Why is BNSF still pushing for the Tongue River Railroad?

On June 15, 2015 at the U.S. Energy Information Administration’s annual conference in Washington, Matthew K. Rose, Burlington Northern Santa Fe’s (BNSF) executive chairman, said the following concerning infrastructure investments that BNSF made in the Powder River Basin (PRB).
“Less than 10 years later, I don’t anticipate that we’ll see that level of coal volume again. That leaves us with millions of dollars in investment in what will eventually be stranded assets.”
Rose also stated that PRB coal accounts for about 20% of BNSF’s traffic, down from 25%. He said this is “the fastest-changing story in railroading.” In other words, the head of BNSF doesn’t see any expansion in coal production in the PRB. In fact, he sees it continuing to decline. The question is why does BNSF continue to push for the Tongue River Railroad in the northern PRB? A railroad that is projected to cost, at minimum, around half a billion dollars to construct. The railroad infrastructure that Rose is referring to as "stranded assets" serve mines that are already in operation and are producing millions of tons of coal per year. Why invest more money to serve a coal mine (Otter Creek mine) that still doesn't have a permit and has low BTU coal, coal that is not competitive on the export market, according to the STB. BNSF has everything going against them in relation to the Tongue River Railroad: extremely high community opposition, sinking demand for coal both domestically and abroad, low coal prices and declining rail traffic out of the PRB’s existing mines. Oh yeah, and they also have a partner that is bordering on bankruptcy. Arch Coal’s stock closed at 33 cents/share today. They also have a heavy debt load and around 418 million dollars in current coal mine reclamation liabilities as of December 31, 2014. The people in southeast Montana are fully aware that a game is being played by companies and individuals who see the Otter Creek and Tongue River Valleys as just a dot on a map with resources to sell. Wouldn't it be nice if BNSF acted on what they already know and what they already stated publicly: investing any more money in coal from the Powder River Basin, especially in a greenfield mine and a new rail line, is a losing proposition.

2 Comments on “Why is BNSF still pushing for the Tongue River Railroad?

  1. I don’t understand how BNSF is allowed in this situation as what is purposed is a spur not common carrier. Should be part of the mine permit.

    BNSF refused to build track for the Youngs Creek mine because it wasn’t common carrier. This smells.

    • Just a side note. KXL LP, without Bakken Market Link, would also be a private carrier, granted common carrier rights/standing.
      KXL LP would be mostly owned by shells of Corporations owning both bitumen extraction plants, but also bitumen based sesaport refineries at the Nederland, terminal hub.