Iowa Pacific to upgrade Permian Basin track

Iowa Pacific Holdings (IPH) will perform extensive upgrades to its Texas-New Mexico Railroad (TNMR) subsidiary, a key rail line in the Permian Basin oilfield. TNMR has experienced massive growth in rail carloads as a result of the vast expansion of oil and gas drilling and production in the Permian Basin. IPH's recent sale of a rail line in Arizona has resulted in the availability of substantial funds for capital spending on existing infrastructure, facilities and equipment.  TNMR operates between a connection with the Union Pacific at Monahans, Texas and Lovington, N.M., about 100 miles away. The line was built in the 1920's when the Permian Basin oilfield was first developed. IPH has invested about $10 million in track upgrades in the past two years, mostly for crossties and improvements to surface and alignment. The new, multi-year program will cost more than $20 million and will include installation of new, heavier rail to support increased volumes of heavy cars of sand, crude oil and other oilfield commodities. It will also include upgrades to TNMR's locomotive fleet and a new locomotive maintenance facility to be constructed in Eunice, N.M. TNMR's carloads have tripled in 2011 from 2010, and are currently running at an annual rate of 7,000 cars per year. New customers coming on stream in 2011 and 2012 will result in another tripling of carloads to 21,000. In addition, a proposed crude oil unit train facility is under development, and could add another 30,000 annual carloads to the railroad as early as 3rd quarter 2012.