Railroads See Ethanol In South In 2008 (Could it be Polk County?)

Tue Jan 15 00:34:20 UTC 2008 By Julie Ingwersen CHICAGO (Reuters) - Rail carriers see the Southeast and Southwest as the next likely growth areas for the U.S. ethanol market in 2008, executives with two of the largest ethanol haulers said. CSX Transportation, a unit of CSX Corp. , plans to build three ethanol terminals in the South this year, Kyle Hancock, CSX vice president for industrial and agricultural products, said in an interview Friday as part of the Reuters Global Agriculture and Biofuel Summit in Chicago. "For us, the market that is growing this year and that we expect to continue to grow into next year is the southern market -- the Carolinas, Georgia, Florida," Hancock said. The CSX terminals, currently in the development stage, would load and unload ethanol unit trains of 80 to 85 tanker cars. Hancock would not give the specific locations but said the terminals would likely be built in 2008. CSX currently operates five such ethanol terminals in the Northeast, all built within the last few years as the boom in biofuels took off. "The industry has the capacity now in terms of terminal capacity in the Northeast to handle all the demand that will go there," Hancock said. Through about 60 locations overall, CSX shipped 1.2 billion gallons of ethanol last year, or about one of every five gallons produced in the United States. Like CSX, Union Pacific Corp. , which runs the largest U.S. railroad, sees the construction of unit train terminals as critical to the growth of the ethanol sector. "That's one of the key pieces of our strategy," Paul Hammes, Union Pacific's vice president and general manager for Agricultural Products, said at the summit on Monday. "Getting those in place, where they can handle large units efficiently and get them into the distribution network of major markets like California, like Texas, potentially Las Vegas and Arizona ... is very important in terms of moving this product efficiently." Hammes said he expected "several more" unit train terminals would be built in the region in the next 18 months. "Markets like Phoenix and L.A., which today operate just six months out of the year, in the winter ... if those markets evolve into 12-month markets, those certainly could be potential markets for more terminals," Hammes said. Currently serving 59 ethanol plants, Union Pacific shipped 1.4 billion gallons of ethanol in 2007, or 48,000 carloads, up from 20,000 carloads in 2003. (For summit blog: summitnotebook.reuters.com/) (Editing by Christian Wiessner)