Permits in hand, Crestwood Services, the supply and logistics arm of Crestwood Equity Partners LP (Kansas, City, Mo.), has commenced construction of a new rail terminal in Montgomery, N.Y. Development of the facility is aimed at providing propane marketers across New York, New Jersey, Pennsylvania, Connecticut, and other regions of the Northeast with additional supply sourcing and reliability. The terminal is expected to come online in the second quarter of this year.

Located in Orange County in the south of the Empire State, the rail facility abuts Interstate 84 and is five miles from the New York State Thruway, providing connections to numerous major roadway transportation arteries in the region. The terminal will occupy a 20-acre site, part of a larger 880-acre rail service tract formerly owned by the storied New York Central Railroad.

The terminal’s state-of-the-art design will include a 16-spot rail rack operating two switches a day, thereby assuring a loading capacity of up to 100 trucks a day. There will also be a four-spot truck rack equipped with can pumps capable of loading four trucks in 17 minutes, eliminating long wait times during peak winter months and optimizing daily transportation. The Montgomery terminal will be served by the Middleton & New Jersey Railroad and can be operated seven days a week in order to provide convenience and product access.

“We are pleased to announce the new Montgomery rail terminal, which will be one of the largest propane rail terminals in the U.S.,” said Andy Ronald, vice president of commercial development and national accounts at Crestwood Services. “With this facility, we can provide propane marketers in New York and the Northeast with reliable supply since the terminal is backed by product controlled by Crestwood from multiple shale producers in the Marcellus and Utica.” He added that Crestwood had seen strong demand from its two recently opened rail terminals in Davisville, R.I. and Rose Hill, N.C., as well as from the company’s long-established rail operations. “We are confident the Montgomery terminal will bring much-needed reliability to customers across New England and the Northeast,” he said.

Ronald commented that choice of the site for the Montgomery terminal followed a one-year study conducted by Crestwood to identify regional pricing dynamics, demand requirements, and infrastructure sufficiency. “We identified a need, but also wanted to assess price factors to ensure the terminal would be cost effective. The goal was to combine all that was good for marketers, consumers, producers, and the railroad in order to justify the investment.”

He elaborated that while Crestwood doesn’t prioritize development of small-scale rail infrastructure, and rather seeks to develop larger projects to serve regional needs, smaller facilities can be augmented by boosting the number of switches per day. Further, after conferring with marketers, railroads, and customers a determination is then made regarding a terminal location that is optimum.

“Montgomery will have a capacity to offload 32 cars a day during peak winter demand periods, giving us the ability to avoid extensive steel storage coupled with the dynamics of being able to unload 16 cars in four and a half hours,” Ronald said. The terminal will have two 90,000-gal. bullets and two 75,000-gal. tanks. Again, supply will be sourced from the nearby Marcellus and Utica producing regions, but in addition from the western U.S. and Chicago, providing the terminal with what Ronald termed was “four-prong supply reliability.”

Montgomery’s loading and unloading capacity is said to make the terminal one of the largest among only a few examples in the U.S. dedicated solely to the propane market, he said. “We will certainly have six trucks in and out in an hour, but it will be closer to eight. We invested in submersible can pumps, rather than above-ground pumps.” He noted that the terminal serves a region with high demand and degree days, which helped drive the site selection decision. Montgomery joins Crestwood’s nearby Davisville, R.I. terminal in serving the Northeast.

Ronald explained that Montgomery is an old railroad town. The New York Central Railroad formerly used the facility for summer coal storage. The company transported coal to the location for later use throughout the East Coast during winter. It was last active in the 1970s. By converting the site to a propane terminal, Crestwood is continuing the historical use but with a new, cleaner-burning fuel.

He added that Crestwood is eyeing other sites for new rail infrastructure development. “We have a continuing strategy of evaluating markets, and are presently reviewing several sites. Our service to producers in developing regions requires valued markets for their production, demanding our continued search for markets that justify terminal development,” he said. “And the times have changed to position rail supply as a primary, rather than a secondary, strategy for value to marketers and producers. Key is large volume potential.” —John Needham