1Genesee & Wyoming Inc.

Shale & RailroadsMarketing & Operations ImpactMarty Pohlod, Vice President – CommercialGenesee & Wyoming – Ohio Valley Region

September 23, 2013

2Genesee & Wyoming Inc.

3Genesee & Wyoming Inc.

Key Shale-by-Rail Locations

• Natural Gas/NGLs Locations• Ohio: Utica Shale (liquids rich)• Pennsylvania: Marcellus (dry gas)• Louisiana: Haynesville (dry gas; activity down)

• Crude Oil Locations• Texas: Eagle Ford Formation and Permian Basin• North Dakota: Bakken• Canada: Alberta tar sands

4Genesee & Wyoming Inc.

G&W Lines and U.S. Shale Geography

5Genesee & Wyoming Inc.

Utica Shale In Ohio

• Utica Shale = rich natural gas liquids (NGLs)– Ethane, Propane, Butane, condensate and/or natural gasoline.

• Utica Shale does not produce significant crude oil– Western portion potentially crude oil rich, not yet economically recoverable.

• Production to grow dramatically with new processing and fractionation is available

– Processing: Separation of NGLs, water and other impurities from dry gas

– Fractionation: Separation of NGLs into components (e.g., ethane, propane, butane, etc.)

6Genesee & Wyoming Inc.

• Site prep ~ 200 railcars of stone• Inputs ~ 30+ railcars per well:

4-6 railcars of OCTG (pipe) 15-30+ railcars of sand ½ railcar of cement

• NGL Outputs ~ 10+ railcars per well: 4-6 railcars of drill cuttings 2-3+ railcars of NGLs/day

Shale to Rail – What Does It Mean?

• Crude Outputs Multiple unit trains per week

7Genesee & Wyoming Inc.

Railcar Storage Impact

• More storage required than traditional rail customers

• Frac sand terminal 5+ grades, may need 1-2 miles car storage.

• NGL Fractionation plants require even more track.– Varying tank cars by commodity

– Multiple shippers/marketers in one facility

8Genesee & Wyoming Inc.

Liquids Shipments Safety Implication

• “Key Train” Status– 20 or more haz-mat placard cars

– No unattended trains

– Close coordination at interchange

– Stays on mainline when passing other trains

• More detailed haz-mat traffic lanes identification

• More interaction with FRA at key haz-mat locations

9Genesee & Wyoming Inc.

Service Impact

• Not incremental traffic – Trainload(s) of new traffic

• Design train service to fit commodity & customer demand

• Careful pre-planning

• Close communication with customers

• Hiring of additional operating employees

• Premium service and cost

10Genesee & Wyoming Inc.

Big Picture Rail & Shale

• Defining the market– Pipelines vs. rail? Competition amongst shale plays and end-markets?

• Committing to long-term track investments– Capacity is available and scalable

• Optimizing use of sites (particularly in East)• Maintaining service to existing (non-shale) customers• Strong competition between railroads for projects• Public policy alignment

– Private RRs invest significant private capital

– More rail shipments make roads safer and last longer (saves everybody $)

– Encourage road funding & TSW policies to work with, not against RRs