Burlington Northern positions for growth

HUDSON – Burlington Northern Santa Fe Railway is raising its Northern Colorado profile through the purchase of about 150 acres in the Hudson Industrial Park.

“Our intent with this site is to work closely with customers and community leaders to help develop the site for companies needing rail service,´ said Lena Kent, BNSF Railway’s director of public affairs.

“The customer would actually build out the site; however, BNSF’s economic development team would help guide them through the process,” Kent said. “The development of this site could potentially bring thousands of new jobs and enhance the region’s economic development.”

That’s music to the ears of local officials, although not much has happened since the land was purchased last summer, according to Joe Racine, Hudson’s town manager.

“They haven’t come in the door with any development plans or sold any property to investors,” Racine said in early January.

But Racine said the town remains optimistic. “We’re certainly hopeful that 2011 will bring some investment activity in general, and the industrial park is part of that strategy,” he said.

Racine said the industrial park currently has only one active occupant – Chemical and Metal Industries – but has been platted with a number of rail sidings for companies desiring rail service.

Kent said BNSF views Colorado as “an important state on our network.”

“We do see emerging business opportunities in Northern Colorado, including the Niobrara oil fields,” she said.

Over the last 18 months, new oil and gas discoveries in the Niobrara formation, particularly in northern Weld County, have increased the need for rail service to the region, including southeastern Wyoming.

In December, construction began in the Swan Ranch Rail Park in Cheyenne for Midwestern Wyoming Inc., an oil and gas pipeline service company that chose the park in part because Cheyenne economic development officials worked with BNSF to improve rail access within the 550-acre park.

BNSF has track running north to south along the Colorado Front Range and from Denver east to Nebraska in Northern Colorado.

Well-situated for rail

Northern Colorado is already well-situated for rail service, having two of the biggest railroads in the United States – BNSF and Union Pacific – running basically north-to-south parallel to each other through the region.

In the case of Hudson, for example, BNSF and UP tracks are located within seven miles of each other.

Mark Davis, a spokesman for UP, said the railroad expects to see “a little increase” in rail traffic on its Denver-to-Cheyenne line in 2011, with the average number of trains rising from 63 a week to 66 a week by the end of the year.

Davis could not point to a specific reason for the increase.

Northern Colorado also benefits from the presence of the Great Western Railway, a short-line service that operates more than 80 miles of owned tracks and leased track rights between BNSF on the west and UP on the east.

Rich Montgomery, vice president for industrial development for The Broe Group, which operates the GWR, said his company is getting increasing inquiries for its rail service. GWR operates on tracks from Longmont north to Fort Collins and east to Greeley. One of its main service areas is the Great Western Industrial Park in east Windsor, where several large employers, including Vestas, Hexcel and O-I, have located to have access to rail service.

“We’re always in discussions with new industries but we can’t say anything because of confidentiality,” Montgomery said. “But we’re certainly seeing an uptick in demand for rail-served property in Northern Colorado.”

Montgomery said he expected to make an announcement about a new GWR customer “sometime in the first quarter” of 2011.

Montgomery said operating a short line between two major railroads has been crucial. “That’s the key to Great Western’s success,” he said. “It has daily interchange with both Burlington Northern and the UP, and it creates a competitive advantage for companies that locate on the short line.”

That location between the two majors also helps create rate competition for companies that could opt to choose either railroad, he noted.

Montgomery said more companies are looking to rail for the shipment of their goods and see the transportation piece as pivotal in their location decisions.

“Often, the price of land pales in comparison with the endless transportation costs,” he said. “As people look at the bottom line, they see transportation costs as a large factor in their business, and moving by rail is generally less expensive than by truck.”

Montgomery noted that an average rail car can hold three to four times what could be hauled in a semi-trailer.

GWR looks to expand

Montgomery said GWR is positioning itself to do more short-line hauling within Northern Colorado, already serving the Anheuser-Busch brewery north of Fort Collins and with plans to serve more of the immediate area. Land surrounding A-B was recently opened to development, and proposed floodplain changes could eventually open more.

The city of Greeley is also planning to open to industrial development an area northwest of town on both sides of the GWR tracks that run from Windsor to Greeley. Montgomery said the area has significant profit potential for GWR and the rail company supports Greeley in its plans for its industrial development.

“We’re absolutely supportive of it,” he said. “We always think if you don’t reserve an area for industry to locate along, you’ll get residential encroachment and that’s not good for rail.”

Larry Burkhardt, president and CEO of Upstate Colorado economic development, said the development of the Hudson Industrial Park by BNSF would be a boon for the region.

“There are infrastructure issues there that have to be addressed, but that area does have a great deal of (development) potential going forward,” he said.

Burkhardt said rail’s transportation cost-advantage – trains can move freight 400 miles on a gallon of fuel compared to something far less in a truck – is the reason why rail access is increasingly becoming more important for industrial companies.

“Somewhere between 20 and 30 percent of our industrial leads over the last five years have been looking specifically for rail-served properties,” he said.

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