CN is on track to generate 2014 frac-sand revenues of C$300-million -- a year ahead of schedule
CHICAGO, Sept. 26, 2014 /CNW Telbec/ - CN (TSX: CNR) (NYSE: CNI) and Northern Frac Proppants II, LLC, today celebrated the opening of Northern's new state-of-the-art frac- sand production plant at Alma Center, Wis. CN now serves 13 frac-sand mines with more than 10 million tons of annual production capacity.
Northern's production facility, located on CN's rehabilitated Whitehall Subdivision, will have an annual production capacity of one million tons of high-grade sands.
CN plans to complete a multi-year, US$36-million upgrade of the Whitehall Subdivision between Whitehall and Wisconsin Rapids, Wis., by December of this year as part of its plan to better serve the frac-sand market. In 2012, CN spent US$35 million to restore a 40-mile segment of the Barron subdivision between Ladysmith and Almena, Wis., for frac-sand producers.
CN is seeing a substantial increase in frac sand production on its Wisconsin network because of the region's reserves of high-quality and in-demand sands. These industrial sands are used by the oil and gas industry in the hydraulic fracturing process to hold shale fractures open to let natural gas and oil flow out.
Jeff Alston, president and chief executive officer of Houston-based Northern Frac Proppants II, LLC, said: "We are excited to work with CN on expanding our frac-sand markets. CN's network is a plus, giving us efficient access to the Bakken, Marcellus and Canadian oil and gas shale plays. Our new facility at Alma Center, which contains all activity to one site to eliminate over-the-road trucking, will be able to accommodate both manifest and unit train service options. I'm also pleased to say the new plant will create 35 new local jobs."
Claude Mongeau, CN president and chief executive officer, said: "CN is well positioned to help its frac-sand customers compete in their end markets, with rail access to the largest North American frac-sand consumption regions, including Western Canada, Texas and Marcellus shales.
"We offer our frac-sand customers merchandise and unit train services to reach markets efficiently in both Canada and the U.S. As part of supply chain collaboration focus to expedite transit times, CN recently launched unit train frac-sand service between Wisconsin production facilities and distribution centres in the Western Canadian Sedimentary Basin in northwestern Alberta and northeastern British Columbia. We are also investing C$45 million over a multi-year time frame to upgrade our rail lines in northern Alberta to handle frac-sand hopper cars of up to 286,000 pounds gross weight and continue to improve siding and yard capacity along our Whitehall and Barron Subs in Wisconsin.
"Our unique frac-sand franchise and end-to-end service focus are paying off and should help us generate C$300 million of frac-sand revenues in 2014 – a full year ahead of CN's 2015 C$300 million target – on roughly 82,000 carloads of product. This would represent a strong increase over 2013 revenues of C$200 million on 55,000 carloads of frac sand."
CN will continue to ramp up its frac sand business to meet growing demand in North America – aggregate consumption is expected to reach 78 million tons by 2016, representing a 22 per cent compounded annual growth rate between 2013 and 2016.
CN is a true backbone of the economy, transporting approximately C$250 billion worth of goods annually for a wide range of business sectors, ranging from resource products to manufactured products to consumer goods, across a rail network spanning Canada and mid-America, from the Atlantic and Pacific oceans to the Gulf of Mexico. CN – Canadian National Railway Company, along with its operating railway subsidiaries -- serves the ports of Vancouver, Prince Rupert, B.C., Montreal, Halifax, New Orleans, and Mobile, Ala., and the metropolitan areas of Toronto, Chicago, Detroit, Duluth, Minn./Superior, Wis., Green Bay, Wis., Minneapolis/St. Paul, Memphis, and Jackson, Miss., with connections to all points in North America. For more information on CN, visit the company's website at www.cn.ca.
Certain information included in this news release is "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and under Canadian securities laws. CN cautions that, by their nature, these forward-looking statements, including statements relating to the growth of and revenue targets for the frac sand market, involve risks, uncertainties and assumptions. The Company cautions that its assumptions may not materialize and that current economic conditions render such assumptions, although reasonable at the time they were made, subject to greater uncertainty. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results or performance of the Company or the rail industry to be materially different from the outlook or any future results or performance implied by such statements.
Important risk factors that could affect the forward-looking statements include, but are not limited to, the effects of general economic and business conditions, industry competition, inflation, currency and interest rate fluctuations, changes in fuel prices, legislative and/or regulatory developments, compliance with environmental laws and regulations, actions by regulators, various events which could disrupt operations, including natural events such as severe weather, droughts, floods and earthquakes, labor negotiations and disruptions, environmental claims, uncertainties of investigations, proceedings or other types of claims and litigation, risks and liabilities arising from derailments, and other risks detailed from time to time in reports filed by CN with securities regulators in Canada and the United States. Reference should be made to "Management's Discussion and Analysis" in CN's annual and interim reports, Annual Information Form and Form 40-F filed with Canadian and U.S. securities regulators, available on CN's website, for a summary of major risks.
CN assumes no obligation to update or revise forward-looking statements to reflect future events, changes in circumstances, or changes in beliefs, unless required by applicable Canadian securities laws. In the event CN does update any forward-looking statement, no inference should be made that CN will make additional updates with respect to that statement, related matters, or any other forward-looking statement.
For further information: CN Contacts: Proppants: Media, Mark Hallman, Director, Communications & Public Affairs, (905) 669-3384 ; Investment Community, Janet Drysdale, Vice-President, Investor Relations, (514) 399-0052 ; Northern Frac, Media & Investors, Jeff Alston, President, (985) 284-2008