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BNSF Railway. Grand Forks, ND. September 18, 2013. Matthew K. Rose. Chairman and Chief Executive Officer. Rail is making a difference in d omestic crude growth. Topics. Birth of crude by rail Fast track to growth Value of rail What’s next. The Birth of Crude by Rail. - PowerPoint PPT Presentation
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Rail is making a difference indomestic crude growth
Grand Forks, NDBNSF Railway
Matthew K. RoseChairman and Chief
Executive Officer
September 18, 2013
• Birth of crude by rail
• Fast track to growth
• Value of rail
• What’s next
Topics
The Birth of Crude by Rail
BNSF in North Dakota
• 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)
For more than a century, BNSF Railway has played an important role in North Dakota’s economy
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
2010 2011 Jan-12
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
40 78 106 114 139 167 178 204 230 258 306 336 366
434 452 504
547 567 587 581 558
14
42 44 40
43 48 58
57 68
71 64
82 74
66 70
67 69
71 68 45 33
54
120 150 154
181 215
235 261
299 329
371 418
440
499 522
571 616
638 655 626
592 Total Manifest
BNSF Total Volumes(000s bpd)
BNSF Crude Volumes592,000 bpd average in July, 2013
2012 201320112010
North Dakota Unit Train Rail 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
BNSF crude shippers invested nearly $1 billion developing 11 new Bakken origin facilities
Crude Transportation PackageUpstream, 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
8%OTHER
23%PIPELINE69%
RAIL
2013 Williston Basin Production
2010 Williston Basin Production
6%RAIL
20%OTHER
74%PIPELINE
11
Relieving U.S. Oil and Gas Transportation Bottlenecks
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 FlexibilityProving access to all of the nation’s western shale plays
Crude Origin Facilities
14
50 Destination Facilities by end of 2014
BNSF NetworkOther Networks
Unit Train FacilityManifest FacilityIn-Development Facility
West Coast: 19 Destination
Facilities
East Coast:11 Destination
Facilities
Gulf: 19 Destination Facilities
Mid-Continent:12 Destination Facilities
15
Crude Destination Facilities
How Have we Responded Today?
In 2013, BNSF plans to invest $400 million
on capacity initiatives to
support crude-by-rail growth
Safe Crude Oil Rail Transportation
BNSF Number of Hazmat Shipments
• 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
172
165
216
169
221195
144
162
135105105
110
92
105
80
112 96 99
10 23 10 16 17 17 17 14 9 17 21 12 12 15 10 15 8 150
50
100
150
200
250
Non-Accident Accident Trend
BNSF Total Hazmat Releases
• 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 Happened in the Past 12 MonthsSafety: FRA Emergency Order 28 & Rail Voluntary Measures
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?