happen that will bring the oil prices down, but I am all for oil exploration and drilling as it has given a HUGE boost to our econemy. It is even good for the railroads, They are the ones that bring in all the Frac Sand that the drillers use to drill with. It has done great things for this town and has made things better for future generations.

Google Jonah Field and you will come up with pages of information on it, It even helped the University. Encana donated $5 million to the school, now the stadium is called The Jonah Field at War Memorial Stadium.

You all use more things that depend on Southwestern Wyoming rescources than you know.

There may be a lot of oil left, but don't forget all those Indians and Chinese getting new cars to burn it with...

LC

[Anonymous]

QUOTE: Originally posted by jakebud

TomDiehl and Farmer 03

You guys seem to pay no attention to the thought that in order make ethanol, you have to plow a field, fertilize, plant, harvest, and move the corn to an ethanol plant. Best as I can tell, all of those processes use diesel fuel in trucks and tractors, and that comes from petroleum. Why don't you take a look at how much fuel is used to produce ethanol before its less than wonderous virtues are touted.

SPIKE

So, you've never heard of biodiesel for all those trucks and tractors????

LC

[spbed]

You know it is quite easy to accuse the UPRR for being stupid in this decision. Buuuuuuuuuuuuut do you know all the factors? Did you sit in on the meetings to see the pros & cons of project? Do you know why the decision was taken by UPRR management not to proceed? If you repliy to all the questions posed is a big fat NO then maybe you are the silly one for calling the UPRR silly cause you have not the slightest idea why the UPRR made the decision they did. I am sure that if the poposed project would have been deemed profitable by the UPRR then would have proceed immediately. [:o)]

QUOTE: Originally posted by BNSFrailfan

Way to go STUPID UP!
http://www.omaha.com/index.php?u_pg=46&u_sid=2136526

[MP173]

Limited clear...

nice job of taking the numbers and giving us reality. At 500 cars per year...this just doesnt seem to be a deal maker.

FM....got an idea. Why not raise some $$$, rehab the line and do the open access/toll railroad system on this spur? Charge either UP or the ethanol plant a per car charge and go with it.

Give us the projected numbers and let us discuss it. LC did this on his shortline and we all had lots of fun with our slide rules.

ed

[TomDiehl]

QUOTE: Originally posted by Murphy Siding

QUOTE: Originally posted by futuremodal

What was the shortline viability rule of thumb? 100 carloads per mile per year?

How many carloads minimum would probably ship from this plant each year, more than a few hundred?

If so, then UP can more than afford to pay for a few miles of upgraded spur line. Remember, this plant will be captive to UP, which means UP is getting up to 400% of revenue to variable costs.

Obviously, something else is going on with the railroad's management to derail this project. Something other than reasoned logic and up front honesty.

But as mudchicken points out, the railroads are right and everyone else is wrong!

You're making an assumption that it is automatically the railroad's fault. I guess I don't see anything that leads me to that assumption. One would guess that there are a lot of other things going on behind the scenes that none of us know about. If it's not a profitable deal for UP, they're not going to do it. Would you?

To add to Murphy's comments, industrial spurs and sidings were traditionally the property of the industry, and were the responsibility of the industry to maintain/repair/upgrade. There's no reason whatsoever that the railroad should upgrade someone else's property without compensation or a contract that will have this pay them to do it. The UP's BOD and stock holders would be up in arms about this, and rightly so.

[Anonymous]

Good thing hardly anyone lives in Wyoming. At that rate it'll just be one big hole in the ground.

[miniwyo]

QUOTE: Originally posted by dingoix

I don't see why some of you are against ethanol. Because that oil deep down in the earth WILL run out someday.

It will be a LONG LONG time before they run out though, They are Projecting a Boom in the Jonah Field north of Rock Springs to produce oil for the next 10-15 years, estimated to contain about 10.5 trillion barrels, and remember, when the Geologists calculate the amount of oil or gas it is always on the low side. By the time this field runs out, they will find a way to get the Keregin(sp?) (like oil) out of the oil shales in this area of Wyoming, we will be set for a very long time. The estimated amount of oil in the oil shales in SW Wyo. is about 1.1 TRILLION barrels, which is way more than the whole world has even used up to this point in time. Althoughthey will only be able to get about 60% of that, it should be enough to keep us in oil for years to come. Yes, I agree that we need somthing to happen that will bring the oil prices down, but I am all for oil exploration and drilling as it has given a HUGE boost to our econemy. It is even good for the railroads, They are the ones that bring in all the Frac Sand that the drillers use to drill with. It has done great things for this town and has made things better for future generations.

Google Jonah Field and you will come up with pages of information on it, It even helped the University. Encana donated $5 million to the school, now the stadium is called The Jonah Field at War Memorial Stadium.

You all use more things that depend on Southwestern Wyoming rescources than you know.

[Anonymous]

QUOTE: Originally posted by nscoal

QUOTE: Originally posted by older than dirt

Humor me for a minute,

OK, if I'm already burning 93 octane gas in my Mustang, I'd suppose going to E-85 should give me quite a horsepower jump, shouldn't it, since it's 103 octane? I get between 21-22 mpg. Would that go down, or stay the same? Would I have to re-re-program my chip too? I don't know much about E-85, and I haven't come across any to try, but from what you guys have said tonight I'd like to try a tank full.

If I've gotten too far off topic, I'm sorry, just tell me so, but this is the first really good discussion I've read about different fuels like this. I think this is interesting, 'specially coming from railfans' perspectives!

Also, one thing that hasn't been mentioned...Nothing smells better than about 20 sprint cars on a humid Saturday night belching out methanol exhaust!

mike

At the risk of oversimplifyng, you will only see a horsepower gain from a higher octane fuel if you raise the compression ratio of the engine to take advantage of it. The sprint cars you speak of have very high compression ratios (14:1 or so). Your mustang is around 9:1, if it is stock.
The UP is a business, if I were a stockholder I would expect sound business decisions, not charity.
Besides, they have lots of work hauling asian made goods to Wal-Mart.
My apology for getting off topic.

He's right about raising the compression ratio to take advantage of burning higher octane.

But, to burn E-85 as I said before requires a flex-fuel vehicle or to have your vehicle (re)programmed to burn the E-85. It takes more ethanol to create the same energy as regular gasoline, which is the reason for the mileage drop because you're using more fuel.

So in turn, burning straight E-85 in your car which is programmed to burn regular fuel will deliver the same amount of fuel regardless of the type. With E-85 your mustang will run lean (not enough fuel), which will cause it to run like crap and might lead to bigger problems with your engine.

I understand all it is is a simple computer chip that determines what kind of fuel you have in a flex-fuel vehicle, something about how it senses the level of alcohol in the fuel. It's a shame that not EVERY vehicle produced on the planet isn't equipped as such.

[Anonymous]

QUOTE: Originally posted by futuremodal

What was the shortline viability rule of thumb? 100 carloads per mile per year?

How many carloads minimum would probably ship from this plant each year, more than a few hundred?

If so, then UP can more than afford to pay for a few miles of upgraded spur line. Remember, this plant will be captive to UP, which means UP is getting up to 400% of revenue to variable costs.

Obviously, something else is going on with the railroad's management to derail this project. Something other than reasoned logic and up front honesty.

But as mudchicken points out, the railroads are right and everyone else is wrong!

OH, here we go with the rules of thumbs...

If you follow that rule, which dates back to the days just after Staggers you'd better be prepared for an expensive reality check. The kind of traffic I'd expect out of this facility is gonna require a heavy rebuild, hence the high cost numbers. Those tanks are heavy beasts and have a nasty tendency to pick on every weak spot in the track structure.

If you read the article, again, you'll notice that UP was asked to rebuild the spur for between $2Million and $3Million. Also, Baard was getting 60 acres of land that the City bought for $600,000 (60 acres @ $10,000/acre) for free ($1). Finally, Baard says the plant will "eventually" produce 100,000,000 gallons of ethanol (I am assuming annually although it is not said). So, obviously, having gotten $600,000 in property for free and having NO CLUE about that nice choo choo over there that will bring us our corn...we'll just guess that it's free too... A lot of these ethanol outfits are out there trying to get RRs interested in helping them. They get big government tax breaks and tax credits for building these facilities and running them, plus BIG incentives from the local and state governments including land purchases, services (watrer, sewer, electric, gas and roads) and more tax breaks (property and sales taxes). What are they out of pocket, not much. Further, I strongly suspect the $140Million number is inflated to include the land cost and probably a bunch of the other stuff thrown in for free. After all, the community is competing with other localities for this plant and its BIG 50 jobs [insert sarcasm here]. (How many jobs will actually be there???) There are a very large number of investment groups out there right now trying to slap up ethanol and biodiesel plants on rail lines across the country and get as many benefits without putting up $$ to get in on the free government handouts and sell ethanol that is or will be required by law in most states soon.

OK. back to RRing. Apply "customer discount" to the wildly speculative 100,000,000 gallon estimate by the customer 100,000,000/ 10 = 10,000,000 gallons annually. Customers always inflate numbers to encourage the RR to invest. Tank car 20,000 gallons capacity each. 500 carloads per year. Hardly a big customer worth of a large buildout or rehab project. The revenue from those 500 cars would take at least 10 years to put a small dent in the investment. Even if Baard moves a LOT more traffic than projected, it still is a nonstarter for UP. FMs projection of 400% of costs is simply drawn out of the air. Rates are simply not that high and would not be sustainable at that level.

Oh, and FM, just for the record, MC is far closer to being right on this one than you are. This deal is a loser...

LC

[Anonymous]

QUOTE: Originally posted by older than dirt

Humor me for a minute,

OK, if I'm already burning 93 octane gas in my Mustang, I'd suppose going to E-85 should give me quite a horsepower jump, shouldn't it, since it's 103 octane? I get between 21-22 mpg. Would that go down, or stay the same? Would I have to re-re-program my chip too? I don't know much about E-85, and I haven't come across any to try, but from what you guys have said tonight I'd like to try a tank full.

If I've gotten too far off topic, I'm sorry, just tell me so, but this is the first really good discussion I've read about different fuels like this. I think this is interesting, 'specially coming from railfans' perspectives!

Also, one thing that hasn't been mentioned...Nothing smells better than about 20 sprint cars on a humid Saturday night belching out methanol exhaust!

mike

At the risk of oversimplifyng, you will only see a horsepower gain from a higher octane fuel if you raise the compression ratio of the engine to take advantage of it. The sprint cars you speak of have very high compression ratios (14:1 or so). Your mustang is around 9:1, if it is stock.
The UP is a business, if I were a stockholder I would expect sound business decisions, not charity.
Besides, they have lots of work hauling asian made goods to Wal-Mart.
My apology for getting off topic.

[Murphy Siding]

QUOTE: Originally posted by futuremodal

What was the shortline viability rule of thumb? 100 carloads per mile per year?

How many carloads minimum would probably ship from this plant each year, more than a few hundred?

If so, then UP can more than afford to pay for a few miles of upgraded spur line. Remember, this plant will be captive to UP, which means UP is getting up to 400% of revenue to variable costs.

Obviously, something else is going on with the railroad's management to derail this project. Something other than reasoned logic and up front honesty.

But as mudchicken points out, the railroads are right and everyone else is wrong!

You're making an assumption that it is automatically the railroad's fault. I guess I don't see anything that leads me to that assumption. One would guess that there are a lot of other things going on behind the scenes that none of us know about. If it's not a profitable deal for UP, they're not going to do it. Would you?

[Murphy Siding]

QUOTE: Originally posted by older than dirt

Humor me for a minute,

OK, if I'm already burning 93 octane gas in my Mustang, I'd suppose going to E-85 should give me quite a horsepower jump, shouldn't it, since it's 103 octane? I get between 21-22 mpg. Would that go down, or stay the same? Would I have to re-re-program my chip too? I don't know much about E-85, and I haven't come across any to try, but from what you guys have said tonight I'd like to try a tank full.

If I've gotten too far off topic, I'm sorry, just tell me so, but this is the first really good discussion I've read about different fuels like this. I think this is interesting, 'specially coming from railfans' perspectives!

Also, one thing that hasn't been mentioned...Nothing smells better than about 20 sprint cars on a humid Saturday night belching out methanol exhaust!

mike

It's my understanding that your car has to be E-85 compatible from the outset, not all cars are. My mechanic says that once you switch over to E-85, you can't switch back without replacing a computer chip(?) Lat summer, we were in Aberdeen, S.D. when gas had spiked at $3.20 a gallon. That day, E-85 was at $1.60!! Now, the difference is more like $2.38 to $2.05. Being a sprint car fan too,I whole-heartedly agree with you on the methanol exhaust![:)]

[Murphy Siding]

QUOTE: Originally posted by mudchicken

QUOTE: Originally posted by Murphy Siding

QUOTE: Originally posted by mudchicken
. Some things never change, just this case is larger than most. Sioux Falls really got in over it's head; Uncle Pete may have just done them a huge favor. Hopefully they do a better job at due-dilligence from this point forward.

Yikes![:0] Sioux Falls and Sioux City are 2 different places, 90miles apart![xx(]

Whoops ...meant the the south Sioux one[:I][:I][:I] (The bigger burgh )

For what it's worth, we(Sioux Falls) are the bigger of the two, even if you take into account all three of the Sioux Cities, in Iowa, Nebraska and South Dakota. Where they do have us beat is in railroads.[:(]